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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K


☒	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2023


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 000-50796

SP PLUS CORPORATION

(Exact Name of Registrant as Specified in Its Charter)


Delaware		16-1171179
(State or Other Jurisdiction of		(I.R.S. Employer Identification No.)
Incorporation or Organization)
	200 E. Randolph Street, Suite 7700
	Chicago, Illinois 60601-7702
(Address of Principal Executive Offices, Including Zip Code)
	(312) 274-2000
(Registrant's Telephone Number, Including Area Code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	SP	The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: NONE


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒	No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐	No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company.

See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

As of June 30, 2023, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common stock held by nonaffiliates of the registrant was approximately $761.9 million. Solely for purposes of this disclosure, shares of common stock held by executive officers and directors of the registrant as of such date have been excluded because such persons may be deemed to be affiliates. This determination of executive officers and directors as affiliates is not necessarily a conclusive determination for any other purposes.


Class	Outstanding at February 26, 2024
Common Stock, $0.001 par value per share	19,798,884 Shares

DOCUMENTS INCORPORATED BY REFERENCE

None

Audit Firm Id: 42 Auditor Name: Ernst & Young LLP Auditor Location: Chicago, Illinois, United States

Table of Contents

SP PLUS CORPORATION

TABLE OF CONTENTS


PART I

	Item 1.	Business	3

	Item 1A.	Risk Factors	8

	Item 1B.	Unresolved Staff Comments	15

	Item 1C.	Cybersecurity	15

	Item 2.	Properties	15

	Item 3.	Legal Proceedings	16

	Item 4.	Mine Safety Disclosures	16

PART II

	Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	17

	Item 6.	[Reserved]	18

	Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19

	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	27

	Item 8.	Financial Statements and Supplementary Data	27

	Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	55

	Item 9A.	Controls and Procedures	55

	Item 9B.	Other Information	55

	Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections	55

PART III

	Item 10.	Directors, Executive Officers and Corporate Governance	56

	Item 11.	Executive Compensation	58

	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	71

	Item 13.	Certain Relationships and Related Transactions, and Director Independence	72

	Item 14.	Principal Accountant Fees and Services	72

PART IV

	Item 15.	Exhibits and Financial Statement Schedules	73

	Item 16.	Form 10-K Summary	75

Signatures			76

Table of Contents

Forward-Looking Statements

The Business section and other parts of this Annual Report on Form 10-K ("Form 10-K") contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Many of the forward-looking statements are located in "Management's Discussion and Analysis of Financial Condition and Results of Operations." Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance and SP Plus Corporation’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A. of this Form 10-K under the heading "Risk Factors," which are incorporated herein by reference. The term the "Company" as used herein refers collectively to SP Plus Corporation and its wholly owned subsidiaries, unless otherwise stated. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Table of Contents

PART I

Item 1. Business

Our Company

SP Plus Corporation, a Delaware corporation, which operates through its subsidiaries (collectively referred to as “SP+”, "we", "us", or "our"), develops and integrates technology with operations management and support to deliver mobility solutions that enable the efficient and time-sensitive movement of people, vehicles and personal travel belongings. We are committed to providing solutions that make every moment matter for a world on the go while meeting the objectives of our diverse client base in North America and Europe, which includes aviation, commercial, hospitality and institutional clients. We typically enter into contractual agreements with property owners or managers as opposed to owning facilities.

On October 4, 2023, we entered into an Agreement and Plan of Merger (the "Merger Agreement") by and among us, Metropolis Technologies, Inc. ("Metropolis") and Schwinger Merger Sub Inc., a direct, wholly owned subsidiary of Metropolis (“Merger Sub”), in an all-cash transaction with a total enterprise value of approximately $1.5 billion. Pursuant to the Merger Agreement, subject to terms and conditions therein, Merger Sub will acquire all of the outstanding shares of our common stock for $54.00 per share, without interest, and merge with SP+, with the SP+ surviving as a wholly owned subsidiary of Metropolis. The Company’s stockholders approved the transaction on February 9, 2024. The transaction is expected to close in 2024, subject to other customary closing conditions, including the receipt of regulatory approvals. Upon completion of the transaction, the Company’s shares will no longer trade on the Nasdaq Global Select Market.

Acquisitions

On July 25, 2023, we acquired certain assets of Roker Inc. ("Roker"), a United States based provider of fully-integrated parking solutions that simplify permit, violation and enforcement management for organizations and municipalities, for approximately $3.1 million. Roker's operations are included in the Commercial segment.

On November 10, 2022, we acquired certain assets of DiVRT, Inc. ("DIVRT"), a developer of innovative software and technology solutions that enables frictionless parking capabilities, for approximately $17.6 million. In addition, we may be required to pay the former owner of DIVRT a maximum amount of $7.0 million in contingent consideration if certain targets related to the number of our locations using the DIVRT technology are met by October 31, 2025. Based on a probability weighting of potential payouts, we accrued $4.0 million in projected contingent consideration as of the acquisition date. During the year ended December 31, 2023, we determined that the first two targets were met as of October 31, 2023, which was the second milestone measurement date. As a result, we paid the former owner $2.8 million during the first quarter of 2024. We will continue to evaluate the potential payouts in the future and adjust the contingent consideration for any changes in the estimated fair value each reporting period. DIVRT's operations are included in the Commercial segment.

On October 11, 2022, we acquired K M P Associates Limited ("KMP"), a United Kingdom based software and technology provider serving aviation and commercial parking clients, primarily through its AeroParker technology, throughout the United States and Europe for approximately $13.8 million, less cash acquired of $0.9 million, and assumed KMP's debt of $0.3 million. Immediately following the acquisition, we repaid all of the debt assumed. KMP's operations are included in the Aviation segment.

Our Operations

We develop and integrate technology with operations management and support to deliver mobility solutions that enable the efficient and time-sensitive movement of people, vehicles and personal travel belongings. We serve a variety of industries and have industry vertical specific specialization. Our Commercial segment serves clients in commercial real estate, residential communities, hotels and resorts, healthcare facilities, municipalities and government facilities, retail operations, large event venues, colleges and universities. Our Aviation segment primarily serves clients in the aviation industry (i.e. airports, airlines, cruise lines, certain hospitality clients and certain commercial clients within Europe that utilize our AeroParker technology).

We typically enter into contractual relationships with property owners or managers as opposed to owning facilities. We primarily operate under two types of arrangements: management type contracts and lease type contracts. See Part I. Industry Operating Arrangements for further discussion.

Our revenue is derived from a broad and diverse group of clients, industry vertical markets and geographies. Our clients include some of North America's largest private and public owners, municipalities and governments, managers and developers of major office buildings, residential properties, commercial properties, shopping centers and other retail properties, healthcare facilities and medical centers, sports and special event complexes, hotels and resorts, airlines and cruise lines. In addition, through our acquisition of KMP, we now service multiple airports and other clients in Europe. No single client accounted for more than 7% of our revenue, net of reimbursed management type contract revenue, during the year ended December 31, 2023. Additionally, we have built a diverse geographic footprint that spans operations in 45 states, the District of Columbia and Puerto Rico, 4 Canadian provinces and multiple countries within Europe. Our strategy is focused on building scale and leadership positions in large, strategic markets in order to leverage the advantages of scale across a larger number of clients in a single market.

The acquisitions discussed above enhance our position as a global provider of frictionless Platform-as-a-Service ("PaaS") and Software-as-a-Service ("SaaS") solutions that are not dependent on our legacy parking management and transportation related operations. Our acquisitions of KMP, DIRVT and Roker have been accounted for as business combinations, and the assets acquired and liabilities assumed were recorded at their fair values as of the acquisition dates. The results of each acquisition’s operations are reflected in our Consolidated Financial Statements from the date of acquisition.

Services

As a professional service and technology solutions provider, we provide comprehensive, turn-key service and technology-enabled offering packages to our clients. Under a typical management type contract structure, we are responsible for providing and supervising all personnel necessary to facilitate daily operations, which may include porters, baggage handlers, valet attendants, managers, bookkeepers, cashiers and a variety of ground transportation services, maintenance, marketing, customer service, and accounting and revenue control functions.

In addition to the conventional management services described above, we also offer an expanded range of ground transportation services, baggage delivery and handling services, technology enabled solutions and other ancillary services as described below for each of our Segments:

Commercial

•

an online and mobile application consumer platform through parking.com;

•

applying curb management strategies and technologies to effectively allocate the use of curb space in urban environments;

•

on-street parking meter collection and other forms of parking enforcement services;

Table of Contents

•

asset management and revenue management services for owners of parking assets;

•

remote monitoring services using technology that enables us to monitor parking operations from a remote, off-site location and provide 24-hour-a-day customer assistance (including remedying equipment malfunctions);

•

shuttle bus vehicles and the drivers to operate them;

•

ground transportation services, such as taxi and livery dispatch services, as well as concierge-type ground transportation information and support services for passengers with transportation network companies;

•

valet services, including vehicle staging, doorman/bellman services and valet tracking systems with SMS capabilities;

•

innovative and environmentally compliant facility maintenance services, including power sweeping and washing, painting and general repairs, as well as cleaning and seasonal services;

•

multi-platform marketing services including SP+ branded websites which offer clients a unique platform for marketing their facilities, mobile applications, search marketing, email marketing and social media campaigns.

•

patient transport services for healthcare clients; and

•

large event transportation logistics, planning and implementation.

Aviation

•

baggage services, including delivery of delayed luggage and baggage handling services;

•

remote airline check-in services;

•

wheelchair assist services at airports and to airline passengers;

•

baggage repair and replacement services;

•

shuttle bus vehicles and the drivers to operate them, such as on-airport car rental operations and private off-airport parking locations;

•

valet services, including vehicle staging and valet tracking systems with SMS capabilities;

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innovative and environmentally compliant facility maintenance services, including power sweeping and washing, painting and general repairs, as well as cleaning and seasonal services;

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comprehensive security services including the training and hiring of security officers and patrol, as well as customized services and technology that are efficient and appropriate for the property involved;

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online and mobile application consumer platforms through our AeroParker technology and parking.com;

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multi-platform marketing services including SP+, AeroParker and KMP Digitata branded websites which offer clients a unique platform for marketing airport facilities, mobile applications, search marketing, email marketing and social media campaigns; and

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revenue management services.

Industry Overview

Overview

The parking management, ground transportation service and baggage service providers, as well as technology solution providers that serve those industries, are large and fragmented. A substantial number of companies in these industries offer parking management services, ground transportation services, technology solutions and baggage services as non-core operations, and companies in these industries are large national competitors or small and private companies that operate in limited markets and geographies. Additionally, technological advancements are having an impact on both consumer behavior and information technology in these industries. From time to time, smaller operators and technology solution providers find they lack the financial resources, economies of scale and/or management techniques required to compete for the business of increasingly sophisticated clients and the increasing demands of clients. We expect this trend to continue and will provide larger professional service and/or technology solutions providers with greater opportunities to expand their businesses and potentially acquire smaller operators and/or technology solutions providers. We also expect that new small operators and technology solutions providers will continue to enter the market as they have in the past.

Industry Operating Arrangements

Professional service businesses and technology solution providers within the industry, including our Company, operate primarily under two general types of arrangements, which include:

Management Type Contracts

Under management type contracts, the professional services operator typically receives a fixed and/or variable monthly fee for providing services and may receive an incentive fee based on the achievement of certain performance objectives. Professional service operators also generally charge fees for various ancillary services such as accounting support services, equipment leasing and consulting. Primary responsibilities under a management type contract include hiring, training and staffing personnel, and providing revenue collection, accounting, record-keeping, insurance and marketing services. The client is usually responsible for operating expenses associated with the client's operations, such as taxes, license and permit fees, insurance costs, payroll and accounts receivable processing and wages of personnel assigned to the operation, although some management type contracts, typically referred to as "reverse" management type contracts, require the professional services operator to pay certain of these cost categories but provide for payment to the operator of a larger management fee. Under a management type contract, the client usually is responsible for non-routine maintenance and repairs and capital improvements of the operation facility or location,

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such as structural and significant mechanical repairs. Management type contracts are typically for a term of one to three years (although the contracts may be terminated early and may contain renewal clauses).

Lease Type Contracts

Under lease type contracts, the professional services operator generally pays to the client or property owner a fixed base rent or fee, percentage rent that is tied to the financial performance of the operation, or a combination of both. The professional services operator collects all revenue and is responsible for most operating expenses, but typically is not responsible for major maintenance, capital expenditures or real estate taxes. In contrast to management type contracts, lease type contracts typically have longer terms, generally three to ten years, often contain a renewal term and provide for a fixed payment to the client regardless of the facility's operating earnings. In addition, many of these lease type contracts may be canceled by the client for various reasons, including development of the real estate for other uses, and on as little as 30 days' notice without cause. Lease type contracts generally require larger capital investment by the professional services operator as compared to management type contracts and therefore tend to have longer contract periods.

General Business Trends

We believe that sophisticated clients recognize the potential for technology-driven mobility solutions, parking services, parking management, ground transportation services, baggage handling services and other ancillary services to be a profit generator and/or a service differentiator to their customers. By outsourcing these services, our clients are able to capture additional profit and improve customer experiences by leveraging the unique technology, operational skills and controls that an experienced services and technology solutions provider can offer. Our ability to consistently deliver a uniformly high level of service to our clients, including the use of various technology solutions and enhancements, allows us to maximize the profit and/or customer experience for our clients and improves our ability to win contracts and retain existing clients.

Our Competitive Strengths

We believe we have the following key competitive strengths:

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A Leading Market Position with a Unique Value Proposition. We are one of the industry leading providers of technology-driven mobility solutions, parking management, ground transportation services, baggage services and other ancillary services for aviation, commercial, hospitality, institutional, municipal and government, airport, airline and cruise line clients across North America and Europe. Our competitive and key advantages are our Sphere technology, which is a suite of industry-leading technology solutions that drives end-to-end mobility and delivers a frictionless consumer experience across all markets we serve and our AeroParker technology, which is a Software-as-a Solution ("SaaS") ecommerce platform that increases non-aeronautical revenues for multiple major US and European airports through pre-booked parking, revenue management and sales of other products such as access to airport lounges. Our services include on-site parking management, valet parking, ground transportation services, facility maintenance, event logistics, baggage related services, remote airline check-in services, security services, municipal meter revenue collection and enforcement services, and consulting services. We market and offer many of our services under our SP+, Sphere, Bags, AeroParker, MetroParker and KMP Digitata brands, which reflect our ability to provide customized solutions and meet the varied demands of our diverse client base. We can augment our parking services and technology solutions by providing our clients with related services through our SP+ Parking, SP+ Facility Maintenance, SP+ GAMEDAY, SP+ Transportation, SP+ Event Logistics, Sphere, AeroParker, MetroParker, KMP Digitata and Bags brands, thus enabling our clients to efficiently address various needs through a single vendor relationship. We believe our ability to offer a comprehensive range of services and technology solutions, as well as leverage our Sphere, AeroParker, MetroParker and KMP Digitata platforms and the Bags service offerings on an international basis is a significant competitive advantage and allows our clients to attract, service and retain customers, gain access to the breadth and depth of our service and process expertise, leverage our significant technology capabilities and enhance their financial operations and customer experience.

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Our Scale and Diversification. Expanding our client base, industry vertical markets and geographic locations has enabled us to significantly enhance our operating efficiency over the past several years by standardizing processes and managing overhead. The ability to use our scale and purchasing power with vendors drives cost savings and benefits for our client base.

Client Base. Our clients include some of North America's largest private and public owners, municipalities, managers and developers of major office buildings, residential properties, commercial properties, shopping centers and other retail properties, sports and special event complexes, hotels and resorts, healthcare facilities and medical centers, airports, airlines and cruise lines. In addition, through our acquisition of KMP, we now service many airports and other clients within Europe.

