ABM (NYSE: ABM), a leading provider of facility solutions, today
announced financial results for the fourth quarter and full year
that ended October 31, 2021. Scott Salmirs, President and
Chief Executive Officer of ABM said, “I am very pleased with our
fourth quarter results and our continued momentum, which
underscores the strength and diversity of our business and the
progress we have made in enhancing our profitability while we
continue to invest in our people and our capabilities.”
“Overall, fiscal 2021 was an outstanding year
for ABM, reflecting strong and consistent execution from our global
team to support our clients as the economy emerges from the
challenges of the pandemic," continued Mr. Salmirs. “Benefiting
from improving business conditions, continued demand for our
higher-margin virus protection services, efficient labor management
and strategic M&A, ABM achieved significant margin expansion
and generated full year revenue growth of 4% and adjusted earnings
per share of $3.58."
“A key milestone in 2021 was the acquisition of
Able Services, a premier facilities management provider that
expands our scale, strengthens our capabilities and accelerates our
growth. Able contributed positively to our fourth quarter results
and we remain excited about the long-term growth opportunities this
transaction provides as we support our customers with a broader
portfolio of services and solutions that align with their evolving
needs.”
Fourth Quarter Financial and Business
Results
For the fourth quarter of fiscal 2021, the
Company achieved revenues of $1.7 billion, an increase of 14.2%
compared to the prior-year period, comprised of 7.4% organic growth
and 6.8% from acquisition. Organic revenue growth was led by a 43%
year-over-year gain in Aviation, reflecting increased domestic air
travel and new customer wins, and by a 21% gain in Technical
Solutions due to improved customer site access and growth in the
Company's emerging e-mobility business. Business and Industry
revenue improved 17.5% year-over-year, benefiting from one month of
contribution from the acquisition of Able Services and the gradual
re-occupancy of offices. Education revenue declined 3.7%, while
Technology & Manufacturing revenue was essentially flat from
the prior-year period as strength in new business starts was offset
by an easing in demand for work orders and EnhancedClean
business.
On a GAAP basis, income from continuing
operations was $34.3 million, or $0.50 per diluted share, compared
to income from continuing operations of $53.1 million, or $0.78 per
diluted share last year. The decrease in income from operations and
diluted EPS is primarily attributable to increased operating and
acquisition-related costs as well as preliminary expenses from the
Elevate initiative, discussed more fully below, and a lower benefit
from self-insurance adjustments related to prior years. These
expenses were partially offset by the absence of reserve of notes
receivable related to a single project within the Company's
Technical Solutions segment recorded last year.
Adjusted income from continuing operations for
the fourth quarter of fiscal 2021 was $58.2 million, or $0.85 per
diluted share, compared to $46.7 million, or $0.69 per diluted
share, for the fourth quarter of fiscal 2020. Adjusted results
exclude items impacting comparability. A description of items
impacting comparability can be found in the "Reconciliation of
Non-GAAP Financial Measures" table.
Results from continuing operations for the
quarter on a GAAP and adjusted basis continued to reflect elevated
customer demand for higher-margin COVID-19-related work orders,
albeit at a moderated level from earlier in the year. Results also
benefited from continued efficient management of direct labor,
particularly in Business & Industry and Aviation, as well as a
favorable mix of business in Aviation and Technical Solutions.
Partially offsetting these gains, operating profit in Education
declined due to higher initial costs as staffing was ramped up
rapidly to accommodate the widespread re-opening of educational
institutions in the fall.
On a GAAP basis, corporate costs increased
primarily due to acquisition-related expenses and a lower benefit
from self-insurance adjustments related to prior years.
Net income for the fourth quarter of 2021 was
$34.3 million, or $0.50 per diluted share, compared to net income
of $53.1 million, or $0.78 per diluted share last year.
Adjusted EBITDA for the fourth quarter of 2021
was $111.2 million compared to $92.5 million in the fourth quarter
of 2020. Adjusted EBITDA margin for the quarter was 6.6% versus
6.2% in the fourth quarter of fiscal 2020. Adjusted results exclude
items impacting comparability. A description of items impacting
comparability can be found in the "Reconciliation of Non-GAAP
Financial Measures" table.
