I have asked Jeff Hebron, the CFO at Central, a number of times to comment on the seeming fact that most of the profits the company has comes from selling off assets and not from the core business of parking cars. I have gotten no response.
Now that stock market wag "The Motley Fool" joins the fray. Read about it here.
The company is criticized for not being able to project its income from quarter to quarter, and for exactly the same issue I bring up above.
So what’s the problem with our largest parking company? They have started a major program, now nearly a year in process, to reinvent themselves and get back to their core business. They are divesting themselves of "losing" operations. According to their web site — in October of 2005, that’s seven months ago, they had 3399 locations. As of the news release today, they operated 3185. That’s a net loss of 214 locations in just over six months. How many losing operations did they have. At their peak Central had over 4500 locations. Hopefully, smaller is better.
The company had a net earnings in the second quarter that were down $5MM to $2MM on revenues of $275MM, which were up almost 2%. The income from operations is up, but unfortunately its that bottom line that makes the difference.
The company says it is reducing costs and hence it is increasing its profits. It is getting out of some of the contracts, particularly in the UK, in the transportation sector.
I sympathize with Butch Eads and his team, in that these quarterly reports often don’t tell the tale. Its too bad companies are required to give sort of month to month reports. But then, that’s the world we live in.
Central is a strong company with a lot of good employees. I do wish them all the best. One can only hope that their sheer size makes it difficult to keep on track. Who knows? Maybe the next quarterly report will tell the tale.
One would think that the parking business should reflect the economy on a day to day basis. The airlines are back to capacity, garage constructions starts are up, parking fees are certainly not headed down, garages are tending toward the "full" sign rather than the "empty" sign. Most operators I speak to are smiling and if the vehicles at Herb Citrin’s Bash yesterday were any indication of success, the business is booming.
Since most of the parking companies in the US are private, we have no hard facts except for the average car price of over $75,000 in their choice of vehicles. But something must be going right somewhere.
JVH