Industry Vertical Markets. We believe our industry vertical market diversification, such as commercial real estate, residential communities, hotels and resorts, airports, airlines, cruise lines, healthcare facilities and medical centers, seaports, municipalities and government facilities, commercial real estate, residential communities, retail operations, large event venues, and colleges and universities, allows us to minimize our exposure to industry-specific seasonality and volatility. We believe that the breadth of the end-markets we serve and the depths and diversity of services and technology solutions we offer to those end-markets provide us with a broader base of clients that we can target.

Geographic Locations. We have a diverse geographic footprint that includes operations or our technology-driven mobility solutions in 45 states, the District of Columbia, Puerto Rico, 4 Canadian provinces and several countries within in Europe.

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Stable Client Relationships. We have a track record of providing our clients with consistent, value-added and high-quality services, which can enhance their customers' experience. We continue to see a trend in outsourcing to professional service providers; we believe this trend has meaningful benefits to companies like ours, which have a national footprint and scale, extensive industry experience, broad process capabilities and a demonstrated ability to create value for our clients. We expect that our acquisition of KMP will further enhance our company footprint outside of North America.

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Established Platform for Future Growth. We have invested in and developed an international infrastructure utilizing our Sphere and AeroParker technology solutions and platforms that are complemented by significant management expertise, which enable us to scale our business for future growth effectively and efficiently. We have the ability to transition into local service operations very quickly, from the simplest to the most complex operation, and have experience working with incumbent professional service operators and technology solution providers to implement smooth and efficient takeovers and integrate professional service operations and technology solutions seamlessly into our existing operations.

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Predictable Business Model. We believe that our business model provides us with a measure of insulation from broader economic cycles, because a significant portion of our locations operate on management type contracts that, for the most part, are not dependent upon the financial performance of the client's operation.

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Highly Capital Efficient Business with Attractive Cash Flow Characteristics. Our business generates attractive operating cash flow due to negative working capital dynamics. In addition, we generally have low capital expenditure requirements, which allows us to grow our business through additional technology investments.

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Focus on Operational Excellence and Human Capital Management. Our culture and training programs place a continuing focus on excellence in the execution of all aspects of day-to-day operations. This focus is reflected in our ability to deliver to our clients professional, high-quality services through well-trained, service-oriented personnel, which we believe differentiates us from our competitors. To support our focus on operational excellence, we manage our human capital through a comprehensive, structured program that evaluates the competencies and performance of all of our key operations and administrative support personnel on an annual basis. We have also dedicated significant resources to human capital management, providing comprehensive training for our employees, delivered through the use of our web-based SP+ University learning management system, in addition to facilitated classes. These investments in our people promote customer service and client retention in addition to providing our employees with continued training and career development opportunities.

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Focus on Operational Compliance and Safety Initiatives. Our culture and training programs continue to focus on various compliance and safety initiatives and disciplines throughout the organization, as we implement an integrated approach for continuous improvement in our risk and safety programs. We have also dedicated significant resources to our risk and safety programs by providing comprehensive training for our employees, delivered primarily through the use of our web-based SP+ University learning management system, on-site training and our SP+irit in Safety newsletters.

Our Growth Strategy

Building on these competitive strengths, we believe we are well positioned to execute on the following growth strategies:

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Grow our Business through Technology investments. We believe a significant opportunity exists to expand our business through the use of technology driven mobility solutions. We provide a suite of industry-leading technology solutions through our Sphere and AeroParker technology and will continue to invest further in these products and offerings, as we believe Sphere and AeroParker are key differentiators for us.

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Grow Our Business in Existing Geographic Markets. A component of our strategy is to capitalize on economies of scale and operating efficiencies by expanding our business in our existing geographic markets, especially in our core markets. As a given geographic market achieves a certain operational size, we will typically establish a local office in order to promote increased operating efficiency by enabling local managers to use a common staff for recruiting, training and human resources support. The concentration of our operating locations allows for increased operating efficiency and superior levels of customer service and retention through the accessibility of local managers and support resources.

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Increase Penetration in Our Current Industry Vertical Markets. We believe that a significant opportunity exists for us to further expand our presence into certain industry vertical markets, such as airports and aviation, colleges and universities, healthcare, municipalities, hospitality and events. In order to effectively target these markets, we have implemented a go-to-market strategy of aligning our business by operating segment, industry vertical markets and branding our domain expertise through our SP+, Sphere, SP+ GAMEDAY, AeroParker, MetroParker, KMP Digitata and Bags designations to highlight the specialized expertise, competencies, services and technology offerings that we provide to meet the needs of each particular industry and customer. Our recognized SP+ brand, which emphasizes our specialized market expertise and distinguishes our ancillary service lines from traditional parking under our operating divisions, SP+ Commercial and SP+ Aviation, with operations supporting airport, airline, cruise line ports, event, venue, healthcare, hospitality, university, residential and retail clients.

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Expand and Cross-Sell Additional Services to Drive Incremental Revenue. We believe we have significant opportunities to further strengthen our relationships with existing clients, and to attract new clients, by continuing to cross-sell value-added services that complement our core service operations. Bags is a leading provider of baggage, remote airline check-in, and other related services, primarily to airlines, airports, sea ports, cruise lines, hotels and resorts. Bags combines exceptional customer service with innovative technologies to provide value-add client and customer services. In addition, our AeroParker technology is a SaaS ecommerce platform that increases non-aeronautical revenues for major U.S. and European airports through pre-booked parking, revenue management and other sales products such as access to airport lounges. We believe there are opportunities to further cross-sell the aforementioned services that Bags and the AeroParker technology provides to our existing clients within the aviation, hospitality and commercial markets and to cross-sell parking services and ground transportation services and other ancillary services to our existing Bags and AeroParker clients. Our emphasis on these innovative services will continue to drive value with our clients and allow us to expand our footprint into multiple markets and geographies.

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Expand Our Geographic Platform. We believe that opportunities exist to further develop new geographic markets through new contracts, acquisitions, alliances, joint ventures or partnerships. Clients that outsource the management of their operations and professional services often have a presence in a variety of urban markets and seek to outsource the management of their operations to a national or international provider. We continue to focus on leveraging relationships with existing clients that have locations in multiple markets as one potential entry point into developing new core markets.

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Focus on Operational Efficiencies to Further Improve Profitability. We have invested substantial resources in information technology and regularly seek to consolidate various corporate functions where possible in order to improve our processes and service offerings. In addition, we will continue to evaluate and improve our human capital management to ensure a consistent and high-level of service for our clients. The initiatives undertaken to date in these areas have improved our cost structure and enhanced our financial strength, which we believe will continue to yield future benefits. Sphere Remote™ allows us to provide remote management services, whereby personnel are able to monitor revenue and other aspects of an operation and provide 24-hour-a-day customer assistance (including remedying equipment malfunctions at a facility) by using off-site personnel and equipment. We have begun expanding the facilities where our remote management technology is installed. Additionally, Sphere iQ™ reduces the dependency on local resources by providing remote support for daily revenue reporting and monthly billing maintenance, reducing the cost of local bookkeeping and allowing for increased focus on maximizing revenue. We expect these businesses to grow as clients focus on improving the profitability of their operations by decreasing labor costs at their locations through remote services.

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Pursue Opportunistic, Strategic Acquisitions. The outsourced professional services industry and technology solution providers serving the industry remain fragmented and presents a significant opportunity for us. Given the scale in our existing operating platform, we have a demonstrated ability to successfully identify, acquire and integrate strategic acquisitions. We will continue to selectively pursue acquisitions and joint venture investment opportunities that we believe will help us acquire scale or further enhance our service capabilities and technology solution offerings.

Business Development

We place a specific focus on marketing and relationship efforts that pertain to those clients or prospective clients having a large regional, national or international presence. Accordingly, we assign dedicated executives to these existing or prospective clients to manage the overall relationship, as well as to reinforce existing account relationships and to develop new relationships, as well as to take any other action that may further our business development interests.

Competition

We face competition from large and numerous smaller operators and technology solution providers, offering an array of services and technology solutions, which may include developers, hotels and resorts, airports, airlines, cruise lines, national services companies and other institutions that may elect to internally manage

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their own professional service offerings. Additionally, technological factors that improve ride-sharing capabilities increase the use of parking aggregators and the use of third-party technology-driven mobility solutions can impact our parking and parking management business. Some of our present and potential competitors have or may be able to obtain greater financial and marketing resources than we have, which may negatively impact our ability to retain existing contracts and gain new contracts. We also face significant competition in our efforts to provide ancillary services such as shuttle bus services and on-street parking enforcement because of the number of large companies that specialize in these services.

We compete for management type contract clients based on a variety of factors, including fees charged for services and technology solutions, providing a comprehensive suite of technology-driven mobility solutions, ability to generate revenues and control expenses for clients, accurate and timely reporting of operational results, providing high quality customer service and experience, and the ability to anticipate and respond to industry and technology related changes. Factors that affect our ability to compete for lease type contract locations include the ability to make financial commitments, long-term financial stability and the ability to generate revenues and control expenses. Factors affecting our ability to compete for employees include wages, benefits and working conditions.

Support Operations

We maintain regional and city offices throughout the United States, Canada, Puerto Rico, the United Kingdom and India. These offices serve as the centralized locations through which we provide the employees to staff our professional services, as well as the on-site and support management staff to oversee those operations. Our administrative staff is primarily based in those same offices and facilitate the efficient, accurate and timely production and delivery of client deliverables, such as monthly reporting and invoicing. Having these all-inclusive operations and administrative teams located in regional and city offices allows us to add new professional services for clients in a seamless and cost-efficient manner.

Our overall basic corporate functions in the areas of finance, human resources, risk management, legal, purchasing, general administration, strategy, and product and technology development are primarily based in our Chicago corporate office, as well as the Nashville support office. We also perform product and technology development at our subsidiary in India.

Employees

As of December 31, 2023, we employed approximately 19,900 individuals, including 13,100 full-time and 6,800 part-time employees. Approximately 31% of our employees are covered by collective bargaining agreements and represented by labor unions, which include various local operational employees. Various union locals represent operational employees in the following cities: Akron (OH), Arlington, Baltimore, Birmingham, Boston, Buffalo, Burbank, Chicago, Cincinnati, Cleveland, Dallas, Denver, Detroit, Kansas City, Las Vegas, Los Angeles, Manchester (NH), Meadowlands, Miami, New York City, Newark, Oakland, Ontario (Canada), Orlando, Oxon Hill, Philadelphia, Pittsburgh, Portland, Richmond, San Diego, San Francisco, San Jose, San Juan (Puerto Rico), Santa Monica, Seattle, Washington, D.C. and Windsor Locks.

We are frequently engaged in collective bargaining negotiations with various union locals. No single collective bargaining agreement covers a material number of our employees. We believe that our employee relations are generally healthy, as evidenced by higher than average rate of tenure and rate of internal promotions.

Central to our ability to execute on our business strategy is the commitment of our employees to delivering excellence in execution of all aspects of our day-to-day operations. We strive to create an inclusive environment which promotes diversity across our organization and a safe and engaging work environment where our employees have the opportunity to succeed and grow. Through our comprehensive development programs and talent management systems, our employees refine their skills and are able to access continued training and career development opportunities. In addition to base salary, our compensation and benefits programs are structured to retain and motivate our employees.

The health and safety of our employees is of paramount importance. Because the safety is the responsibility of everyone, each employee is expected to take all safety and health polices seriously and help enforce these policies within the workplace.

Insurance

We purchase comprehensive liability insurance covering certain claims that occur in the operations that we lease or manage, including coverage for general/garage liability, garage keepers legal liability and auto liability. In addition, we purchase workers' compensation insurance for all eligible employees and umbrella/excess liability coverage. Under our various liability and workers' compensation insurance policies, we are obligated to pay directly or reimburse the insurance carrier for the deductible / retention amount for each loss covered by our general/garage liability, automobile liability, workers' compensation and garage keepers legal liability policy. As a result, we are effectively self-insured for all claims up to the deductible / retention amount for each loss. We also purchase property insurance that provides coverage for loss or damage to our property and in some cases our clients' property, as well as business interruption coverage for lost operating income and certain associated expenses. Because of the size of the operations covered and our claims experience, we purchase insurance policies at prices that we believe represent a discount to the prices that would typically be charged to our clients on a stand-alone basis. The clients for whom we provide professional services pursuant to management type contracts have the option of purchasing their own liability insurance policies (provided that we are named as an additional insured party), but historically most of our clients have chosen to obtain insurance coverage by being named as additional insureds under our master liability insurance policies. Pursuant to our management type contracts, we charge those clients insurance-related costs.

We provide group health insurance with respect to eligible full-time employees (whether they work at leased facilities, managed facilities or in our support offices). We self-insure the cost of the medical claims for these participants up to a stop-loss limit. Pursuant to our management type contracts, we charge those clients insurance-related costs.

Regulation

Our business is subject to numerous federal, foreign, state and local laws and regulations. In some cases, foreign, municipal and state authorities directly regulate or impose extensive governmental restrictions concerning automobile capacity, pricing, structural integrity and certain prohibited practices. Additionally, many cities impose a tax or surcharge on parking services, which generally range from 10% to 50% of revenues collected. We collect and remit sales/parking taxes and file our own tax returns, as well as tax returns on behalf of our clients. We are affected by laws and regulations that may impose a direct assessment on us for failure to remit sales/parking taxes, or filing our own tax returns or filing tax returns on behalf of our clients.

Under various federal, foreign, state and local environmental laws, ordinances and regulations, a current or previous owner or operator of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in such property. Such laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. In connection with the operation of parking facilities, we may be potentially liable for any such costs.

Several foreign, state and local laws have been passed in recent years that encourage car-pooling and the use of mass transit or impose certain restrictions on automobile usage. These types of laws have adversely affected our revenues and could continue to do so in the future. For example, New York City and Boston imposed restrictions in the wake of terrorist attacks, which included street closures, traffic flow restrictions and a requirement for passenger cars entering certain

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bridges and tunnels to have more than one occupant during the morning rush hour. It is possible that cities could enact new or additional measures such as higher tolls, increased taxes and vehicle occupancy requirements in certain circumstances, which could adversely impact us. We are also affected by zoning and use restrictions and other laws and regulations that are common to any business that deals with real estate.

In addition, we are subject to laws generally applicable to businesses, including, but not limited to federal, foreign, state and local regulations relating to wage and hour matters, including minimum wage per hour laws and regulations imposed, employee classification, mandatory healthcare benefits, unlawful workplace discrimination, human rights laws and whistle blowing. Several cities in which we have operations either have adopted or are considering the adoption of so-called "living wage" ordinances, which could adversely impact our profitability by requiring companies that contract with local governmental authorities and other employers to increase wages to levels substantially above the federal minimum wage. In addition, we are subject to the provisions of the Occupational Safety and Health Act of 1970, as amended ("OSHA"), and related regulations. Any actual or alleged failure to comply with any regulation applicable to our business or any whistle-blowing claim, even if without merit, could result in costly litigation, regulatory action or otherwise harm our business, financial condition and results of operations.

In connection with ground transportation services and certain airline and cruise line transportation, baggage services and remote airline check-in services provided to our clients, the U.S. Department of Transportation, including the Transportation Security Administration (the "TSA"), the Federal Aviation Administration (the "FAA") and Department of Homeland Security, and various federal and state agencies, exercise broad powers over these certain transportation services, including shuttle bus operations, baggage delivery services, remote airline check-in, licensing and authorizations, safety, training and insurance requirements. Our employees must also comply with the various safety and fitness regulations promulgated by the U.S. Department of Transportation and other federal agencies, including those related to minimum training hours and requirements, drug and alcohol testing and service hours. We may become subject to new and more restrictive federal and state regulations. Compliance with such regulations may increase our operating costs.

Regulations by the FAA may affect our business. The FAA generally prohibits parking within 300 feet of airport terminals during times of heightened alert. The 300 feet rule and new regulations may prevent us from using a number of existing spaces during heightened security alerts at airports. Reductions in the number of parking spaces may reduce our operating income and cash flow.