Fiscal 2021 Results
For fiscal 2021, the Company achieved revenues
of approximately $6.2 billion, an increase of 4.0%, including 2.3%
organic growth and 1.7% growth from acquisition. Organic growth
reflected the increase in EnhancedClean services and work orders
driven by the COVID-19 pandemic, growth in new customer wins and
generally improving economic conditions.
On a GAAP basis, income from continuing
operations was $126.3 million, or $1.86 per diluted share, compared
to income from continuing operations of $0.2 million, or $0.00 per
diluted share last year. This increase in income from continuing
operations in fiscal 2021 reflects the benefit to earnings of
revenue growth, higher self-insurance reserve adjustments related
to prior year claims, and the absence of a goodwill impairment
charge and notes receivable reserve, both of which were recorded in
2020, offset in part by a litigation settlement reserve,
acquisition-related costs and ramp up for our Elevate program.
Adjusted income from continuing operations for
fiscal 2021 was $243.3 million, or $3.58 per diluted share,
compared to $163.5 million, or $2.43 per diluted share for fiscal
2020. Adjusted results exclude items impacting comparability. A
description of items impacting comparability can be found in the
"Reconciliation of Non-GAAP Financial Measures" table.
Net income for fiscal 2021 was $126.3 million,
or $1.86 per diluted share, compared to $0.3 million, or $0.00 per
diluted share last year.
Adjusted EBITDA for fiscal 2021 was $455.0
million compared to $361.9 million in fiscal 2020. Adjusted EBITDA
margin for the year was 7.3% versus 6.0% last year. Adjusted
results exclude items impacting comparability. A description of
items impacting comparability can be found in the "Reconciliation
of Non-GAAP Financial Measures" table.
Recent Corporate
Developments
September 30, 2021 — ABM announced the closing
of its previously announced acquisition of Able Services, a leading
facilities services company headquartered in San Francisco.
September 9, 2021 — ABM announced the company
has initiated a project with the New York Power Authority to
support its electrification of New York City Transit buses and
planned reduction of greenhouse gas emissions.
Liquidity & Capital
Structure
The majority of the Company's revolving line of
credit remained undrawn at fiscal year-end. Additionally, the
Company’s cash and cash equivalents totaled $62.8 million as of
October 31, 2021.
The Company ended the quarter with total debt of
$1,058.9 million, including $167.7 million in standby letters of
credit, resulting in a total leverage ratio per the Company's
credit facility of 1.9x. Additionally, the Company had total
available liquidity of approximately $938 million, inclusive of
cash and cash equivalents at fiscal year-end 2021.
Declaration and Increase of Quarterly Cash
Dividend
The Company also announced that the Board of
Directors approved a 2.6% increase in the quarterly cash dividend
from $0.190 to $0.195 per common share, payable on February 7, 2022
to stockholders of record on January 6, 2022. This marks ABM’s
223rd consecutive quarterly cash dividend.
Elevate Investment Program
Building upon the success of the Company's
Vision 2020 initiative, ABM will discuss today at its Virtual
Investor Day a multi-year comprehensive investment initiative,
called Elevate. Elevate is a transformational program intended to
enhance the Company's strategic position; leverage the advantages
of leading-edge technologies, inclusive of data and analytics;
capture incremental growth and profit opportunities arising from
shifting demographics, rapidly changing workplace dynamics and the
need for increased corporate sustainability.
Elevate investments are expected to accelerate
the Company's organic growth, strengthen profitability and create a
more rewarding experience for both clients and employees. The total
Elevate investment is estimated to be $150 million to $175 million
and most of these discrete investments will be reported as items
impacting comparability. Elevate is expected to be largely
completed by the end of fiscal 2025.
In fiscal 2022, the Company expects its Elevate
investment will be $80 million, including $72 million in discrete
expenses and $8 million in capital expenditures. This initial
investment will significantly advance the implementation of the
Company's digital transformation initiative, enabling lower levels
of investment in subsequent years.
