As president and CEO of Standard Parking Corp., a company that manages nearly 2,000 parking facilities containing more than 1 million parking spaces, you might think James Wilhelm would get a free pass on parking fees.
Not so.
“When I’m out parking for my family, I am any other customer, and because I don’t own any of the facilities, I’m very respectful of our clients’ need to maximize the revenue,” says Wilhelm, who’s been with Standard Parking nearly 20 years.
But that doesn’t mean he forgets his role.
“At that point, I become a paying customer, and I still keep both eyes on the ball in terms of writing a report on what I saw,” he says. “There’s nothing more disappointing to me than going into one of our facilities and seeing one that is not being managed to my standards. You can imagine what happens and the tornado that almost immediately results when I find one that I don’t like.”
In addition to his self-styled role as facilities watchdog, Standard Parking’s recent initial public offering added a new twist to his CEO duties — he’s now head of a public company.
“Approximately three years ago, we found ourselves highly overleveraged following the merging and acquisition of eight parking companies together,” says Wilhelm. “In March of 1998, the two primary companies in the merger were Standard Parking, the company I grew up with here in Chicago, and APCOA, a Cleveland-based provider of parking services. We bought six other parking companies within the following year. We used low-grade bonds to facilitate the financing.”
The debt created by the mergers and acquisitions didn’t sit well with Wilhelm, who, at the time, was president and COO of the company. Adding to the debt was the economic downturn following Sept. 11, 2001. The terrorist attacks, and the fallout, hit Standard Parking particularly hard because a large number of the parking facilities it manages are located at airports, where it also manages shuttle bus operations.
“We were flying in the face of a real economic cycle,” he says. “We are generally a service vendor in buildings that support office buildings, the airport industry, high-end hotels where we provide valet and parking services, and our ability to create profitability for our company rests on the demands of those industries.
“With increased office vacancy rates and a downturn in passenger enplanements, and a downturn in overnight hotel stays over the last couple years, we were further challenged in terms of the turnaround that we had designed for the company.”
The merger also created some surprises for Wilhelm and his team.
“We found that we had inherited several deals at some airports and in some office buildings that, with the downturn in the economy, put contracts that had been very profitable for the company in a losing situation,” he says. “The challenge was to sit down with those clients and renegotiate terms that were fair for both sides. That was the most contrary behavior.
“Normally, we’re working with clients on acquiring new properties and renegotiating extended terms, and for us to have to go back and utilize language that enables us to renegotiate based on catastrophic events was really new for us.”
But that was only the beginning. Wilhelm and the other directors formulated a plan to bring the company back to stability and position it for further growth.
“We found that the debt load that was placed upon the company was frustrating from the perspective of growth opportunities,” Wilhelm says. “About that time, three years ago when we put the current management team together, we laid out a strategy where we would, methodically, over a period of years, try to delever (unleverage) the company’s balance sheet to take away any remaining hurdles from what we thought could be a fairly effective growth rate.”
That strategy was designed to establish credibility with the company’s primary stakeholders — banks, bondholders and owners — and allow Standard to stand alone as a new, beefed-up entity.
Explains Wilhelm, “We felt that the best way to do that was just to put our noses to the grindstone and produce solid quarterly year-over-year results. By establishing that credibility, in what turned out to be a down economic cycle, if we could show that growth on a quarter-by-quarter basis, we would have credibility to go back to the marketplace and, through a series of creative financing methods, reduce our debt load and enable the company the opportunity to grow the way that we felt that it could.”
That period of strategy culminated with the decision to take Standard Parking public; its IPO was completed in June. The stock was initially offered for $11.50 per share and has been as high as $14.69. It was selling in the mid to upper $12 range as of mid-July.
Adaptation to meet consumers needs
Wilhelm joined the company in 1985, and since then, he has seen a number of changes.
“The industry has become more sophisticated,” he says. “The use of technology, whether it is hardware in the field that enables us to control the revenues we collect from our customers and then ultimately provide to our clients, is much different than it was when I joined the company. The software that drives that hardware has improved over the years, which enables us to capture most, if not all, of the revenue that we’re entitled to.”
But it’s not just the technology that has become more sophisticated. The clients themselves are much more savvy when it comes to parking revenue opportunities.
“I think our clients have become much more sophisticated and demanding over the last 20 years,” Wilhelm says. “Parking was an afterthought in some of the buildings that we manage, whether it was the airport industry or the office building industry or the medical field or some of the other vertical markets that we serve. The clients were rather sleepy regarding that revenue stream.
“Over the last 15 years, we have seen that level of sophistication grow. They recognize that the parking revenue that we provide to them is often the second largest profit center in their entity. And as such, they’re demanding (more) in the form of revenue control, marketing and amenities for their customers.”
Those demands are realized in a variety of ways, including Standard Parking’s patented musical theme floor reminder system. The company uses songs and pictures help parkers locate their cars. At O’Hare International Airport, the Chicago Cubs dominate the first floor of the parking structure, followed by the Bears, White Sox, Black Hawks, Bulls and Wolves on deck six.
“We made a conscious decision many, many years ago, as we were developing Standard Parking, that we were going to separate ourselves from our competition by offering superior products to our clients,” Wilhelm says. “That enables us additional profitability per contract because clients tend to incentivize us to maximize the amount of revenues they collect. That’s really the key to our business model to be in the parking management business and to be able to maximize revenue to our clients.
“(That is why the company developed) the idea of reminding people where they parked by virtue of music and themes, the Standard Road Assist product, the Midas Car Care program, FilmsToGo or some of the other products or the services, including our Little Parkers program for children that we offer at our locations.”
Continuous improvement
One operation that makes Wilhelm most proud is Standard University, the company’s continuous training program. Classes include revenue control systems, self-park vs. valet, employee grooming, product delivery standards, facility maintenance standards and risk management standards.
“The top 400 people in the company are continually enrolled — and that includes me,” Wilhelm says.
Wilhelm contends that his job has changed over the years. As the company grows, he spends an increasingly disproportionate amount of each day with investment bankers, attorneys and accounting firms.
“As my job has become more sophisticated, I deal in a little different realm,” Wilhelm says. “The part of my job that I enjoy most, almost every day is stopping in one of our facilities and ensuring that the product that we have promised our client is being delivered.”
And while the toughest hurdles may be behind them, Wilhelm knows there are still some challenges to come.
“We’re very focused now on taking our improved financial condition and leveraging that to continue to grow the company,” he says. “Some of the barriers that existed — being weighed down by debt — were relieved by virtue of the preliminary financial transactions that we did over the past few years. The recent IPO and the associated the renegotiation of our senior credit facility with our banks — and we’re delighted to have their support — enables us to tear down any of the barriers that were remaining in terms of executing and realizing the business vision and model.”
And with those barriers lowered, Wilhelm says it’s time to look ahead at growth.
“The focus now, with the handcuffs off, is how can we grow our product line and how can we grow our market share by virtue of continuing to improve the product,” he says. “That is the focus of the near future. At some point in the future, we will be making decisions on how best to leverage the capital that we’ll be generating for the company.” How to reach: Standard Parking, (888) 700-PARK or http://www.standardparking.com