Various other governmental regulations affect our operation of properties or facilities, both directly and indirectly, including the Americans with Disabilities Act (the "ADA"). Under the ADA, all public accommodations, including parking facilities, are required to meet certain federal requirements related to access and use by disabled persons. For example, the ADA requires parking facilities to include handicapped spaces, headroom for wheelchair vans, attendants' booths that accommodate wheelchairs and elevators that are operable by disabled persons. When negotiating contracts with clients, we generally require that the property owner contractually assume responsibility for any ADA liability in connection with the property or facility. There can be no assurance, however, that the property owner has assumed such liability for any given property or that we would not be held liable despite assumption of responsibility for such liability by the property owner. We believe that the parking facilities we operate are in substantial compliance with ADA requirements.

We are also subject to consumer credit laws and credit card industry rules and regulations relating to the processing of credit card transactions, including the Fair and Accurate Credit Transactions Act and the Payment Card Data Security Standard. These laws and industry standards impose substantial financial penalties for non-compliance.

Intellectual Property

SP Plus®, SP+® and the SP+ logo, SP+ GAMEDAY®, Sphere TM, Sphere Technology by SP+TM, Parking.comTM and the Parking.com logoTM, AeroParker®, MetroParkerTM, KMP DigitataTM, Standard Parking® and the Standard Parking logo, Central Parking System®, Central Parking Corporation®, USA Parking®, the Bags logo, and Making Every Moment Matter for a World on the GoTM, are some of the important trademarks and service marks utilized in our business. Where appropriate, we have also sought protection for the names and logos of our material subsidiaries and divisions with the United States Patent and Trademark Office or the equivalent state or foreign registry. We invented the Multi-Level Vehicle Parking Facility Musical Theme Floor Reminder System. We have also registered the copyright in our proprietary software, such as Client View©, Hand Held Program©, License Plate Inventory Programs© and ParkStat© with the United States Copyright Office. We also own the URLs parking.com, spplus.com, and maketraveleasier.com. We deem our registered service marks to be important, but not critical, to our business and marketing efforts.

Corporate Information

Our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) are available free of charge at www.spplus.com as soon as reasonably practicable after we file such material with, or furnish it to, the Securities and Exchange Commission ("SEC"). We provide references to our website for convenience, but our website is not incorporated into this or any of our other filings with the SEC.

Item 1A. Risk Factors

The following discussion of risk factors contains forward-looking statements. These risk factors may be important to understanding any statement in this Form 10-K or elsewhere. The following information should be read in conjunction with Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the Consolidated Financial Statements and related notes in Part IV, Item 15. "Exhibits and Financial Statement Schedules" of this Form 10-K.

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described below. Any one or more of such factors could directly or indirectly cause our actual results of operations and financial condition to vary materially from past or anticipated future results of operations and financial condition. Any of these factors, in whole or in part, could materially and adversely affect our business, financial condition, results of operations and stock price.

Because of the following factors, as well as other factors affecting our financial condition and operating results, past financial performance should not be considered to be a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods.

Risks related to our business and industry

We may fail to consummate the Merger, and uncertainties related to the consummation of the Merger may have a material adverse effect on our business, financial condition and results of operations.

The Merger is subject to the satisfaction of a number of conditions beyond our control. Failure to satisfy the conditions to the Merger could prevent or delay the completion of the Merger. If the Merger does not receive, or timely receive, the required regulatory approvals and clearances, including anti-trust clearance under the Hart-Scott-Rodino Act, the completion of the Merger may be delayed or prevented. If the Merger does not close, we may experience other consequences that

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could adversely affect our business, financial condition, operating results and stock price. Our stockholders could be exposed to additional risks, including, but not limited to the following:

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to the extent that the current market price of our common stock reflects an assumption that the Merger will be completed, the market price of our common stock could decrease if the Merger is not completed;

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investor confidence in us could decline, stockholder litigation could be brought against us, relationships with existing and prospective customers, service providers, investors, lenders and other business partners may be adversely impacted;

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we may be unable to retain key personnel, and our operating results may be adversely impacted due to costs incurred in connection with the Merger;

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we have incurred, and will continue to incur, significant expenses for professional services in connection with the Merger for which we will have received little or no benefit if the Merger is not consummated; and

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any disruptions to our business resulting from the pending Merger, including adverse changes in our relationships with customers, suppliers, partners and employees, could potentially continue or intensify in the event the Merger is not consummated or is significantly delayed.

In addition, the efforts and costs to satisfy the closing conditions of the Merger may place a significant burden on management and internal resources, and the Merger and related transactions whether or not consummated, may result in a diversion of management's attention from day-to-day operations. Any significant diversion of management's attention away from ongoing business and difficulties encountered in the Merger process could have a material adverse effect on our business, results of operations and financial condition.

We are subject to intense competition that could constrain our ability to gain business and adversely impact our profitability.

Competition is intense in the parking facility management, valet, ground transportation service, event management, technology-driven mobility solutions and baggage delivery businesses including other ancillary services that we offer. Providers of similar services have traditionally competed on the basis of cost and quality of service. As we have worked to establish ourselves as a leader in the industries in which we operate, we compete predominately on the basis of high levels of service and strong relationships. We may not be able to, or may choose not to compete with certain competitors on the basis of price. As a result, a greater proportion of our clients may switch to other service providers or elect to self-manage the services we provide.

The low cost of entry into these businesses has led to strongly competitive, fragmented markets consisting of various sized entities, ranging from small local or single operators to large regional and national businesses and multi-facility operators, as well as governmental entities and companies that can perform for themselves one or more of the services we provide. Regional and local-owned and operated companies may have additional insights into local or smaller markets and significantly lower labor and overhead costs, providing them with a competitive advantage in those regards. Competitors may also be able to adapt more quickly to changes in customer requirements, devote greater resources to the promotion and sale of their services or develop technology that is as or more successful than our technology.

We provide nearly all of our services under contracts, many of which are obtained through competitive bidding, and many of our contracts require that our clients pay certain costs at specified rates. Our management type contracts are typically for a term of one to three years, although the contracts may be terminated by the client, without cause, on 30-days' notice or less, giving clients regular opportunities to attempt to negotiate a reduction in fees or other allocated costs. Any loss of a significant number of clients could, in the aggregate, materially adversely affect our operating results. We may experience higher operating costs related to changes in laws and regulations regarding employee benefits, employee minimum wage, and other entitlements promulgated by federal, state and local governments or as a result of increased local wages necessary to attract employees due to changes in the unemployment rate. If actual costs exceed the rates specified in the contacts or we are unable to renegotiate our specified rates in our contracts, our profitability may be negatively affected. Furthermore, these strong competitive pressures could impede our success in bidding for profitable business and our ability to maintain or increase prices even as costs rise, thereby reducing margins.

Changing consumer preferences and legislation affecting our industry or related industries may lead to a decline in parking demand, which could have a material adverse impact on our business, financial condition and results of operations.

While we devote considerable effort and resources to analyzing and responding to consumer preferences and changes in the markets in which we operate, consumer preferences cannot be predicted with certainty and can change rapidly. Changes in consumer behaviors, including the use of mobile phone applications and on-line parking reservation services that help drivers reserve parking with garage, lots and individual owner spaces, cannot be predicted with certainty and could change current customers' parking preferences, which may have an impact on the price customers are willing to pay for our services. In addition, demand for ride share services, such as Uber and Lyft, and car sharing services, like Zipcar, along with the potential for driverless cars, may lead to a decline in parking demand in cities and urban areas. Additionally, urban congestion and congestion pricing due to state and local laws that have been or may be passed encouraging carpooling and use of mass transit systems or the aforementioned ride sharing services, may negatively impact parking demand and pricing that a customer would be willing to pay for our services. If we are unable to anticipate and respond to trends in the consumer marketplace and the industry, including, but not limited to, market displacement by livery service companies, car sharing companies and changing technologies, we could experience a material and adverse impact on our business, financial condition and results of operations. In addition, several state and local laws have been passed in recent years that encourage the use of carpooling and mass transit. In the future, local, state and federal environmental regulatory authorities may pursue or continue to pursue, measures related to climate change and greenhouse gas emissions which may have the effect of decreasing the number of cars being driven. Such laws or regulations could adversely impact the demand for our services and our business.

Our business success depends on our ability to preserve client relationships.

We primarily provide services pursuant to agreements that are cancelable by either party upon 30-days’ notice. As we generally incur initial costs on new contracts, our business associated with long-term client relationships is generally more profitable than short-term client relationships. Managing our existing client relationships, including those client relationships acquired as part of a business acquisition, is an important factor in contributing to our business success. If we lose a significant number of existing clients, or fail to win new clients, our profitability could be negatively impacted, even if we gain equivalent revenues from new clients or through client relationships obtained through acquisitions.

We may have difficulty obtaining, maintaining or renewing coverage for certain insurable risks or coverage for certain insurable risks at a reasonable cost to us or at all.

We use a combination of insured and self-insured programs to cover workers' compensation, general/garage liability, automobile liability, property damage, healthcare and other insurable risks, and we provide liability and workers' compensation insurance coverage, consistent with our obligations to our clients under our various contracts. We are responsible for claims in excess of our insurance policies' limits, and, while we endeavor to purchase insurance coverage that is appropriate to our assessment of risk, we are unable to predict with certainty the frequency, nature or magnitude of claims or direct or consequential damages. If our insurance proves to be inadequate or unavailable, our business may be negatively affected.

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Recent consolidation within the insurance industry could impact our ability to obtain or renew policies at competitive rates. Should we be unable to obtain or renew our excess, umbrella or other commercial insurance policies at competitive rates, it could have a material adverse impact on our business, as would the occurrence of catastrophic uninsured claims or the inability or refusal of our insurance carriers to pay otherwise insured claims.

We are subject to volatility associated with our high deductible and high retention insurance programs, including the possibility that changes in estimates of ultimate insurance losses could result in material charges against our operating results.

We are obligated to reimburse our insurance carriers for, or pay directly, each loss incurred up to the amount of a specified deductible or self-insured retention amount. We also purchase property insurance that provides coverage for loss or damage to our property and, in some cases, our clients' property, as well as business interruption coverage for lost operating income and certain associated expenses. The deductible or retention applicable to any given loss under the property insurance policies varies based upon the insured values and the peril that causes the loss. Our financial statements reflect our funding of all such obligations based upon guidance and evaluation received from third-party insurance professionals. However, our actual obligations at any particular time may exceed the amount presently funded or accrued, in which case we would need to set aside additional funds to reserve for any such excess.

The determination of required insurance reserves is dependent upon significant actuarial judgments. We use the results of actuarial studies to estimate insurance rates and reserves for future periods and adjust reserves as appropriate for the current year and prior years. Changes in insurance reserves as a result of periodic evaluations of the liabilities can cause swings in operating results that may not be indicative of the performance of our ongoing business. Actual experience related to our insurance reserves can cause us to change our estimates for reserves, and any such changes may materially impact our results of operations, causing volatility in our operating results. Additionally, our obligations could increase if we receive a greater number of insurance claims, or if the severity of, or the administrative costs associated with, those claims materially increases.

Further, to the extent that we self-insure our losses, deterioration in our loss control and/or our continuing claim management efforts could increase the overall costs of claims within our retained limits. A material change in our insurance costs due to changes in the frequency of claims, the severity of claims, the costs of excess/umbrella premiums, regulatory changes or consolidation within the insurance industry could have a material adverse effect on our financial position, results of operations or cash flows.

Because of the size of the operations covered and our claims experience, we purchase insurance policies at prices that we believe represent a discount to the prices that would typically be charged to clients on a stand-alone basis. The clients for whom we provide professional services pursuant to management type contracts have the option of purchasing their own liability insurance policies (provided that we are named as an additional insured party). Historically, most of our clients have chosen to obtain insurance coverage by being named as additional insureds under our master liability insurance policies. Pursuant to our management type contracts, we charge those clients an allocated portion of our insurance-related costs. Our inability to purchase such policies at competitive rates or charge clients for such insurance-related costs, could have a material adverse effect on our financial position, results of operations or cash flows.

We do not maintain insurance coverage for all possible risks.

We maintain a comprehensive portfolio of insurance policies to help protect us against loss or damage incurred from a wide variety of insurable risks. Each year, we review with our third-party insurance advisers whether the insurance policies and associated coverages that we maintain are sufficient to adequately protect us from the various types of risk to which we are exposed in the ordinary course of business. That analysis takes into account various pertinent factors such as the likelihood that we would incur a material loss from any given risk, as well as the cost of obtaining insurance coverage against any such risk. We are responsible for claims in excess of our insurance policies' limits, and, while we endeavor to purchase insurance coverage that is appropriate to our assessment of risk, we are unable to predict with certainty the frequency, nature or magnitude of claims or direct or consequential damages, including, in particular, due to unforeseen events, such as natural disasters, severe weather conditions, pandemic outbreaks and acts of terrorism and other geopolitical events. In addition, we may sustain material losses resulting from an event or occurrence where our insurance coverage is believed to be sufficient, but such coverage is either inadequate or we cannot access the coverage. Furthermore, our business interruption insurance, may not provide sufficient coverage, if any, for losses we incur in connection with these events, in addition to other specified exclusions. These scenarios may result in a material adverse impact on our results of operations.

Risks relating to our acquisition strategy may adversely impact our results of operations.

In the past, a significant portion of our growth has been generated by acquisitions. Any acquisition we make may not provide us with any of the benefits that we anticipated or anticipate when entering into such transaction, particularly acquisitions in adjacent professional services. The process of integrating an acquired business may create unforeseen difficulties and expenses. The areas in which we may face risks in connection with any potential acquisition of a business include, but are not limited to:

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failure of the acquired business to perform in-line with our expectations or acquisition models;

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revenue synergies and our ability to cross-sell service offerings to existing clients may be different than our expectations;

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costs of integrating the business or synergies anticipated could be different than our expectations;

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our time and focus may be diverted from operating our business to acquisition integration;

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the time frame for integration could be delayed and the related costs may exceed our expectations;

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clients or key employees of an acquired business may not remain, which could negatively impact our ability to grow that acquired business;

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integration of the acquired business’s accounting, information technology, human resources and other administrative systems may fail to permit effective management and expense reduction;

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an acquired entity may not have in place all the necessary controls as required by the SEC and the Public Company Accounting Oversight Board, and implementing such controls, procedures, and policies may fail;

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integrating financial reporting policies in compliance with the SEC's requirements and the requirements of other regulatory bodies may result in increased costs, time and resources spent on or by our financial personnel;

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integrating an acquired entity into our internal control over financial reporting may require and continue to require significant time and resources from our management and other personnel and may increase our compliance costs;

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additional indebtedness incurred as a result of an acquisition may adversely impact our financial position, results of operations and cash flows;

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we may be subject to additional compliance and other regulatory requirements as a result of an acquired business, including in connection with any new products or services we offer; and

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unanticipated or unknown liabilities may arise relating to an acquired business.

We are increasingly dependent on information technology, and potential disruption, cyber-attacks, cyber-terrorism and security breaches to our technology, or our third-party providers and clients, or the compromise of our data, present risks that could materially harm our business.

We are increasingly dependent on automated information technology systems to manage and support a variety of business processes and activities. In addition, a portion of our business operations is conducted electronically, increasing the risk of attack or interception that could in the future cause loss or misuse of data, system failures, disruption of operations, unauthorized malware, computer or system viruses, or the compromise of data, such as theft of intellectual property or

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inappropriate disclosure of confidential, proprietary or personal information. Such disruptions could have a material impact on our business, however, disruptions that have occurred have not been material or negatively impacted on our business.

Furthermore, the controls and procedures that we have in place may not be sufficient to protect us from security breaches. Improper activities by third parties, exploitation of encryption technology, new data-hacking tools and discoveries and other events or developments can result in a compromise or breach of our networks, payment card terminals or other payment systems. In particular, the techniques used by criminals to obtain unauthorized access to sensitive data change frequently and often are not recognized until they have been deployed against a target. Accordingly, we may be unable to anticipate these techniques or implement adequate preventative measures.