Guidance
For fiscal 2022, ABM expects GAAP earnings per
diluted share of $2.05 to $2.30, and adjusted EPS from continuing
operations of $3.30 to $3.55. This guidance assumes an easing in
COVID-19-related disinfection services and work orders. Fiscal 2022
adjusted EBITDA margin is anticipated to be in the range of
6.2%-6.6%, inclusive of synergies from the Able Services
acquisition.
Mr. Salmirs concluded, “Over the past five
years, ABM achieved significant strategic, operational and
financial progress through the successful execution of our 2020
Vision. Today, ABM embarks on our next transformational strategic
initiative, Elevate, which we believe will further strengthen our
industry leadership position and unlock long-term shareholder value
by accelerating our growth and enhancing our profitability.
Supported by our broad portfolio of high-value services and
solutions and the strength of our balance sheet, ABM has never been
better positioned to invest in our future and launch our next phase
of growth.”
Earnings Webcast and Virtual Investor Day
Information
ABM will host via webcast its quarterly
earnings, followed by a Virtual Investor Day presentation
on Wednesday, December 15, 2021 at 8:30 AM (EST).
The live webcast can be accessed approximately 15 minutes prior to
the scheduled start time via webcast at the "Investors" section of
the Company's website, located at www.abm.com. The presentation
will be recorded and archived on the ABM website for 90 days.
ABOUT ABM
ABM (NYSE: ABM) is one of the world’s largest
providers of integrated facility services. A driving force for a
cleaner, healthier, and more sustainable world, ABM provides
essential services that improve the spaces and places that matter
most. From curbside to rooftop, ABM offers a comprehensive array of
facility services that includes janitorial, engineering, parking,
electrical & lighting, energy solutions, HVAC & mechanical,
landscape & turf, and mission critical solutions. ABM delivers
these custom facility solutions to properties across a wide range
of industries – from commercial office buildings to schools,
airports, hospitals, data centers, manufacturing plants and
distribution centers, entertainment venues and more. Founded in
1909, ABM is a Fortune 500 company with annual revenue exceeding $6
billion and more than 100,000 team members in 350+ offices
throughout the United States, United Kingdom and other
international locations. For more information, visit
www.abm.com.
Cautionary Statement under the Private Securities
Litigation Reform Act of 1995
This press release contains both historical and
forward-looking statements about ABM Industries Incorporated
(“ABM”) and its subsidiaries (collectively referred to as “ABM,”
“we,” “us,” “our,” or the “Company”). We make forward-looking
statements related to future expectations, estimates and
projections that are uncertain, and often contain words such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,”
“intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “should,”
“target,” or other similar words or phrases. These statements are
not guarantees of future performance and are subject to known and
unknown risks, uncertainties, and assumptions that are difficult to
predict. For us, particular uncertainties that could cause our
actual results to be materially different from those expressed in
our forward-looking statements include: The COVID-19 pandemic has
had and is expected to continue having a negative effect on the
global economy, and the United States economy, and it has disrupted
and is expected to continue disrupting our operations and our
clients’ operations, which may adversely affect our business,
results of operations, cash flows, and financial condition; our
success depends on our ability to gain profitable business despite
competitive market pressures; our business success depends on our
ability to attract and retain qualified personnel and senior
management and to manage labor costs; investments in and changes to
our businesses, operating structure, financial reporting structure,
or personnel relating to our ELEVATE strategy, including the
implementation of strategic transformations, enhanced business
processes, and technology initiatives may not have the desired
effects on our financial condition and results of operations; our
ability to preserve long-term client relationships is essential to
our continued success; our international business involves risks
different from those we face in the United States that could have
an effect on our results of operations and financial condition; our
use of subcontractors or joint venture partners to perform work
under customer contracts exposes us to liability and financial
risk; acquisitions, divestitures, and other strategic transactions
could fail to achieve financial or strategic objectives, disrupt
our ongoing business, and adversely impact our results of
operations; we may experience difficulties integrating Able
Services and may not realize the growth opportunities and cost
synergies that are anticipated from the Able acquisition; we manage
our insurable risks through a combination of third-party purchased
policies and self-insurance, and we retain a substantial portion of
the risk associated with expected losses under these programs,
which exposes us to volatility associated with those risks,
including the possibility that changes in estimates to our ultimate
insurance loss reserves could result in material charges against
our earnings; our risk management and safety programs may not have
the intended effect of reducing our liability for personal injury
or property loss; we may experience breaches of, or disruptions to,
our information technology systems or those of our third-party
providers or clients, or other compromises of our data that could
adversely affect our business; unfavorable developments in our
class and representative actions and other lawsuits alleging
various claims could cause us to incur substantial liabilities; a
significant number of our employees are covered by collective
bargaining agreements that could expose us to potential liabilities
in relation to our participation in multiemployer pension plans,
requirements to make contributions to other benefit plans, and the
potential for strikes, work slowdowns or similar activities, and
union organizing drives; our business may be materially affected by
changes to fiscal and tax policies; negative or unexpected tax
consequences could adversely affect our results of operations;
changes in general economic conditions, such as changes in energy
prices, government regulations, or consumer preferences, could
reduce the demand for facility services and, as a result, reduce
our earnings and adversely affect our financial condition; future
increases in the level of our borrowings or in interest rates could
affect our results of operations; impairment of goodwill and
long-lived assets could have a material adverse effect on our
financial condition and results of operations; if we fail to
maintain proper and effective internal control over financial
reporting in the future, our ability to produce accurate and timely
financial statements could be negatively impacted, which could harm
our operating results and investor perceptions of our Company and
as a result may have a material adverse effect on the value of our
common stock; our business may be negatively impacted by adverse
weather conditions; catastrophic events, disasters, and terrorist
attacks could disrupt our services; actions of activist investors
could disrupt our business. For additional information on these and
other risks and uncertainties we face, see ABM’s risk factors, as
they may be amended from time to time, set forth in our filings
with the Securities and Exchange Commission, including our most
recent Annual Report on Form 10-K and subsequent filings. We urge
readers to consider these risks and uncertainties in evaluating our
forward-looking statements. We caution readers not to place undue
reliance upon any such forward-looking statements, which speak only
as of the date made. We undertake no obligation to publicly update
any forward-looking statements, whether as a result of new
information, future events, or otherwise, except as required by
law.
Use of Non-GAAP Financial Information
To supplement ABM’s consolidated financial
information, the Company has presented income from continuing
operations and income from continuing operations per diluted share
as adjusted for items impacting comparability, for the fourth
quarter and twelve months of fiscal years October 31, 2021 and
2020. These adjustments have been made with the intent of providing
financial measures that give management and investors a better
understanding of the underlying operational results and trends as
well as ABM’s operational performance. In addition, the Company has
presented earnings before income from discontinued operations, net
of taxes, interest, taxes, depreciation and amortization and
excluding items impacting comparability (adjusted EBITDA) for the
fourth quarter and twelve months of fiscal years 2021 and 2020.
Adjusted EBITDA is among the indicators management uses as a basis
for planning and forecasting future periods. Adjusted EBITDA margin
is defined as adjusted EBITDA divided by revenue. We cannot provide
a reconciliation of forward-looking non-GAAP adjusted EBITDA margin
measures to GAAP due to the inherent difficulty in forecasting and
quantifying certain amounts that are necessary for such
reconciliation. The Company has also presented Free Cash Flow which
is defined as net cash provided by operating activities less
additions to property, plant and equipment. The presentation of
these non-GAAP financial measures is not meant to be considered in
isolation or as a substitute for financial statements prepared in
accordance with accounting principles generally accepted in the
United States of America. (See accompanying financial tables for
supplemental financial data and corresponding reconciliations to
certain GAAP financial measures.)