Additionally, our systems are subject to damage or interruption from system conversions, power outages, computer or telecommunications failures, computer viruses and malicious attack, security breaches and catastrophic events. If our systems are damaged or fail to function properly, we may incur substantial repair and/or replacement costs, experience data loss or theft and impediments to our ability to manage customer transactions, which could materially adversely affect our business and our results of operations. The occurrence of acts of cyber terrorism, such as website defacement, denial of automated payment services, sabotage of our proprietary on-demand technology or the use of electronic social media to disseminate unfounded or otherwise harmful allegations to our reputation, could have a material adverse effect on our business. Any disruptions to our information technology systems, breaches or compromise of data and/or misappropriation of information could result in lost sales, negative publicity, litigation, violation of privacy laws, business interruptions or damage to our reputation that, in turn, could materially negatively impact our financial condition and results of operations. Our insurance coverage may be insufficient to cover all losses potentially incurred and would not remedy any damage to our reputation.

We do not have control over security measures taken by third-party vendors hired by our clients to prevent unauthorized access to electronic and other confidential information. There can be no assurance third-party vendors will not suffer an attack in the future in which unauthorized parties gain access to personal financial information of individuals associated with our Company, our clients or our client's customers, and any such incident may not be discovered and remedied in a timely manner, or at all.

Our risk management and safety programs may not have the intended effect of allowing us to reduce our insurance costs.

We attempt to mitigate our business and operating risks through the implementation of Company-wide safety and loss control programs designed to decrease the incidence of accidents or events that might increase our exposure or liability. However, our insurance coverage may not be adequate, despite our implementation of Company-wide safety and loss control efforts, or may be inaccessible in certain instances, either of which would result in additional costs to us and may adversely impact our results of operations.

Our contracts expose us to certain risks.

The loss or renewal on less favorable terms of a substantial number of contracts could have a material adverse effect on our business, financial condition and results of operations. A material reduction in the operating income associated with the integrated services we provide under our contracts could have a material adverse effect on our business, financial condition and results of operations. Our management type contracts are typically for a term of one to three years, although the contracts may be terminated, without cause, on 30-days' notice or less, giving clients regular opportunities to attempt to negotiate a reduction in fees or other allocated costs. Any loss of a significant number of clients could in the aggregate materially adversely affect our operating results.

We are particularly exposed to increases in costs for locations that we operate under lease type contracts because we are generally responsible for all the operating expenses of our leased locations. Typically, during the first and fourth quarters of each year, seasonality generally impacts our performance with regard to moderating revenues, with the reduced levels of travel most clearly reflected in the parking activity associated with our aviation and hotel businesses, as well as increases in certain costs of parking services, such as snow removal, all of which can negatively affect operating income.

Deterioration in economic conditions in general could reduce the demand for our services and, as a result, reduce our earnings and adversely affect our financial condition.

Adverse changes in global, national and local economic conditions could have a negative impact on our business. Adverse economic conditions, including inflation and rising interest rates, may result in our client's customers reducing their discretionary spending, which includes travel and leisure spending. Because a portion of our revenue is tied to the volume of airline passengers, hotel guests, retail shoppers and sporting event attendees, our business could be adversely impacted by the curtailment of business travel, personal travel or discretionary spending caused by unfavorable changes in economic conditions and/or consumer confidence. Adverse changes in local, regional, national and international economic conditions could depress prices for our services or cause clients to cancel agreements for the services we provide to our clients and their customers.

In addition, the majority of our business tends to be concentrated in large urban areas. Many of our customers are workers who commute by car to their places of employment in these urban areas or who use services in the travel, leisure and hospitality industry. Our business could be materially adversely affected to the extent that weak economic conditions or demographic factors could result in the elimination of jobs and high unemployment in the large urban areas where our business is concentrated. In addition, increased unemployment levels, increased office vacancies in urban areas, movement toward home office or “work from home” alternatives or lower consumer spending could reduce demand for our services.

Global or large-scale pandemics could have a negative effect on the global economy and the financial markets, which has had and could in the future have an adverse effect on our business, financial condition and results of operations.

If a pandemic or similar occurrence, or general economic weakness causes deterioration for the travel, leisure and hospitality industry or the other industries to which we provide services, we may not be able to expand the geographies in which we provide our services or acquire businesses that may enable us to expand or otherwise execute our strategic growth plan. Such events have caused, and could in the future cause us to incur additional expenses in light of the public health implications, including additional or accelerated investments in technology solutions which may be mandated by local, state, federal, foreign or other governmental authorities or by recommendations from the Centers for Disease Control and Prevention.

Labor disputes could lead to loss of revenues or expense variations.

When one or more of our major collective bargaining agreements becomes subject to renegotiation or we face union organizing drives, we may disagree with the union on important issues that, in turn, could lead to a strike, work slowdown or other job actions. We may not be able to renew existing labor union contracts on acceptable terms, particularly during times of economic distress, and, in such cases, we may not be able to staff sufficient employees for our short-term needs. A strike, work slowdown or other job action could in some cases disrupt our ability to provide services, resulting in reduced revenues. If declines in client service occur or if our clients are targeted for sympathy strikes by other unionized workers, contract cancellations could result. Negotiating a first-time agreement or renegotiating an existing collective bargaining agreement could result in a substantial increase in labor and benefits expenses that we may be unable to pass through to clients. In addition, potential legislation could make it significantly easier for union organizing drives to be successful and could give third-party arbitrators the ability to impose terms of collective bargaining agreements upon us and a labor union if we are unable to agree with such union on the terms of a collective

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bargaining agreement. At December 31, 2023, approximately 31% of our employees were represented by labor unions and approximately 13% of our collective bargaining contracts are up for renewal in 2024, representing approximately 22% of our employees. In addition, at any given time, we may face a number of union organizing drives. In a market where we are unionized but our competitors are not unionized, we may lose clients as a result. Moreover, negotiating first-time collective bargaining agreements or renewing existing agreements, could result in substantial increases in labor and benefit costs that we may not be able to pass through to clients.

In addition, we make contributions to multi-employer benefit plans on behalf of certain employees covered by collective bargaining agreements, and we could be responsible for paying unfunded liabilities incurred by such benefit plans, which could be material. If we become responsible for any such liability or liabilities, we could experience a material adverse impact on our results of operations and financial condition.

Catastrophic events could disrupt our business and services.

Catastrophic events, including natural disasters, severe weather conditions, pandemic outbreaks and acts of terrorism or other geopolitical events, have in the past, and may again in the future, cause economic dislocations throughout the geographies we operate in, lead to reduced levels of travel and result in an increase in certain costs of providing parking and remote bag check-in and handling services, any of which could negatively affect the use of our services and our operating income. In addition, terrorist attacks have resulted in, and may continue to result in, increased government regulation of airlines and airport facilities, including the imposition of minimum distances between parking facilities and terminals, resulting in the elimination of parking facilities we manage. We derive a significant percentage of our operating income from parking facilities and parking related services in and around airports. The FAA generally prohibits parking within 300 feet of airport terminals during periods of heightened security. Although the prohibition is not currently in effect, it may be reinstated in the future. The existing regulations governing parking within 300 feet of airport terminals during a period of heightened security or future regulations may prevent us from using certain parking spaces. Reductions in the number of parking spaces and air travelers may reduce our revenue and cash flow from both our leased facilities and those facilities and contracts we operate under management type contracts.

Because our business is affected by weather-related trends, typically in the first and fourth quarters of each year, our results may fluctuate from period to period, which could make it difficult to evaluate our business.

Weather conditions, including fluctuations in temperatures, snow or severe weather storms, heavy flooding, hurricanes or natural disasters, can negatively impact portions of our business. We have from time to time experienced fluctuations in our quarterly results arising from a number of factors, including the following:

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reduced levels of travel during and as a result of severe weather conditions, which is reflected in lower revenue from our services; and

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increased cost of services, such as snow removal and longer delivery times for our baggage delivery services.

These factors have typically had negative impacts to our operating income and could cause operating income reductions in the future. Fluctuations in our results could make it difficult to evaluate our business or cause instability in the market price of our common stock.

There are risks associated with operations outside the United States

We have operations outside the United States. As such, we are subject to risks inherent in conducting our business outside the United States. The economic environment in which we operate may become volatile and we could be impacted by changes in foreign exchange rates, tax or other regulatory changes in the countries in which we have operations. In addition, we may have difficulties managing our international operations across different geographic areas and cultures, including assuring compliance with the U.S. Foreign Corrupt Practices Act and other U.S. and foreign anti-corruption laws. Any of these issues could have a material adverse impact on our business, financial condition and results of operations.

State and municipal government clients may sell or enter into long-term lease type contracts of parking-related assets with our competitors or property owners and developers may redevelop existing locations for alternative uses.

In order to raise additional revenue, a number of state and municipal governments have either sold or entered into long-term lease type contracts of public assets or may be contemplating such transactions. The assets that are the subject of such transactions have included government-owned parking garages located in downtown commercial districts and parking operations at airports. The sale or long-term leasing of such government-owned parking assets to our competitors or clients of our competitors could have a material adverse effect on our business, financial condition and results of operations.

Additionally, property owners and developers may elect to redevelop existing locations for alternative uses other than parking or significantly reduce the number of existing spaces used for parking at those facilities. Reductions in the number of parking spaces or potential loss of contracts due to redevelopment by property owners may reduce our operating income and cash flow for both our lease type contracts and those facilities or contracts we operate under management type contracts.

We have investments in joint ventures and may be subject to certain financial and operating risks with our joint venture investments.

We have acquired or invested in a number of joint ventures, and may acquire or enter into joint ventures with additional companies. These transactions create risks such as:

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additional operating losses and expenses in the businesses acquired or joint ventures in which we have made investments;

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potential unknown liabilities associated with a company we may acquire or in which we invest;

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requirements or obligations to commit and provide additional capital, equity or credit support as required by the joint venture agreements;

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inability of the joint venture partner to (1) perform its obligations as a result of financial or other difficulties or (2) provide additional capital, equity or credit support under the joint venture agreements; and

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disruption of our ongoing business, including loss of our focus on the business.

As a result of future acquisitions or joint ventures in which we may invest, we may need to issue additional equity securities, spend our cash, or incur debt and contingent liabilities, any of which could reduce our profitability and harm our business. In addition, valuations supporting our acquisitions or investments in joint ventures could change rapidly given the global economic environment. We could determine that such valuations have experienced impairments, resulting in other-than-temporary declines in fair value that could adversely impact our financial results.

Risks related to legal and regulatory matters

Adverse litigation judgments or settlements resulting from legal proceedings in which we may be involved could adversely affect our operations and financial condition.

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In the normal course of business, we are from time to time involved in various legal proceedings, including class action litigation. The outcome of these and any other legal proceedings cannot be predicted. It is possible that an unfavorable outcome of some or all of the legal proceedings could cause us to incur substantial liabilities that may have a material adverse effect on our financial condition and results of operations. Any significant adverse litigation, judgments or settlements could have a negative effect on our business, financial condition and results of operations. Because our business employs a significant number of employees, we incur risks that these individuals will make claims against us for violating various employment-related federal, foreign, state and local laws. Some or all of these claims may lead to litigation, including class action litigation, and there may be negative publicity with respect to any alleged claims. Additionally, we are subject to legal and regulatory risks in the states and foreign countries where we have employees, including, for example, if there are new or unanticipated judicial interpretations of existing laws and those interpretations are applied to employers on a retroactive basis.

We operate in a highly regulated environment, and our compliance with laws and regulations, including any changes thereto, or our non-compliance with such laws and regulations, may impose significant costs on us.

Under various federal, state and local environmental laws, ordinances and regulations, current or previous owners or operators of real property may be liable for the costs of removal or remediation of hazardous or toxic substances on, under or in their properties. This could apply to properties we either own or operate. These laws typically impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of such hazardous or toxic substances. We may be potentially liable for such costs as a result of our operation of parking facilities. Additionally, we hold a partial ownership interest in four parking facilities, and companies that we previously acquired may have owned a large number of properties that we did not acquire. We may be held liable for certain costs as a result of such previous and current ownership. In addition, from time to time we are subject to legal claims and regulatory actions involving environmental issues at certain locations or otherwise in connection with our operations. The cost of defending against claims of liability, or remediation of a contaminated property, could have a material adverse effect on our business, financial condition and results of operations.

In connection with ground transportation services and certain transportation and baggage services provided to our clients, including shuttle bus operations, baggage handling and delivery services and remote airline check-in services, the U.S. Department of Transportation, including the TSA and Department of Homeland Security, and various federal and state agencies exercise broad powers over these transportation and baggage related services, including, licensing and authorizations, safety, training and insurance requirements. Our employees must also comply with the various safety and fitness regulations promulgated by the U.S. Department of Transportation and other federal agencies, including those related to minimum training hours and requirements, drug and alcohol testing and service hours. We may become subject to new and more restrictive federal and state regulations. Compliance with such regulations could hamper our ability to provide qualified drivers and increase our operating costs. Our compliance with any new rules and regulations, directives, anticipated rules or other forms of regulatory oversight may have a material adverse effect on our business, financial condition or results of operations.

In addition, we are subject to laws generally applicable to businesses, including, but not limited, to federal, foreign, state and local regulations relating to data privacy, wage and hour matters, employee classification, mandatory healthcare benefits, unlawful workplace discrimination and whistle blowing. Any actual or alleged failure to comply with any regulation applicable to our business or any whistle-blowing claim, even if without merit, could result in costly litigation, regulatory action or otherwise harm our business, financial condition and results of operations.

We collect and remit sales/parking taxes and file our own tax returns and tax returns on behalf of our clients. We are affected, and may in the future be affected, by laws and regulations that may impose a direct assessment on us for failure to remit sales/parking taxes and filing our tax returns and tax returns on behalf of our clients.

We cannot predict changes in laws and regulations made by federal, foreign, state or local governments. Any such changes may pose additional regulatory burden and costs on our business or otherwise adversely affect our results of operations.

Rising healthcare costs may adversely affect our business and results of operations.

We provide healthcare and other benefits to employees. In certain circumstances, we charge our clients insurance-related costs. Costs for health care have generally increased more rapidly than general inflation in the U.S. economy. If this trend in health care continues and we are unable to raise the rates we charge our clients to cover expenses incurred due to the Patient Protection and Affordable Care Act or other healthcare initiatives, our operating income could be negatively impacted.

Changes in tax laws or rulings could materially affect our financial position, results of operations, and cash flows.

We are subject to income and other tax laws in the United States (federal, state and local) and other foreign jurisdictions, which include Canada, Puerto Rico, the United Kingdom and India. Changes in tax laws, regulations, tax rulings, administrative practices or changes in interpretations of existing laws, could materially affect our business. Due to economic and political conditions, tax rates in various jurisdictions may be subject to significant change, with or without notice, and our effective tax rate could be affected by changes in the mix of earnings in countries with differing statutory tax rates or changes in tax laws or their interpretation, including in the United States (federal, state and local) and the other foreign jurisdictions in which we operate. Our income tax expense, deferred tax assets and liabilities and our effective tax rates could be affected by numerous factors, including the relative amount of our foreign earnings, including earnings being lower than anticipated in jurisdictions where we have lower statutory rates and higher than anticipated in jurisdictions where we have higher statutory rates, the applicability of special tax regimes, losses incurred in jurisdictions for which we are not able to realize the related tax benefit, entry into new businesses or geographies, changes to our existing business and operations, acquisitions and investments and how they are financed and changes in the relevant tax, accounting and other tax law regulations, administrative practices, principles and interpretations. Additionally, adverse changes in the underlying profitability and financial outlook of our operations or changes in tax law, as discussed above, could lead to changes in our valuation allowances against deferred tax assets on our consolidated balance sheets, which could materially affect our results of operations.

We are also subject to tax audits and examinations by governmental authorities in the United States (federal, state and local) and other foreign jurisdictions in which we operate. We regularly assess the likelihood of an adverse outcome resulting from these examinations to determine the adequacy of our provision for taxes, but our assessments as to the outcome of such tax audits and examinations involve a number of assumptions and may ultimately prove to be incorrect. Negative unexpected results from one or more such tax audits or examinations or our failure to sustain our reporting positions on examination could have an adverse effect on our results of operations and our effective tax rate.