Contact: |
|
Investor Relations: |
Paul Goldberg |
|
(212) 297-9721 |
|
ir@abm.com |
Financial Schedules
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
|
|
Three Months Ended October 31, |
|
|
(in millions, except per share
amounts) |
|
2021 |
|
2020 |
|
Increase / (Decrease) |
Revenues |
|
$ |
1,695.7 |
|
|
|
$ |
1,484.6 |
|
|
|
14.2% |
Operating expenses |
|
1,446.2 |
|
|
|
1,242.2 |
|
|
|
16.4% |
Selling, general and
administrative expenses |
|
180.9 |
|
|
|
155.1 |
|
|
|
16.6% |
Restructuring and related
expenses |
|
— |
|
|
|
2.8 |
|
|
|
NM* |
Amortization of intangible
assets |
|
12.9 |
|
|
|
11.5 |
|
|
|
12.5% |
Operating
profit |
|
55.7 |
|
|
|
73.0 |
|
|
|
(23.7)% |
Income from unconsolidated
affiliates |
|
0.7 |
|
|
|
0.1 |
|
|
|
NM* |
Interest expense |
|
(6.0 |
) |
|
|
(10.1 |
) |
|
|
40.4% |
Income from continuing
operations before income taxes |
|
50.3 |
|
|
|
63.0 |
|
|
|
(20.1)% |
Income tax provision |
|
(16.1 |
) |
|
|
(9.9 |
) |
|
|
(62.2)% |
Income from continuing
operations |
|
34.3 |
|
|
|
53.1 |
|
|
|
(35.4)% |
Income from discontinued
operations, net of taxes |
|
— |
|
|
|
— |
|
|
|
NM* |
Net
income |
|
34.3 |
|
|
|
53.1 |
|
|
|
(35.4)% |
Net income per common
share — Basic |
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.51 |
|
|
|
$ |
0.79 |
|
|
|
(35.4)% |
Income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
NM* |
Net income |
|
$ |
0.51 |
|
|
|
$ |
0.79 |
|
|
|
(35.4)% |
Net income per common
share — Diluted |
|
|
|
|
|
|
Income from continuing operations |
|
$ |
0.50 |
|
|
|
$ |
0.78 |
|
|
|
(35.9)% |
Income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
NM* |
Net income |
|
$ |
0.50 |
|
|
|
$ |
0.78 |
|
|
|
(35.9)% |
Weighted-average
common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
67.7 |
|
|
|
67.0 |
|
|
|
|
Diluted |
|
68.5 |
|
|
|
67.6 |
|
|
|
|
Dividends declared per
common share |
|
$ |
0.190 |
|
|
|
$ |
0.185 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful
(due to variance greater than or equal to +/-100%) |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
|
|
Years Ended October 31, |
|
|
(in millions, except per share
amounts) |
|
2021 |
|
2020 |
|
Increase / (Decrease) |
Revenues |
|
$ |
6,228.6 |
|
|
|
$ |
5,987.6 |
|
|
|
4.0% |
Operating expenses |
|
5,258.2 |
|
|
|
5,157.0 |
|
|
|
2.0% |
Selling, general and
administrative expenses(1) |
|
719.2 |
|
|
|
506.1 |
|
|
|
42.1% |
Restructuring and related
expenses |
|
— |
|
|
|
7.6 |
|
|
|
NM* |
Amortization of intangible
assets |
|
45.0 |
|
|
|
48.4 |
|
|
|
(7.1)% |
Impairment loss of goodwill
and other intangibles |
|
— |
|
|
|
172.8 |
|
|
|
NM* |
Operating
profit |
|
206.3 |
|
|
|
95.7 |
|
|
|
NM* |
Income from unconsolidated
affiliates |
|
2.1 |
|
|
|
2.2 |
|
|
|
(3.9)% |
Interest expense |
|
(28.6 |
) |
|
|
(44.6 |
) |
|
|
35.9% |
Income from continuing
operations before income taxes |
|
179.8 |
|
|
|
53.3 |
|
|
|
NM* |
Income tax provision |
|
(53.5 |
) |
|
|
(53.1 |
) |
|
|
(0.8)% |
Income from continuing
operations |
|
126.3 |
|
|
|
0.2 |
|
|
|
NM* |
Income from discontinued
operations, net of taxes |
|
— |
|
|
|
0.1 |
|
|
|
NM* |
Net
income |
|
126.3 |
|
|
|
0.3 |
|
|
|
NM* |
Net income per common
share — Basic |
|
|
|
|
|
|
Income from continuing operations |
|
$ |
1.87 |
|
|
|
$ |
0.00 |
|
|
|
NM* |
Income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
NM* |
Net income |
|
1.87 |
|
|
|
0.00 |
|
|
|
NM* |
Net income per common
share — Diluted |
|
|
|
|
|
|
Income from continuing operations |
|
$ |
1.86 |
|
|
|
$ |
0.00 |
|
|
|
NM* |
Income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
NM* |
Net income |
|
$ |
1.86 |
|
|
|
$ |
0.00 |
|
|
|
NM* |
Weighted-average
common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
67.4 |
|
|
|
66.9 |
|
|
|
|
Diluted |
|
68.0 |
|
|
|
67.3 |
|
|
|
|
Dividends declared per
common share |
|
$ |
0.760 |
|
|
|
$ |
0.740 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful
(due to variance greater than or equal to +/-100%) |
(1) 2021 includes
$142.9 million litigation settlement reserve |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESSELECTED CONSOLIDATED CASH FLOW
INFORMATION (UNAUDITED)
|
|
Three Months Ended October 31, |
(in millions) |
|
2021 |
|
2020 |
Net cash provided by operating activities of continuing
operations |
|
$ |
55.6 |
|
|
|
$ |
198.7 |
|
|
Net cash provided by operating
activities of discontinued operations |
|
— |
|
|
|
— |
|
|
Net cash provided by
operating activities |
|
$ |
55.6 |
|
|
|
$ |
198.7 |
|
|
Additions to property, plant
and equipment |
|
(11.0 |
) |
|
|
(9.1 |
) |
|
Purchase of business, net of
cash acquired |
|
(710.2 |
) |
|
|
— |
|
|
Other |
|
2.3 |
|
|
|
(0.3 |
) |
|
Net cash used in
investing activities |
|
$ |
(718.8 |
) |
|
|
$ |
(9.4 |
) |
|
Taxes withheld from issuance
of share-based compensations awards, net |
|
(0.3 |
) |
|
|
(0.3 |
) |
|
Dividends paid |
|
(12.8 |
) |
|
|
(12.3 |
) |
|
Borrowings from credit
facility |
|
325.0 |
|
|
|
6.5 |
|
|
Repayment of borrowings from
credit facility |
|
(96.3 |
) |
|
|
(38.6 |
) |
|
Changes in book cash
overdrafts |
|
1.7 |
|
|
|
9.8 |
|
|
Financing of energy savings
performance contracts |
|
4.2 |
|
|
|
9.6 |
|
|
Repayment of finance lease
obligations |
|
(0.4 |
) |
|
|
(0.8 |
) |
|
Net cash provided by
(used in) financing activities |
|
$ |
221.1 |
|
|
|
$ |
(26.0 |
) |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
(0.4 |
) |
|
|
1.5 |
|
|
|
|
Years Ended October 31, |
(in millions) |
|
2021 |
|
2020 |
Net cash provided by operating activities of continuing
operations |
|
$ |
314.3 |
|
|
|
$ |
457.4 |
|
|
Net cash provided by operating
activities of discontinued operations |
|
— |
|
|
|
0.1 |
|
|
Net cash provided by
operating activities |
|
$ |
314.3 |
|
|
|
$ |
457.5 |
|
|
Additions to property, plant
and equipment |
|
(34.3 |
) |
|
|
(38.0 |
) |
|
Purchase of business, net of
cash acquired |
|
(710.2 |
) |
|
|
— |
|
|
Other |
|
4.4 |
|
|
|
10.5 |
|
|
Net cash used in
investing activities |
|
$ |
(740.0 |
) |
|
|
$ |
(27.5 |
) |
|
Taxes withheld from issuance
of share-based compensations awards, net |
|
(8.1 |