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Risks related to our liquidity and capital resources

Interest rate changes could have a material adverse effect on our results of operations.

We are exposed to interest rate risks primarily as a result of our borrowings and investing activities, which include long-term borrowings used to maintain liquidity and fund our business and capital requirements. The nature and amount of our debt may vary from time to time as a result of business requirements, market conditions, and other factors.

On April 21, 2022, we entered into a fifth amendment (the “Fifth Amendment”) to our Amended Credit Agreement (as defined in Note 11. Borrowing Arrangements), pursuant to which the Lenders have made available to us a senior secured credit facility (the “Senior Credit Facility”). The Senior Credit Facility bears interest at a forward-looking SOFR term interest rate administered by Chicago Mercantile Exchange (“Term SOFR”). Our interest expense could increase due to changes in the Term SOFR rate and our available cash flow for general corporate requirements may be adversely affected. In addition, there remains uncertainty as to the longer-term impact of the adoption of Term SOFR and other alternative reference rates, which could affect our overall financial condition or results of operations.

Impairment charges could have a material adverse effect on our financial condition and results of operations.

Goodwill represents the excess of the purchase price of acquired businesses over the fair values of the assets acquired and liabilities assumed. October 1st is our annual impairment assessment date for goodwill. However, we could be required to evaluate the recoverability of goodwill prior to the annual assessment if we experience a significant under-performance relative to expected historical or projected future operating results, significant changes in the use of acquired assets or our business strategy, or significant negative industry or economic trends. The goodwill impairment test is performed at the reporting unit level. If the fair value of one of our reporting units is less than its carrying value, we would record impairment for the excess of the carrying amount over the implied fair value. The valuation of our reporting units requires significant judgment in evaluation of recent indicators of market activity and estimated future cash flows, discount rates, and other factors. Future events may indicate differences from our judgments and estimates which could, in turn, result in impairment charges. Future events that may result in impairment charges include economic volatility, increases in interest rates, which would impact discount rates, or other factors which could decrease revenues and profitability of our reporting units and changes in the cost structure of existing facilities.

We evaluate our long-lived assets, including lease right-of-use (“ROU”) and intangible assets, for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. These events and circumstances include, but are not limited to, a current expectation that a long-lived asset will be disposed of significantly before the end of its previously estimated useful life, a significant adverse change in the extent or manner in which we use a long-lived asset or asset group, a change in a long-lived asset’s physical condition or a projection or forecast that demonstrates continuing losses associated with the use of the long-lived asset or asset group. When this occurs, a recoverability test is performed that compares the projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying amount. If we conclude that the projected undiscounted cash flows are less than the carrying amount, impairment would be recorded for the excess of the carrying amount over the estimated fair value. See Notes 1. Significant Accounting Policies and Practices and Note 3. Leases to our Consolidated Financial Statements for further discussion.

Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any future changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets or asset groups and could result in additional impairment charges. Future events that may result in impairment charges include economic volatility or other factors which could decrease revenues and profitability of existing locations and changes in the cost structure of existing facilities.

We have incurred indebtedness, and we may incur indebtedness in the future, which could adversely affect our financial condition.

Our Amended Credit Agreement provides for a Senior Credit Facility that includes a $400.0 million revolving credit facility and a $200.0 million term loan that is scheduled to mature in April 2027. The Senior Credit Facility is secured by a lien on all of our assets. In connection with our Amended Credit Agreement, the negative and financial covenants in the Credit Agreement were amended and some additional covenants were added, as described in Note 11. Borrowing Arrangements. Failure to comply with covenants or to meet payment obligations under our Senior Credit Facility could result in an event of default which, if not cured or waived, could result in the acceleration of outstanding debt obligations.

We may incur additional indebtedness in the future, which could cause the related risks to intensify. We may need to refinance all or a portion of our indebtedness on or before their respective maturities. We may not be able to refinance any of our indebtedness, including indebtedness under our Senior Credit Facility, on commercially reasonable terms or at all. If we are unable to refinance our debt, we may default under the terms of our indebtedness, which could lead to an acceleration of the repayment of outstanding debt. We do not expect that we could repay all of our outstanding indebtedness if the repayment of such indebtedness was accelerated. If adequate capital is not available to us and our internal sources of liquidity prove to be insufficient, or if future financings require more restrictive covenants, such combination of events could adversely affect our ability to (i) acquire new businesses or enter new markets, (ii) service or refinance our existing debt, (iii) make necessary capital investments and (iv) make other expenditures necessary for the ongoing conduct of our business.

In addition, the terms of future debt agreements and amendments to our existing debt agreements could include more restrictive covenants, which may further restrict our business operations or cause future financing to be unavailable due to our covenant restrictions then in effect.

Our ability to maintain and expand our business will be dependent upon the availability of adequate capital.

The ability to maintain and expand our business will depend, in part, on the availability of adequate capital, which in turn will depend, in large part, on cash flow generated by our business and the availability of equity and debt capital. As a result, we may not have the ability to obtain adequate capital to maintain and expand our business.

The financial difficulties or bankruptcy of one or more of our major clients could adversely affect our results.

Future revenue and our ability to collect accounts receivable depend in part on the financial strength of our clients. We estimate an allowance for doubtful accounts, which adversely impacts profitability. In the event that any of our clients experience financial difficulty, become unable to obtain financing or seek bankruptcy protection, our profitability could be impacted by our inability to collect accounts receivable in excess of the estimated allowance. Additionally, our future revenue could be reduced by the loss of any such clients or by the cancellation of contracts by clients in bankruptcy.

The sureties for our performance bond program may elect not to provide us with new or renewal performance bonds for any reason.

As is customary in the industry, a surety provider can refuse to provide a bond principal with new or renewal surety bonds. If any existing or future surety provider refuses to provide us with surety bonds, either generally or because we are unwilling or unable to post collateral at levels sufficient to satisfy the surety's requirements, we may not be able to find alternate providers on acceptable terms, or at all. Our inability to provide surety bonds could also result in the loss of

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existing contracts. Failure to find a provider of surety bonds, and our resulting inability to bid for new contracts or renew existing contracts, could have a material adverse effect on our business and financial condition.

General risk factors

Our business success depends on retaining senior management and attracting and retaining qualified personnel.

Our future performance depends on the continuing services and contributions of our senior management to execute on our acquisition and growth strategies and to identify and pursue new opportunities. Our future success also depends, in large part, on our continued ability to attract and retain qualified personnel. Any unplanned turnover in senior management or the inability to attract and retain qualified personnel could have a negative effect on our results of operations.

Additionally, we must attract, train and retain a large and growing number of qualified employees while controlling labor costs. Our ability to control labor costs is subject to numerous internal and external factors, including changes in immigration policy, regulatory changes, prevailing wage rates, and competition we face from other companies to attract and retain qualified employees. We may not be able to attract and retain qualified employees in the future, which could have a material adverse effect on our business, financial condition and results of operations.

Climate change may have a long-term impact on our business.

There are inherent climate-related risks wherever our business is conducted. Changes in market dynamics, stakeholder expectations, local, national and international climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure in the United States and abroad, all have the potential to disrupt our business. Such events could result in a significant increase in our costs and expenses and harm our future revenue, cash flows and financial performance. Global climate change is resulting, and may continue to result, in certain natural disasters and adverse weather, such as droughts, wildfires, storms, sea-levels rising and flooding, occurring more frequently or with greater intensity, which could cause business disruptions and impact employees’ abilities to commute to work or to work from home effectively. Government failure to address climate change could result in greater exposure to economic and other risks from climate change and impact our ability to achieve climate goals.

Actions of activist investors could disrupt our business.

Public companies have been the target of activist investors, including, in particular, during times of economic and market turmoil. In the event that a third-party, such as an activist investor, proposes to change our governance policies, Board of Directors (the "Board") or other aspects of our business, our review and consideration of such proposals may create a significant distraction for our management and employees. This could negatively impact our ability to execute our long-term growth plan and may require our management to expend significant time and resources responding to such proposals. Such proposals may also create uncertainties with respect to our financial position and operations and may adversely affect our ability to attract and retain key employees.

Item 1B. Unresolved Staff Comments

Not applicable.

Item 1C. Cybersecurity

We maintain an information security and cybersecurity program as part of our overall risk management program. Our information security and cybersecurity program is managed by a dedicated Chief Information Security Officer (“CISO”), who reports to our Chief Financial Officer ("CFO"). Our CISO has extensive expertise and eighteen years of experience in information security. In addition, the CISO’s team is responsible for leading the enterprise-wide information security and cybersecurity strategy, policy, standards, architecture and processes. Our information security and cybersecurity program identifies and prioritizes risks to appropriately analyze and manage our potential cyber-related threats. The CISO provides periodic, or as needed, reports regarding risks from cybersecurity threats to the Audit Committee (the “AC”) of the Board, as well as the Security Executive Committee, which includes our Chairman and Chief Executive Officer ("CEO"), CFO and other executive leadership. These reports include updates on our cybersecurity risks, the status of projects to strengthen our information security systems, assessments of the information security program and the emerging threat landscape. The CISO is responsible for leading the day-to-day assessment, identification and management of cybersecurity risks, while the Board, as a whole and through the AC, has responsibility for the oversight of risk management, including cybersecurity risk. The Board, in its risk oversight role, is responsible for determining that the risk management framework and supporting processes as implemented by management are adequate and functioning as designed. The Board is actively involved in the oversight of key risks inherent in our business and routinely reviews our strategic plan and the related key risks, including the output of our enterprise risk management process, which includes risks related to cybersecurity.

In addition to the CISO’s and Security Executive Committee's review, cybersecurity risks are regularly assessed by two other internal information security sub-committees, as well as a third-party security consultant. The results of those reviews are reported to our Security Executive Committee, the AC and the Board. The third-party security consultant discussed above has extensive industry expertise in security and risk management. In addition, as part of our cybersecurity program, we evaluate all of our third-party vendors for any material cybersecurity risks and only contract with third-party vendors that have the controls that we believe are appropriate to have in place to protect against cybersecurity risks and threats. As of the date of this report, we are not aware of any material risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition. See Part I, Item 1A. Risk Factors of this Form 10-K under the heading “Risk Factors” for further discussion.

Item 2. Properties

Our principal support office is located at 200 East Randolph Street, Suite 7700, Chicago, Illinois 60601.

Principal Properties as of December 31, 2023


Location	Character of Office	Approximate Square Feet		Lease Expiration Date	Segment
Chicago, Illinois (1)	Chicago Support Office		35,000	September 2025	Other
Nashville, Tennessee	Nashville Support Office		25,000	June 2025	Other

(1)

During the year ended December 31, 2020, 6,000 square feet of office space was vacated.

In addition to the above properties, we have other offices, warehouses and parking facilities in various locations in the United States, Canada, Puerto Rico, the United Kingdom and India.

We believe that these properties are well maintained, in good operating condition and suitable for the purposes for which they are used.

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Item 3. Legal Proceedings

General

We are subject to claims and litigation in the normal course of our business, including those related to labor and employment, contracts, personal injury and other related matters, some of which allege substantial monetary damages and claims. Some of these actions may be brought as class actions on behalf of a class or purported class of employees. While the outcomes of claims and legal proceedings brought against us are subject to uncertainty, we believe the final outcome will not have a material adverse effect on our financial position, results of operations or cash flows.

We accrue a charge when we determine that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss and, if material, disclose the estimated range. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. We regularly evaluate current information available to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and estimating the amount of a loss or a range of loss involves significant estimation and judgment.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed on the Nasdaq Stock Market LLC under the symbol "SP".

Holders

As of February 13, 2024, we estimate that there were approximately 9,700 registered holders of our common stock.

Issuer Purchases of Equity Securities

On February 14, 2023, our Board approved a new stock repurchase plan authorizing us to repurchase, on the open market, shares of our outstanding common stock in an amount not to exceed $60.0 million in aggregate.

As of December 31, 2023, $60.2 million remained available for repurchase under our May 2022 and February 2023 stock repurchase programs. Repurchases of our common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades, or by other means in accordance with the Rules 10b-18, to the extent relied upon, and 10b5-1 under the Exchange Act at the time and prices considered to be appropriate at our discretion. The stock repurchase program does not obligate us to repurchase any particular amount of common stock and has no fixed termination date, and may be suspended at any time at our discretion.

As a condition of the Merger Agreement, beginning on October 4, 2023, we were restricted from repurchasing our common stock.

Securities Authorized for Issuance Under Equity Compensation Plans

We have an amended and restated long-term incentive plan (the "Plan") that was adopted in conjunction with our initial public offering in 2004. On March 26, 2021, our Board approved an amendment and restatement of the Plan that increased the number of shares of common stock available under the Plan from 3,775,000 to 4,775,000. Our stockholders approved the Plan amendment and restatement on May 12, 2021. Under the Plan, we have granted stock options, stock grants and issued restricted stock units (“RSU’s”) and performance stock units (“PSU’s”) awards to certain employees. Forfeited and expired options under the Plan generally become available for reissuance. Additional information regarding the Plan appears in Note 1. Significant Accounting Policies and Practices and Note 6. Stock-Based Compensation to our Consolidated Financial Statements.

The status of the Plan as of December 31, 2023 was as follows:

      
    Number of

       
    Securities

      
    Remaining

      
    Available

      
    Number of

    Weighted-

    for Future

      
    Securities to be

    Average

    Issuance

      
    Issued Upon

    Exercise

    Under Equity

      
    Exercise of

    Price of

    Compensation

      
    Outstanding

    Outstanding

    Plans

      
    Options,

    Options,

    (Excluding

     
    Warrants
and

    Warrants
and

    Securities
Reflected in

    Plan Category

    Rights (Column A)

    Rights (Column B)

    Column A)

Equity compensation plans approved by securities holders (a)

610,955

—

832,273

Equity compensation plans not approved by securities holders

—

—

—

Total

610,955

—

832,273

Securities to be issued comprise of 290,787 RSU’s and 320,206 PSU’s. The weighted average exercise price does not take these awards into account. There were no stock options or grants outstanding as of December 31, 2023.

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Stock Performance Graph


	Years Ended December 31,
Company / Index	2018		2019		2020		2021		2022		2023
SP Plus Corporation	$	100.00	$	143.64	$	97.60	$	95.53	$	117.54	$	173.49
S&P 500 Index	$	100.00	$	131.49	$	155.68	$	200.37	$	164.08	$	207.21
S&P SmallCap 600 Commercial & Professional Services	$	100.00	$	128.41	$	121.80	$	144.16	$	124.98	$	142.05

The performance graph above shows the cumulative total stockholder return of our common stock for the period starting on December 31, 2018 to December 31, 2023. This performance is compared with the cumulative total returns over the same period of the Standard & Poor's (“S&P”) 500 Index and the S&P SmallCap 600 Commercial and Professional Services Index, which includes our direct competitor, ABM Industries Incorporated. The graph assumes that on December 31, 2018, $100 was invested in each of the other two indices, and assumes reinvestment of dividends. The stock performance shown in the graph represents past performance and should not be considered an indication of future performance.

Item 6. [Reserved]

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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" and other parts of this Form 10-K contain forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes," "estimates," "expects," "intends," "plans," "predicts," "will," "would," "could," "can," "may," and similar terms. Forward-looking statements are not guarantees of future performance, and SP Plus Corporation’s (“we”, "us" or "our") actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in Part I, Item 1A. "Risk Factors" of this Form 10-K, which are incorporated herein by reference. The following discussion should be read in conjunction with the Consolidated Financial Statements and notes thereto included in Part IV, Item 15. "Exhibits and Financial Statement Schedules" of this Form 10-K. Each of the terms "We" and "Our" as used herein refers collectively to SP Plus Corporation and its wholly-owned subsidiaries, unless otherwise stated. We assume no obligation to revise or update any forward-looking statements for any reason, except as required by law.

A discussion regarding our financial condition and results of operations for the year-ended December 31, 2022 compared to the year-ended December 31, 2021 can be found in Part II Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 as filed with the Securities and Exchange Commission on February 24, 2023.

Recent Developments

On October 4, 2023, we entered into the Merger Agreement by and among us, Metropolis and the Merger Sub. See Note 1. Significant Accounting Policies and Practices within the Notes to the Consolidated Financial Statements for further discussion.

General Overview

As of December 31, 2023, in our Commercial segment, we operated approximately 88% of our locations under management type contracts and 12% under lease type contracts, while in our Aviation segment, we served 159 airports across North America and Europe.

In evaluating our financial condition and operating performance, our primary area of focus is on our operating income. Revenue from lease type contracts includes all gross customer collections derived from our leased locations (net of local taxes), whereas revenue from management type contracts only includes our contractually agreed upon management fees and amounts attributable to ancillary services. Gross customer collections at facilities under management type contracts, therefore, are not included in our revenue. Accordingly, while a change in the proportion of our operating agreements that are structured as lease type contracts may cause significant fluctuations in reported revenue and cost of services, our operating income under lease type contracts will be comparable to the operating income under management type contracts.

We believe that sophisticated clients recognize the potential for technology-driven mobility solutions, parking services, parking management, ground transportation services, baggage handling services and other ancillary services to be a profit generator and/or a service differentiator to their customers. By outsourcing these services, our clients are able to capture additional profit and improve customer experiences by leveraging the unique technology, operational skills and controls that an experienced services and technology solutions provider can offer. Our ability to consistently deliver a uniformly high level of services to our clients, including the use of various technology solutions and enhancements, allows us to maximize the profit and/or customer experience for our clients and improves our ability to win contracts and retain existing clients. Our focus on customer service and satisfaction is a key driver of our high retention rate, which was approximately 94% and 93% for the years ended December 31, 2023 and 2022, respectively, for our Commercial segment facilities.

Commercial Segment Facilities

The following table reflects our Commercial facilities (by contractual type) operated on the dates indicated:


	December 31,
	2023		2022
Managed facilities		2,979		2,709
Leased facilities		405		421
Total Commercial segment facilities		3,384		3,130

The increase as of December 31, 2023 included 22 unique facilities added as a result of the acquisition of Roker.

Aviation Segment - Airports Served

The following table reflects the number of airports where at least one of our services is provided as of the dates indicated:


	December 31,
	2023		2022
North America		101		100
Europe		58		58
Total Airports		159		158

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Revenue

We recognize services revenue from our contracts and certain fees for using our technology-driven mobility solutions as the related services are provided. Substantially all of our revenue comes from the following two sources:

Management type contracts. Consists of management fees, including fixed, variable and/or performance-based fees, and in some cases e-commerce technology fees, customer convenience fees and monthly subscription fees related to the use of our technology solutions and amounts attributable to ancillary services such as accounting, equipment leasing, baggage services, payments received for exercising termination rights, consulting, developmental fees, gains on sales of contracts, insurance and other value-added services. We believe we generally can purchase required insurance at lower rates than our clients can obtain on their own because we effectively self-insure for all liability, worker’s compensation and health care claims by maintaining a large per-claim deductible. As a result, we generate operating income on the insurance provided under our management type contracts by focusing on our risk management efforts and controlling losses. Management type contract revenues do not include gross customer collections, as those revenues belong to the client rather than to us. Management type contracts generally provide us with a management fee regardless of the operating performance of the underlying facility. In addition, management type contract revenue includes revenue related to our other aviation services. Other aviation services include our baggage delivery, curbside concierge, remote airline check-in and other miscellaneous services provided to our airport and airline clients.

Lease type contracts. Consists of all revenue received at lease type locations, including gross receipts (net of local taxes), e-commerce technology fees and customer convenience fees. As discussed in Note 4. Revenue within the Notes to the Consolidated Financial Statements, revenue from lease type contracts includes a reduction for certain expenses (primarily rent expense) related to service concession arrangements.

Reimbursed Management Type Contract Revenue. Consists of the direct reimbursement from the client for operating expenses incurred under a management type contract.

Cost of Services (Exclusive of Depreciation and Amortization)

Our cost of services consists of the following:

Management type contracts. Expenses under a management type contract are generally the responsibility of the client. As a result, these costs are not included in our cost of services. However, "reverse" management type contracts, which typically provide for larger management fees, do require us to pay for certain costs, which are included in cost of services. In addition, certain costs related to providing our other aviation and ancillary services are included in cost of services.

Lease type contracts. Consists of contractual rents or fees paid to the client and all operating expenses incurred in connection with operating the leased facility. Contractual rents or fees paid to the client are generally based on either a fixed contractual amount, a percentage of gross revenue or a combination thereof. Generally, under a lease type arrangement we are not responsible for major capital expenditures or real estate taxes.

Reimbursed Management Type Contract Expense. Consists of directly reimbursed costs incurred on behalf of a client under a management type contract.

Gross Profit

Gross profit equals our revenue less the cost of generating such revenue (“cost of services”), lease impairment and depreciation and amortization expenses related to cost of services activities.

General and Administrative Expenses

General and administrative expenses include salaries, wages, incentive compensation, stock-based compensation, payroll taxes, insurance, travel and office related expenses for our headquarters, field offices and supervisory employees. Additionally, acquisition-related expenses are included in general and administrative expenses.

Depreciation and Amortization

Depreciation is determined using a straight-line method over the estimated useful lives of the various asset classes, or in the case of leasehold improvements, over the term of the operating lease or its useful life, whichever is shorter. Intangible assets determined to have finite lives, usually acquired through the acquisition of businesses, are amortized over their remaining estimated useful lives.

Operating Income

Operating income represents revenue less cost of services, general and administrative expense and depreciation and amortization. This is the key metric our Chief Operating Decision Maker (“CODM”) uses for making decisions, assessing performance and allocating resources to our Operating Segments, Commercial and Aviation.

Segments

An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenue and incur expenses, and about which separate financial information is regularly evaluated by the CODM. The CODM is our CEO. The CODM uses this separate discrete financial information by segment to allocate resources and assess performance, primarily based on operating income.

Our operating segments are Commercial and Aviation, which are described below.

•

Commercial encompasses our services in healthcare facilities, municipalities, including meter revenue collection and enforcement services, government facilities, hotels, commercial real estate, residential communities, retail, colleges and universities, as well as ancillary services such as providing technology-driven mobility solutions, shuttle and ground transportation services, valet services, taxi and livery dispatch services and event planning, including shuttle and transportation services.

•

Aviation encompasses our services in aviation (e.g., airports, airline and certain hospitality clients with baggage and parking services), as well as ancillary services, which includes shuttle and ground transportation services, valet services, baggage handling, baggage repair and replacement, remote air check-in services, wheelchair assist services and other services, as well as providing technology-driven mobility solutions.

The Other segment includes costs related to our operational support teams and common and shared infrastructure, including finance, accounting, information technology, human resources, procurement, legal and corporate development.

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Analysis of Results of Operations

New business relates to contracts that started during the current period. Contract terminations relate to contracts that have expired or terminated early during the current period but where we were operating the business in the prior year.

Acquisition-related, restructuring and other costs include expenses related to the proposed merger with Metropolis, compensation expenses related to organizational changes, acquisition-related expenses, including integration expenses related to our recent acquisitions, and severance and other costs primarily related to workforce reductions.

2023 Compared to 2022

Consolidated results during the years ended December 31, 2023 and 2022, respectively, included the following notable items:


	December 31,				Variance
(millions)	2023		2022		Amount			%
Services revenue	$	1,782.3	$	1,553.5	$	228.8			14.7	%
Cost of services (exclusive of depreciation and amortization)(1)		1,528.3		1,331.8		196.5			14.8	%
General and administrative expenses		140.4		109.1		31.3			28.7	%
Depreciation and amortization		36.1		29.7		6.4			21.5	%
Operating income		77.5		82.9		(5.4	)		(6.5	)%
Interest expense		29.1		17.7		11.4			64.4	%
Income tax expense		14.0		17.5		(3.5	)		(20.0	)%
Net income attributable to SP Plus Corporation		31.1		45.2		(14.1	)		(31.2	)%

(1)

Included lease impairment of $3.7 million during the year ended December 31, 2022.

Services revenue increased by $228.8 million, or 14.7%, attributable to the following:

•

Services revenue for management type contracts increased $71.3 million, or 13.7%, primarily due to an increase in activity associated with volume related to our baggage delivery businesses and other volume-based management type contracts as a result of continued recovery in travel and fewer restrictions on mobility, as well as increased volume related to other aviation services, new business and revenue from acquisitions of $4.5 million, partially offset by terminations.

•

Services revenue for lease type contracts increased $17.5 million, or 6.3%, primarily due to an increase in transient and monthly parking revenue as a result of the continued recovery in travel and fewer restrictions on mobility and new business, partially offset by terminations and lower cost concessions related to service concession arrangements of $11.1 million during the year ended December 31, 2023 as compared to $12.0 million during the year ended December 31, 2022.

•

Reimbursed management type contract revenue was $899.1 million and $759.1 million during the years ended December 31, 2023 and 2022, respectively. The $140.0 million increase in reimbursed management type contract revenue was primarily due to the continued recovery in travel and fewer restrictions on mobility, new business and revenue from acquisitions of $2.0 million, partially offset by terminations.

Cost of services (exclusive of depreciation and amortization) increased by $196.5 million, or 14.8%, attributable to the following:

•

Cost of services (exclusive of depreciation and amortization) for management type contracts increased $45.4 million, or 13.2%, primarily due to higher operating costs as a result of the continued recovery in travel and fewer restrictions on mobility related to our baggage delivery businesses, reverse management contracts and other aviation related services, as well as new business and acquisitions, partially offset by terminations.

•

Cost of services (exclusive of depreciation and amortization) for lease type contracts increased $14.8 million, or 6.6%, primarily due to higher operating costs as a result of the continued recovery in travel and fewer restrictions on mobility, new business and lower cost concessions related to rent concessions of $4.1 million during the year ended December 31, 2023 as compared to $6.2 million during the year ended December 31, 2022, partially offset by terminations.

•

We recognized $3.7 million of impairment charges related to operating lease ROU assets during the year ended December 31, 2022.

•

Reimbursed management type contract expense was $899.1 million and $759.1 million during the years ended December 31, 2023 and 2022, respectively. The $140.0 million increase in reimbursed management type contract cost of services was primarily due to the continued recovery in travel and fewer restrictions on mobility, new business and acquisitions of $2.0 million, partially offset by terminations.

General and administrative expenses increased $31.3 million, or 28.7%, primarily due to higher compensation and non-cash stock-based compensation expenses and higher acquisition-related, restructuring and other costs of $18.3 million during the year ended December 31, 2023 as compared to $3.7 million during the year ended December 31, 2022, as well as our continued investment in business development, technology deployment and growth initiatives.

Depreciation and amortization expenses increased $6.4 million, or 21.5%, primarily due to the amortization of other intangible assets related to the recent acquisitions and our continued investment in technology and growth initiatives.

Our effective tax rate was 28.7% and 26.7% during the years ended December 31, 2023 and 2022, respectively. The increase in the effective tax rate is primarily due to certain non-deductible expenses as a result of the proposed merger with Metropolis.

The following tables summarize our revenues (excluding reimbursed management type contract revenue), gross profit, general and administrative expenses, depreciation and amortization, and operating income (expense) by segment during the years ended December 31, 2023 and 2022.

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Commercial


	Commercial						Variance
(millions)	2023			2022			Amount			%
Services revenue
Management type contracts	$	307.7		$	276.8		$	30.9			11.2	%
Lease type contracts		277.8			261.7			16.1			6.2	%
Total services revenue		585.5			538.5			47.0			8.7	%
Gross profit
Management type contracts		138.9			123.4			15.5			12.6	%
Lease type contracts		47.8			44.7			3.1			6.9	%
Lease impairment		—			(3.7	)		3.7			100.0	%
Depreciation and amortization		(8.3	)		(7.9	)		(0.4	)		(5.1	)%
Total gross profit		178.4			156.5			21.9			14.0	%
General and administrative expenses		36.6			29.3			7.3			24.9	%
Depreciation and amortization(1)		6.8			5.2			1.6			30.8	%
Operating income	$	135.0		$	122.0		$	13.0			10.7	%

(1)

Primarily related to amortization of intangible assets and general and administrative depreciation and amortization.

Gross Profit

•

Management type contracts. Gross profit increased $15.5 million, or 12.6%, to $138.9 million during the year ended December 31, 2023, compared to $123.4 million during the year ended December 31, 2022. Gross profit increased primarily due to an increase in activity associated with volume-based management type contracts as a result of the continued recovery in travel and fewer restrictions on mobility and new business, partially offset by terminations.

•

Lease type contracts. Gross profit increased $3.1 million, or 6.9%, to $47.8 million during the year ended December 31, 2023, compared to $44.7 million during the year ended December 31, 2022. Gross profit increased primarily due to increases in transient and monthly parking revenue as a result of the continued recovery in travel and fewer restrictions on mobility and new business, partially offset by lower cost concessions related to rent concessions and service concession arrangements of $4.1 million and $7.4 million, respectively, during the year ended December 31, 2023 as compared to $6.2 million and $7.5 million, respectively, during the year ended December 31, 2022, as well as terminations.

•

Lease impairment. We recognized $3.7 million of impairment charges related to operating lease ROU assets during the year ended December 31, 2022.

•

Depreciation and amortization. Depreciation and amortization expenses increased $0.4 million, or 5.1%, to $8.3 million during the year ended December 31, 2023, compared to $7.9 million during the year ended December 31, 2022.

General and administrative expenses increased $7.3 million, or 24.9%, to $36.6 million during the year ended December 31, 2023, compared to $29.3 million during the year ended December 31, 2022. The increase was primarily related to higher compensation and non-cash stock-based compensation expenses, as well as higher restructuring and other costs of $3.7 million during the year ended December 31, 2023 as compared to $0.8 million during the year ended December 31, 2022 and our continued investments in growth initiatives.

Operating Income increased $13.0 million, or 10.7%, to $135.0 million during the year ended December 31, 2023, compared to $122.0 million during the year ended December 31, 2022, primarily due to the factors noted above, partially offset by increased amortization expenses related to the other intangible assets acquired as a result of the acquisitions of DIVRT and Roker.

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Aviation


	Aviation						Variance
(millions)	2023			2022			Amount			%
Services revenue
Management type contracts	$	282.3		$	241.9		$	40.4			16.7	%
Lease type contracts		15.4			14.0			1.4			10.0	%
Total services revenue		297.7			255.9			41.8			16.3	%
Gross profit
Management type contracts		62.5			52.1			10.4			20.0	%
Lease type contracts		4.8			5.2			(0.4	)		(7.7	)%
Depreciation and amortization		(6.1	)		(5.8	)		(0.3	)		(5.2	)%
Total gross profit		61.2			51.5			9.7			18.8	%
General and administrative expenses		17.2			12.6			4.6			36.5	%
Depreciation and amortization(1)		6.1			5.4			0.7			13.0	%
Operating income	$	37.9		$	33.5		$	4.4			13.1	%

(1)

Primarily related to amortization of intangible assets and general and administrative depreciation and amortization.

Gross Profit

•

Management type contracts. Gross profit increased $10.4 million, or 20.0%, to $62.5 million during the year ended December 31, 2023, compared to $52.1 million during the year ended December 31, 2022. Gross profit increased primarily due to an increase in activity associated with volume-based management type contracts as a result of the continued recovery in travel and fewer restrictions on mobility, increased activity related to other aviation services, as well as new business and acquisitions, partially offset by terminations.

•

Lease type contracts. Gross profit decreased $0.4 million, or 7.7%, to $4.8 million during the year ended December 31, 2023, compared to $5.2 million during the year ended December 31, 2022. Gross profit decreased primarily due to lower cost concessions related to service concession arrangements of $3.7 during the year ended December 31, 2023 as compared to $4.5 million during the year ended December 31, 2022 and terminations, partially offset by an increase in transient revenue as a result of the continued recovery in travel and fewer restrictions on mobility.

•

Depreciation and amortization. Depreciation and amortization expenses increased $0.3 million, or 5.2%, to $6.1 million during the year ended December 31, 2023, compared to $5.8 million during the year ended December 31, 2022.