) |
|
|
(0.9 |
) |
|
Repurchases of common
stock |
|
— |
|
|
|
(5.1 |
) |
|
Dividends paid |
|
(51.0 |
) |
|
|
(49.3 |
) |
|
Deferred financing costs
paid |
|
(6.4 |
) |
|
|
(4.4 |
) |
|
Borrowings from credit
facility |
|
357.7 |
|
|
|
1,058.5 |
|
|
Repayment of borrowings from
credit facility |
|
(194.2 |
) |
|
|
(1,141.6 |
) |
|
Changes in book cash
overdrafts |
|
(17.9 |
) |
|
|
41.2 |
|
|
Financing of energy savings
performance contracts |
|
15.1 |
|
|
|
11.1 |
|
|
Repayment of finance lease
obligations |
|
(2.8 |
) |
|
|
(3.4 |
) |
|
Net cash provided by
(used in) financing activities |
|
$ |
92.4 |
|
|
|
$ |
(94.1 |
) |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
1.9 |
|
|
|
(0.2 |
) |
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
INFORMATION (UNAUDITED)
|
October 31, |
(in millions) |
2021 |
|
2020 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
62.8 |
|
|
$ |
394.2 |
|
Trade accounts receivable, net of allowances |
1,137.1 |
|
|
854.2 |
|
Costs incurred in excess of amounts billed |
52.5 |
|
|
52.2 |
|
Prepaid expenses |
88.7 |
|
|
85.4 |
|
Other current assets |
60.0 |
|
|
55.9 |
|
Total current assets |
1,401.2 |
|
|
1,441.9 |
|
Other investments |
11.8 |
|
|
11.1 |
|
Property, plant and equipment,
net of accumulated depreciation |
111.9 |
|
|
133.7 |
|
Right-of-use assets |
126.5 |
|
|
143.1 |
|
Other intangible assets, net
of accumulated amortization |
424.8 |
|
|
239.7 |
|
Goodwill |
2,228.9 |
|
|
1,671.4 |
|
Other noncurrent assets |
131.2 |
|
|
136.1 |
|
Total assets |
$ |
4,436.2 |
|
|
$ |
3,776.9 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities |
|
|
|
Current portion of long-term debt, net |
$ |
31.4 |
|
|
$ |
116.7 |
|
Trade accounts payable |
289.4 |
|
|
273.3 |
|
Accrued compensation |
238.0 |
|
|
187.6 |
|
Accrued taxes—other than income |
124.9 |
|
|
45.5 |
|
Insurance claims |
171.4 |
|
|
155.2 |
|
Income taxes payable |
11.4 |
|
|
6.2 |
|
Current portion of lease liabilities |
31.8 |
|
|
35.0 |
|
Other accrued liabilities |
387.4 |
|
|
167.3 |
|
Total current liabilities |
1,285.8 |
|
|
986.9 |
|
Long-term debt, net |
852.8 |
|
|
603.0 |
|
Long-term lease
liabilities |
116.6 |
|
|
131.4 |
|
Deferred income tax liability,
net |
22.5 |
|
|
10.8 |
|
Noncurrent insurance
claims |
413.3 |
|
|
366.3 |
|
Other noncurrent
liabilities |
123.5 |
|
|
168.1 |
|
Noncurrent income taxes
payable |
12.5 |
|
|
10.1 |
|
Total liabilities |
2,827.0 |
|
|
2,276.6 |
|
Total stockholders’ equity |
1,609.2 |
|
|
1,500.3 |
|
Total liabilities and
stockholders’ equity |
$ |
4,436.2 |
|
|
$ |
3,776.9 |
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESREVENUES AND OPERATING PROFIT BY
SEGMENT (UNAUDITED)
|
|
Three Months Ended October 31, |
|
|
($ in millions) |
|
2021 |
|
2020 |
|
Increase/(Decrease) |
Revenues |
|
|
|
|
|
|
Business & Industry |
|
$ |
933.2 |
|
|
|
$ |
794.3 |
|
|
|
17.5% |
Technology &
Manufacturing |
|
245.5 |
|
|
|
245.2 |
|
|
|
0.1% |
Education |
|
204.4 |
|
|
|
212.2 |
|
|
|
(3.7)% |
Aviation |
|
201.7 |
|
|
|
141.0 |
|
|
|
43.0% |
Technical Solutions |