General and administrative expenses increased $4.6 million, or 36.5%, to $17.2 million during the year ended December 31, 2023, compared to $12.6 million during the year ended December 31, 2022 primarily due to our continued investments in growth initiatives, as well as higher restructuring and other costs of $2.0 million during the year ended December 31, 2023 as compared to a benefit of $0.4 million during the year ended December 31, 2022.

Operating Income increased $4.4 million, or 13.1%, to $37.9 million during the year ended December 31, 2023, compared to $33.5 million during the year ended December 31, 2022, primarily related to the factors noted above, partially offset by increased amortization expenses related to the other intangible assets acquired as a result of the acquisition of KMP.

Other

Operating expenses within the Other segment increased $22.8 million, or 31.4%, to $95.4 million during the year ended December 31, 2023, compared to $72.6 million during the year ended December 31, 2022, primarily due to higher acquisition-related, restructuring and other costs of $12.6 million during the year ended December 31, 2023 as compared to $3.3 million during the year ended December 31, 2022, as well as higher compensation and non-cash stock-based compensation expenses and our continued investments in business development, technology deployment and growth initiatives.

Analysis of Financial Condition

Liquidity and Capital Resources

General

We continually project anticipated cash requirements for our operating, investing and financing needs, as well as cash flows generated from operating activities available to meet these needs. Our operating needs can include, among other items, commitments for cost of services, operating leases, payroll, insurance claims, interest and legal settlements. Our investing and financing spending can include payments for acquired businesses or assets, joint ventures, capital expenditures, distributions to noncontrolling interests, stock repurchases and payments on our outstanding indebtedness.

As of December 31, 2023, we had $19.1 million of cash and cash equivalents and $227.5 million of borrowing availability under our Senior Credit Facility (as defined in Note 11. Borrowing Arrangements within the Notes to the Consolidated Financial Statements). We believe we will be able to generate sufficient liquidity to satisfy our obligations and remain in compliance with our existing debt covenants for the next twelve months.

Outstanding Indebtedness

As of December 31, 2023, we had total indebtedness of approximately $352.1 million, an increase of $7.9 million from $344.2 million as of December 31, 2022. The $352.1 million included:

•

$326.9 million under our Senior Credit Facility; and

•

$25.2 million of other debt, primarily related to finance lease obligations.

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As of December 31, 2023, we were in compliance with our debt covenants under the Amended Credit Agreement (as defined in Note 11. Borrowing Arrangements within the Notes to the Consolidated Financial Statements).

As of December 31, 2023, we had $36.9 million of letters of credit outstanding under the Senior Credit Facility and borrowings against the Senior Credit Facility aggregated to $329.5 million.

The weighted average interest rate on our Senior Credit Facility was 6.5% and 5.6% during the years ended December 31, 2023 and 2022, respectively. That rate included the letters of credit for both years and the interest rate collars during the year ended December 31, 2022. The weighted average interest rate on all outstanding borrowings, not including letters of credit, was 7.0% and 6.0% during the years ended December 31, 2023 and 2022, respectively.

During the year ended December 31, 2022, we incurred approximately $2.5 million for fees and other customary closing costs in connection with the Amended Credit Agreement.

Stock Repurchases

In February 2023, our Board authorized us to repurchase, on the open market, shares of our outstanding common stock in an amount not to exceed $60.0 million in aggregate.

In May 2022, our Board authorized us to repurchase, on the open market, shares of our outstanding common stock in an amount not to exceed $60.0 million in aggregate. During the year ended December 31, 2023, we repurchased 285,700 shares of common stock at an average price of $36.53 under this program. As of December 31, 2023, $0.2 million remained available for repurchase under this program.

As of December 31, 2023, $60.2 million remained available for repurchase under the May 2022 and February 2023 stock repurchase programs. Under the programs, repurchases of our common stock may be made in open market transactions effected through a broker-dealer at prevailing market prices, in block trades or by other means in accordance with Rules 10b-18, to the extent relied upon, and 10b5-1 under the Exchange Act at times and prices considered to be appropriate at our discretion. The stock repurchase programs do not obligate us to repurchase any particular amount of common stock, have no fixed termination date, and may be suspended at any time at our discretion.

As a condition of the Merger Agreement, beginning on October 4, 2023, we are restricted from repurchasing our common stock.

Stock repurchase activity under the May 2022 stock repurchase program during the years ended December 31, 2023 and 2022 was as follows:


(millions, except for share and per share data)	December 31, 2023		December 31, 2022
Total number of shares repurchased		285,700		1,474,300
Average price paid per share	$	36.53	$	33.47
Total value of common stock repurchased	$	10.4	$	49.4

The remaining authorized repurchase amount under the May 2022 and February 2023 repurchase programs as of December 31, 2023 was as follows:


(millions)	December 31, 2023
Total authorized repurchase amount	$	120.0
Total value of shares repurchased		59.8
Total remaining authorized repurchase amount	$	60.2

Letters of Credit

We provided letters of credit totaling $30.9 million and $30.8 million to our casualty insurance carriers to collateralize our casualty insurance program as of December 31, 2023 and 2022, respectively.

We provided $6.5 million and $7.7 million in letters of credit to collateralize other obligations as of December 31, 2023 and 2022, respectively.

Interest Rate Collars

In May 2019, we entered into three-year interest rate collar contracts with an aggregate notional amount of $222.3 million. The interest rate collar contracts matured in April 2022. The interest rate collars were used to manage interest rate risk associated with variable interest rate borrowings under the Credit Agreement (as defined in Note 11. Borrowing Arrangements within the Notes to the Consolidated Financial Statements). The interest rate collars established a range where we paid the counterparties if the one-month London Interbank Offered Rate ("LIBOR") fell below the established floor rate, and the counterparties paid us if the one-month LIBOR exceeded the established ceiling rate of 2.5%. The interest rate collars settled monthly through the maturity date. No payments or receipts were exchanged on the interest rate collar contracts unless interest rates rose above or fell below the pre-determined ceiling or floor rates. The notional amount amortized consistently with the term loan portion of the Senior Credit Facility under the Credit Agreement prior to the third amendment to the Credit Agreement (the “Third Amendment”). The fair value of the interest rate collars was a Level 2 fair value measurement, as the fair value was determined based on quoted prices of similar instruments in active markets.

On May 6, 2020, concurrent with entering into the Third Amendment, we de-designated the interest rate collars. Prior to de-designation, the effective portion of the change in the fair value of the interest rate collars was reported in Accumulated other comprehensive loss. Upon de-designation, the balance in Accumulated other comprehensive loss was being reclassified to Other expense within the Consolidated Statements of Income on a straight-line basis through April 2022, which was over the remaining life for which the interest rate collars had previously been designated as cash flow hedges. Changes in the fair value of the interest rate collars after de-designation were included in Other expense within the Consolidated Statements of Income. During the years ended December 31, 2022 and 2021, $0.8 million and $2.5 million, respectively, was paid in interest related to the interest rate collars.

We do not enter into derivative instruments for any speculative purposes.

Daily Cash Collections

As a result of day-to-day activity at our parking locations, we collect significant amounts of cash. Lease type contract revenue is generally deposited into our local bank accounts, with a portion remitted to our clients in the form of rental payments based on the terms of the leases. Under management type contracts, clients may require us to deposit the daily receipts into one of our local bank accounts, with the cash in excess of our operating expenses and management fees remitted to the clients at negotiated intervals. Other clients may require us to deposit the daily receipts into client designated bank accounts and the clients then reimburse us for operating expenses and pay our management fee subsequent to month-end. In addition, our clients may require segregated bank accounts for receipts and

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disbursements. Our working capital and liquidity may be adversely affected if a significant number of our clients require us to deposit all parking revenues into their respective accounts.

Our liquidity also fluctuates on an intra-month and intra-year basis depending on the contract mix and timing of significant cash payments. Additionally, our ability to utilize cash deposited into our local accounts is dependent upon the availability and movement of that cash into our corporate accounts. For all these reasons, from time to time, we carry a significant cash balance, while also utilizing our Senior Credit Facility.

Cash and Cash Equivalents

We had cash and cash equivalents of $19.1 million and $12.4 million as of December 31, 2023 and 2022, respectively. The cash balances reflect our ability to utilize funds deposited into our bank accounts. Availability, timing of deposits and the subsequent movement of cash into our corporate bank accounts may result in significant changes to our cash balances.

Summary of Cash Flows

Our primary sources of liquidity are cash flows from operating activities and availability under our Senior Credit Facility. Our cash flows during the years ended December 31, 2023, 2022 and 2021 were as follows:


	Years ended December 31,
(millions)	2023			2022			2021
Net cash provided by operating activities	$	55.8		$	93.3		$	53.4
Net cash used in investing activities		(26.6	)		(54.0	)		(9.1	)
Net cash used in financing activities		(22.3	)		(42.4	)		(42.4	)
Effect of exchange rate changes on cash and cash equivalents		(0.2	)		(0.2	)		(0.1	)
Net increase (decrease) in cash and cash equivalents		6.7			(3.3	)		1.8

Operating Activities

Net cash provided by operating activities decreased $37.5 million to $55.8 million during the year ended December 31, 2023 from $93.3 million during the year ended December 31, 2022. The decrease resulted from the payment of $21.7 million of acquisition-related, restructuring and other costs, primarily related to the proposed merger with Metropolis, and per the terms of the Merger Agreement, certain incentive compensation earned in 2023, which usually would be paid in 2024, during the year ended December 31, 2023. In addition, the decrease related to the receipt of the $20.5 million U.S. Federal income tax refund during the year ended December 31, 2022, as well as higher interest payments during the year ended December 31, 2023 of $27.7 million as compared to $16.9 million during the year ended December 31, 2022, partially offset by growth in the business and improved working capital.

Net cash provided by operating activities increased $39.9 million to $93.3 million during the year ended December 31, 2022 from $53.4 million during the year ended December 31, 2021. The increase primarily resulted from higher operating income, net of non-cash related items, due to improving business conditions, as well as the receipt of the $20.5 million U.S. Federal income tax refund related to our ability to carry back our 2020 U.S. Federal NOL and lower interest payments, partially offset by the payment of performance-based compensation and higher income tax installment payments during the year ended December 31, 2022.

Investing Activities

Net cash used in investing activities was $26.6 million during the year ended December 31, 2023, a decrease of $27.4 million from $54.0 million during the year ended December 31, 2022. The decrease was primarily due to the acquisitions of businesses and other intangible assets, net of cash acquired, of $3.1 million during the year ended December 31, 2023 as compared to $32.3 million during the year ended December 31, 2022, as well as the noncontrolling interest buyout of $2.4 million during the year ended December 31, 2023.

Net cash used in investing activities was $54.0 million during the year ended December 31, 2022, an increase of $44.9 million from $9.1 million during the year ended December 31, 2021. The increase was primarily due to the acquisitions of businesses and other intangible assets, net of cash acquired, of $32.3 million during the year ended December 31, 2022. Cash used to purchase property and equipment, primarily related to our investments in internal-use software, was $21.9 million during the year ended December 31, 2022 as compared to $9.6 million during the year ended December 31, 2021, reflecting our continued investment in technology initiatives during the year ended December 31, 2022.

Financing Activities

Net cash used in financing activities was $22.3 million during the year ended December 31, 2023, a decrease of $20.1 million from $42.4 million during the year ended December 31, 2022. The decrease was primarily related to the $11.1 million purchase of common stock during the year ended December 31, 2023 as compared to $48.7 million during the year ended December 31, 2022, partially offset by borrowings under our Senior Credit Facility during the year ended December 31, 2022 that were used, in addition to cash on hand, to fund the acquisitions noted above and $5.8 million related to payments of withholding taxes on share-based compensation during the year ended December 31, 2023.

Net cash used in financing activities was $42.4 million during the years ended December 31, 2022 and 2021. During the year ended December 31, 2022 we repurchased $48.7 million of common stock under our May 2022 stock repurchase program, partially offset by an increase in borrowings under our Senior Credit Facility that were used, in addition to cash on hand, to fund the acquisitions noted above. During the year ended December 31, 2021, we paid down debt by $40.1 million.

Summary Disclosures about Contractual Obligations and Commercial Commitments

The following table summarizes certain contractual obligations as of December 31, 2023 and the effect such obligations are expected to have on our liquidity and cash flow in future periods. We do not have significant short-term purchase obligations.

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	Payments Due by Period
									2029 and
(millions)	Total		2024		2025 - 2026		2027 - 2028		thereafter
Contractual obligations
Operating leases(1)	$	246.9	$	66.1	$	95.3	$	49.5	$	36.0
Finance leases		27.2		8.7		11.7		4.8		2.0
Service concession arrangements(2)		38.3		19.3		13.3		4.8		0.9
Noncontrolling interests buyout		2.1		0.4		0.8		0.5		0.4
Total contractual obligations	$	314.5	$	94.5	$	121.1	$	59.6	$	39.3

(1)

Represents minimum rental commitments, excluding (i) contingent rent provisions under all non-cancelable leases; and (ii) sublease income.

(2)

Represents lease type contracts that meet the definition of service concession arrangements under Topic 853.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("US GAAP") requires us to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses and related disclosures of contingent assets and liabilities within the Consolidated Financial Statements and accompanying notes. The SEC has defined critical accounting policies and estimates as the ones that are most important to the portrayal of the financial condition and results of operations, and which require the most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We base these estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Certain accounting estimates are particularly sensitive because of their complexity and the possibility that future events affecting them may differ materially from our current judgments and estimates.

This listing of critical accounting policies is not intended to be a comprehensive list of all of our accounting policies. We also have other key accounting policies, which involve the use of estimates, judgments, and assumptions that are significant to understanding our results, which are included in Note 1. Significant Accounting Policies and Practices within the Notes to the Consolidated Financial Statements included in Part IV, Item 15. "Exhibits and Financial Statement Schedules."

Goodwill and Other Intangible Assets

Goodwill represents the excess of the purchase price paid over the fair value of net assets acquired. In accordance with the Financial Accounting Standards Board's ("FASB") authoritative accounting guidance on goodwill, we evaluate goodwill for impairment on an annual basis, or more often if events or circumstances change that could cause goodwill to become impaired. We have elected to assess the impairment of goodwill annually on October 1 or at an interim date if there is an event or change in circumstances indicating the carrying value may not be recoverable. The goodwill impairment test is performed at the reporting unit level; our reporting units represent our operating segments, consisting of Commercial and Aviation. Factors that could trigger an impairment review include significant under-performance relative to expected historical or projected future operating results, significant changes in the use of acquired assets or our business strategy, and significant negative industry or economic trends.

We may perform a qualitative, rather than quantitative, assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If we determine it is more likely than not that the fair value is less than the carrying amount, we would need to perform a quantitative assessment. The determination of fair value of a reporting unit utilizes cash flow projections that assume certain future revenue and cost levels, comparable marketplace data, comparable company market valuations, assumed discount rates based upon current market conditions and other valuation factors, all of which involve the use of significant judgment and estimates. We also assess critical areas that may impact our business including economic conditions, market related exposures, competition, changes in service offerings and changes in key personnel.

Other intangible assets represent assets with finite lives that are amortized on a straight-line basis over their estimated useful lives. We evaluate other intangible assets on a periodic basis to determine whether events or circumstances warrant a revision to their remaining useful lives. In addition, other intangible assets are reviewed for impairment when circumstances change that would indicate the carrying value may not be recoverable. Assumptions and estimates about future values and remaining useful lives of intangible assets are complex and subjective, and can be affected by a variety of factors, including external factors such as industry and economic trends, and internal factors, such as changes in our business strategy and forecasts. Although we believe the historical assumptions and estimates are reasonable and appropriate, different assumptions and estimates could materially impact our reported financial results.

Long-Lived Assets

We evaluate long-lived assets, including ROU assets, leasehold improvements, equipment and construction/development in progress, for impairment whenever events or circumstances indicate that the carrying value of an asset or asset group may not be recoverable. We group assets at the lowest level for which cash flows are separately identified in order to measure an impairment. Events or circumstances that would result in an impairment review include a significant change in the use of an asset, the planned sale or disposal of an asset, or a projection that demonstrates continuing losses associated with the use of a long-lived asset or asset group. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of the asset or asset group to future undiscounted cash flows expected to be generated by the asset or asset group. If the asset or asset group is determined to be impaired, the impairment recognized is measured by the amount by which the carrying value of the asset or asset group exceeds its fair value.

Assumptions and estimates used to determine cash flows in the evaluation of impairment and the fair values used to determine the impairment are subject to a degree of judgment and complexity. Any future changes to the assumptions and estimates resulting from changes in actual results or market conditions from those anticipated may affect the carrying value of long-lived assets and could result in additional impairment charges. Future events that may result in impairment charges include economic volatility, or other factors, that could decrease revenues and profitability of existing locations and changes in the cost structure of existing facilities, such as increasing labor and benefit costs.

Insurance Reserves

We purchase comprehensive casualty insurance covering certain claims that arise in connection with our operations. In addition, we purchase umbrella/excess liability coverage. Under the various liability and workers' compensation insurance policies, we are obligated to pay directly or reimburse the insurance carrier for the deductible / retention amount of each loss covered by our general / garage, automobile, workers' compensation and garage keepers legal liability policies. As a result, we are effectively self-insured for all claims within the deductible / retention amount of each loss. Any loss over the deductible / retention is the responsibility of the third-party insurer. The expense recognition is based upon our determination of an unfavorable outcome of a claim being deemed as probable and capable of being reasonably estimated. This determination requires the use of judgment in both the estimation of probability and the amount to be recognized as an expense. We utilize historical claims experience and exposures specific to each type of insurance, along with actuarial methods performed quarterly by a third party actuarial adviser in determining the required level of insurance reserves. As of December 31, 2023, the insurance reserve for general, garage, automobile

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and workers’ compensation liabilities was $50.3 million, of which $24.9 million and $25.4 million was recorded in Accrued and other current liabilities and Other noncurrent liabilities, respectively, within the Consolidated Balance Sheets. Future information regarding historical loss experience may require changes to the level of insurance reserves and could result in increased expense in the future.

Allowance for Doubtful Accounts

Accounts receivable, net of the allowance for doubtful accounts, represents our estimate of the amount that ultimately will be realized in cash. We review the adequacy of the allowance for doubtful accounts on an ongoing basis, primarily using a review of specific accounts, as well as historical collection trends and aging of receivables, and record adjustments to the allowance as necessary. Changes in economic conditions or other circumstances could have an impact on the collection of existing receivable balances or future allowance considerations.

Income Taxes

Deferred income taxes are computed using the asset and liability method, such that deferred tax assets and liabilities are recognized for deductible temporary differences between US GAAP amounts and the tax basis of existing assets and liabilities based on currently enacted tax laws and tax rates in effect for the periods in which these temporary differences are expected to reverse or be settled. Income tax expense (benefit) is the tax payable (receivable) for the period plus the change during the period in deferred income taxes. We have certain state NOL carry forwards which expire in 2043. We consider a number of factors in our assessment of the recoverability of our NOL carryforwards including their expiration dates and the limitations imposed due to the change in ownership, as well as future projections of income. Future changes in our operating performance, along with these considerations, may significantly impact the amount of NOLs ultimately recovered, and our assessment of their recoverability.

We recognize deferred tax liabilities related to taxes on certain foreign earnings that are not considered to be permanently invested. In addition, we have recognized deferred tax liabilities on nondeductible intangible assets.

When evaluating our tax positions, we account for uncertainty in income taxes within our Consolidated Financial Statements. The evaluation of a tax position is a two-step process, the first step being recognition. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon tax examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position and the weight of available evidence. If a tax position does not meet the more-likely-than-not threshold, which is more than 50% likely of being realized, the benefit of that position is not recognized in our financial statements. The second step is measurement of the tax benefit. The tax position is measured as the largest amount of benefit that is more-likely-than-not of being realized, which is more than 50% likely of being realized upon ultimate resolution with a taxing authority.

Legal and Other Contingencies

We accrue a charge when we determine that it is probable that an asset has been impaired or a liability has been incurred and the amount of loss can be reasonably estimated. When a loss is probable, we record an accrual based on the reasonably estimable loss or range of loss. When no point of loss is more likely than another, we record the lowest amount in the estimated range of loss, and if material, disclose the estimated range. We do not record liabilities for reasonably possible loss contingencies, but do disclose a range of reasonably possible losses if they are material and we are able to estimate such a range. If we cannot provide a range of reasonably possible losses, we explain the factors that prevent us from determining such a range. We regularly evaluate current information available to determine whether an accrual should be established or adjusted. Estimating the probability that a loss will occur and the amount of a loss or a range of loss involves significant estimation and judgment.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Interest Rates

Our primary market risk exposure consists of risk related to changes in interest rates. We use the variable rate Senior Credit Facility to finance our operations. The Senior Credit Facility exposes us to variability in interest payments due to changes in interest rates. If interest rates increase, interest expense increases and conversely, if interest rates decrease, interest expense also decreases. We believe that it is prudent to limit our exposure to an increase in interest rates. See Note 11. Borrowing Arrangements within the Notes to the Consolidated Financial Statements for further discussion.

A one percent increase in the average market rate would result in an increase in our annual interest expense of $3.3 million related to borrowings outstanding on our Senior Credit Facility.

Foreign Currency Risk

We are exposed to the impact of foreign currency fluctuations in certain countries in which we operate. The exposure to foreign currency movements is limited in our Canada and India subsidiaries because the operating revenues and expenses are substantially in the local currency in which they operate. Even though our United Kingdom subsidiary transacts business in many countries, their exposure to foreign currency fluctuations is considered not significant. We had $1.6 million of foreign denominated cash instruments and no debt instruments denominated in foreign currencies as of December 31, 2023. We do not hold any hedging instruments related to foreign currency transactions.

We monitor foreign currency positions and may enter into certain hedging instruments in the future if we determine the exposure to foreign exchange risk has increased.

Item 8. Financial Statements and Supplementary Data

1. All Financial Statements

Index to Consolidated Financial Statements

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Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)		29
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting		30
Audited Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, 2023 and 2022		31
For the years ended December 31, 2023, 2022 and 2021
Consolidated Statements of Income		32
Consolidated Statements of Comprehensive Income		33
Consolidated Statements of Stockholders' Equity		34
Consolidated Statements of Cash Flows		35
Notes to Consolidated Financial Statements		36

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of SP Plus Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of SP Plus Corporation (the Company) as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 27, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.


		Valuation of insurance reserves for claims incurred but not reported
Description of the Matter		As discussed in Note 1 to the consolidated financial statements, the Company purchases comprehensive liability insurance covering certain claims that occur in its operations, including coverage for general, garage and automobile liabilities. In addition, the Company purchases workers' compensation insurance coverage for all eligible employees and umbrella/excess liability insurance coverage. Under these various insurance policies, the Company is effectively self-insured for all claims up to the retention amount of each loss. Any loss over the retention is the responsibility of the third-party insurer. The Company’s insurance reserves for claims that have been incurred but not reported (IBNR) are based upon historical claims experience and actuarial methods performed by a third-party actuarial advisor. As of December 31, 2023, the insurance reserves for general, garage, automobile and workers’ compensation liabilities are recorded in Accrued and other current liabilities and Other noncurrent liabilities in the Consolidated Balance Sheets for $24.9 million and $25.4 million, respectively. Auditing management's insurance reserves was complex due to the estimation required in determining the reserves, which requires the use of actuarial methods and is dependent on claims experience history that is utilized in the actuarial analysis.
How We Addressed the Matter in Our Audit		We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s IBNR process, including controls over management’s review of the actuarial analysis and the data inputs provided to the actuary to perform the analysis. To test the insurance reserves, we performed audit procedures over the completeness and accuracy of the underlying claims data provided to management’s third-party actuarial advisers, which is the basis used to estimate total ultimate dollar value of claims and the expected amount of IBNR claims. Furthermore, we involved our actuarial specialist to assist in our evaluation of the methodologies and assumptions applied by management’s third-party actuarial advisers in measuring the actuarially determined reserve. We compared the Company’s recorded reserves to a range which our actuarial specialist developed based on independently selected assumptions. We also reconciled management’s third-party actuarial advisers’ report to the Company’s insurance liability reserve to amounts recorded by the Company.

/s/ ERNST & YOUNG LLP

We have served as the Company’s auditor since 1989.

Chicago, Illinois

February 27, 2024

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Report of Independent Registered Public Accounting Firm

To the Stockholders and the Board of Directors of SP Plus Corporation

Opinion on Internal Control Over Financial Reporting

We have audited SP Plus Corporation’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, SP Plus Corporation (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 27, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ ERNST & YOUNG LLP

Chicago, Illinois

February 27, 2024

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SP Plus Corporation

Consolidated Balance Sheets


	December 31,
(millions, except for share and per share data)	2023			2022
Assets
Cash and cash equivalents	$	19.1		$	12.4
Accounts receivable, net		180.5			167.7
Prepaid expenses and other current assets		12.6			16.7
Total current assets		212.2			196.8
Property and equipment, net		68.3			60.2
Right-of-use assets		179.4			166.9
Goodwill		544.6			543.2
Other intangible assets, net		59.7			68.9
Deferred income taxes		42.8			44.4
Other noncurrent assets		44.9			41.0
Total noncurrent assets		939.7			924.6
Total assets	$	1,151.9		$	1,121.4
Liabilities and stockholders' equity
Liabilities
Accounts payable	$	136.6		$	133.4
Accrued and other current liabilities		128.1			137.6
Short-term lease liabilities		56.2			60.2
Current portion of long-term borrowings		16.5			12.4
Total current liabilities		337.4			343.6
Long-term borrowings, excluding current portion		335.6			331.8
Long-term lease liabilities		158.0			158.5
Other noncurrent liabilities		70.2			61.8
Total noncurrent liabilities		563.8			552.1
Total liabilities	$	901.2		$	895.7
Stockholders' equity
Preferred Stock, par value $0.01 per share; 5,000,000 shares authorized as of December 31, 2023 and 2022, respectively; no shares issued or outstanding	$	—		$	—
Common stock, par value $0.001 per share; 50,000,000 shares authorized as of December 31, 2023 and 2022; 23,593,626 and 19,798,884 shares issued and outstanding as of December 31, 2023, respectively, and 23,276,329 and 19,767,287 shares issued and outstanding as of December 31, 2022, respectively		—			—
Treasury stock at cost; 3,794,742 and 3,509,042 shares as of December 31, 2023 and December 31, 2022, respectively		(130.5	)		(120.0	)
Additional paid-in capital		277.9			274.2
Accumulated other comprehensive loss		(1.3	)		(1.8	)
Retained earnings		104.7			73.6
Total SP Plus Corporation stockholders' equity		250.8			226.0
Noncontrolling interests		(0.1	)		(0.3	)
Total stockholders' equity		250.7			225.7
Total liabilities and stockholders' equity	$	1,151.9		$	1,121.4

See Notes to Consolidated Financial Statements.

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SP Plus Corporation

Consolidated Statements of Income


	Years Ended December 31,
(millions, except for share and per share data)	2023			2022			2021
Services revenue
Management type contracts		590.0			518.7			385.9
Lease type contracts		293.2			275.7			215.6
		883.2			794.4			601.5
Reimbursed management type contract revenue		899.1			759.1			575.7
Total services revenue		1,782.3			1,553.5			1,177.2
Cost of services (exclusive of depreciation and amortization)
Management type contracts		388.6			343.2			247.5
Lease type contracts		240.6			225.8			170.6
Lease impairment		—			3.7			3.6
		629.2			572.7			421.7
Reimbursed management type contract expense		899.1			759.1			575.7
Total cost of services (exclusive of depreciation and amortization)		1,528.3			1,331.8			997.4
General and administrative expenses		140.4			109.1			88.2
Depreciation and amortization		36.1			29.7			25.1
Operating income		77.5			82.9			66.5
Other expense (income)
Interest expense		29.1			17.7			21.2
Interest income		(0.3	)		(0.4	)		(0.4	)
Other income		—			—			(0.1	)
Total other expenses		28.8			17.3			20.7
Earnings before income taxes		48.7			65.6			45.8
Income tax expense		14.0			17.5			10.5
Net income		34.7			48.1			35.3
Less: Net income attributable to noncontrolling interests		3.6			2.9			3.6
Net income attributable to SP Plus Corporation	$	31.1		$	45.2		$	31.7
Common stock data
Net income per common share
Basic	$	1.58		$	2.17		$	1.50
Diluted	$	1.57		$	2.15		$	1.48
Weighted average shares outstanding
Basic		19,670,918			20,809,363			21,166,323
Diluted		19,781,388			21,007,068			21,379,983

See Notes to Consolidated Financial Statements.

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SP Plus Corporation

Consolidated Statements of Comprehensive Income


	Years Ended December 31,
(millions)	2023		2022		2021
Net income	$	34.7	$	48.1	$	35.3
Reclassification of de-designated interest rate collars		—		0.5		1.7
Foreign currency translation gain (loss)		0.5		0.5		(0.1	)
Comprehensive income		35.2		49.1		36.9
Less: Comprehensive income attributable to noncontrolling interests		3.6		2.9		3.6
Comprehensive income attributable to SP Plus Corporation	$	31.6	$	46.2	$	33.3

See Notes to Consolidated Financial Statements

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SP Plus Corporation

Consolidated Statements of Stockholders' Equity


	Common Stock
	Number							Accumulated			Retained
	of				Additional			Other			Earnings
	Shares		Par		Paid-In			Comprehensive			(Accumulated			Treasury			Noncontrolling
(millions, except share data)	Issued		Value		Capital			Loss			Deficit)			Stock			Interests			Total
Balance at January 1, 2021		23,088,386	$	—	$	261.4		$	(4.4	)	$	(3.3	)	$	(70.6	)	$	(1.7	)	$	181.4
Net income		—		—		—			—			31.7			—			3.6			35.3
Foreign currency translation		—		—		—			(0.1	)		—			—			—			(0.1	)
Reclassification of de-designated interest rate collars		—		—		—			1.7			—			—			—			1.7
Issuance of stock grants		13,420		—		0.5			—			—			—			—			0.5
Issuance of restricted stock units		41,517		—		—			—			—			—			—			—
Issuance of performance stock units		81,136		—		—			—			—			—			—			—
Non-cash stock-based compensation		—		—		5.6			—			—			—			—			5.6
Distributions to noncontrolling interests		—		—		—			—			—			—			(2.3	)		(2.3	)
Balance at December 31, 2021		23,224,459	$	—	$	267.5		$	(2.8	)	$	28.4		$	(70.6	)	$	(0.4	)	$	222.1
Net income		—		—		—			—			45.2			—			2.9			48.1
Foreign currency translation		—		—		—			0.5			—			—			—			0.5
Reclassification of de-designated interest rate collars		—		—		—			0.5			—			—			—			0.5
Issuance of stock grants		14,635		—		0.4			—			—			—			—			0.4
Issuance of restricted stock units		37,235		—		—			—			—			—			—			—
Non-cash stock-based compensation		—		—		8.6			—			—			—			—			8.6
Repurchases of common stock		—		—		—			—			—			(49.4	)		—			(49.4	)
Noncontrolling interests buyout		—		—		(2.3	)		—			—			—			—			(2.3	)
Distributions to noncontrolling interests		—		—		—			—			—			—			(2.8	)		(2.8	)
Balance at December 31, 2022		23,276,329	$	—	$	274.2		$	(1.8	)	$	73.6		$	(120.0	)	$	(0.3	)	$	225.7
Net income		—		—		—			—			31.1			—			3.6			34.7
Foreign currency translation		—		—		—			0.5			—			—			—			0.5
Issuance of stock grants		18,660		—		0.6			—			—			—			—			0.6
Issuance of restricted stock units		242,909		—		—			—			—			—			—			—
Issuance of performance stock units		55,728		—		—			—			—			—

SP Plus Corp 10-K