|
149.0 |
|
|
|
123.1 |
|
|
|
21.0% |
Elimination of inter-segment
revenues |
|
(38.1 |
) |
|
|
(31.3 |
) |
|
|
(21.6)% |
Total
revenues |
|
$ |
1,695.7 |
|
|
|
$ |
1,484.6 |
|
|
|
14.2% |
Operating
profit |
|
|
|
|
|
|
Business & Industry |
|
82.1 |
|
|
|
84.7 |
|
|
|
(3.0)% |
Technology &
Manufacturing |
|
24.5 |
|
|
|
23.5 |
|
|
|
4.2% |
Education |
|
7.7 |
|
|
|
15.1 |
|
|
|
(48.8)% |
Aviation |
|
13.2 |
|
|
|
3.5 |
|
|
|
NM* |
Technical Solutions |
|
19.0 |
|
|
|
(3.6 |
) |
|
|
NM* |
Corporate |
|
(90.1 |
) |
|
|
(49.2 |
) |
|
|
(83.2)% |
Adjustment for income from
unconsolidated affiliates, included in Aviation and Technical
Solutions |
|
(0.7 |
) |
|
|
(0.1 |
) |
|
|
NM* |
Adjustment for tax deductions
for energy efficient government buildings, included in Technical
Solutions |
|
(0.1 |
) |
|
|
(0.9 |
) |
|
|
89.0% |
Total operating
profit |
|
55.7 |
|
|
|
73.0 |
|
|
|
(23.7)% |
Income from unconsolidated
affiliates |
|
0.7 |
|
|
|
0.1 |
|
|
|
NM* |
Interest expense |
|
(6.0 |
) |
|
|
(10.1 |
) |
|
|
40.4% |
Income from continuing
operations before income taxes |
|
50.3 |
|
|
|
63.0 |
|
|
|
(20.1)% |
Income tax provision |
|
(16.1 |
) |
|
|
(9.9 |
) |
|
|
(62.2)% |
Income from continuing
operations |
|
34.3 |
|
|
|
53.1 |
|
|
|
(35.4)% |
Income from discontinued
operations, net of taxes |
|
— |
|
|
|
— |
|
|
|
NM* |
Net income |
|
$ |
34.3 |
|
|
|
$ |
53.1 |
|
|
|
(35.4)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful
(due to variance greater than or equal to +/-100%) |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESREVENUES AND OPERATING PROFIT BY
SEGMENT (UNAUDITED)
|
|
Years Ended October 31, |
|
|
($ in millions) |
|
2021 |
|
2020 |
|
Increase/(Decrease) |
Revenues |
|
|
|
|
|
|
Business & Industry |
|
$ |
3,346.5 |
|
|
|
$ |
3,157.8 |
|
|
|
6.0% |
Technology &
Manufacturing |
|
987.1 |
|
|
|
956.0 |
|
|
|
3.3% |
Education |
|
836.4 |
|
|
|
808.8 |
|
|
|
3.4% |
Aviation |
|
668.8 |
|
|
|
680.9 |
|
|
|
(1.8)% |
Technical Solutions |
|
534.0 |
|
|
|
506.6 |
|
|
|
5.4% |
Elimination of inter-segment
revenues |
|
(144.2 |
) |
|
|
(122.4 |
) |
|
|
(17.8)% |
Total
revenues |
|
$ |
6,228.6 |
|
|
|
$ |
5,987.6 |
|
|
|
4.0% |
Operating
profit |
|
|
|
|
|
|
Business & Industry |
|
$ |
337.8 |
|
|
|
$ |
253.7 |
|
|
|
33.1% |
Technology &
Manufacturing |
|
103.8 |
|
|
|
84.4 |
|
|
|
22.9% |
Education (2020 includes
$99.3m impairment charge) |
|
60.5 |
|
|
|
(41.1 |
) |
|
|
NM* |
Aviation (2020 includes $61.1m
impairment charge) |
|
32.5 |
|
|
|
(59.6 |
) |
|
|
NM* |
Technical Solutions (2020
includes $12.4m impairment charge) |
|
49.8 |
|
|
|
9.5 |
|
|
|
NM* |
Government Services |
|
(0.2 |
) |
|
|
(0.1 |
) |
|
|
NM* |
Corporate (2021 includes
$142.9m litigation settlement reserve) |
|
(374.6 |
) |
|
|
(146.9 |
) |
|
|
NM* |
Adjustment for income from
unconsolidated affiliates, included in Aviation and Technical
Solutions |
|
(2.1 |
) |
|
|
(2.2 |
) |
|
|
3.9% |
Adjustment for tax deductions
for energy efficient government buildings, included in Technical
Solutions |
|
(1.2 |
) |
|
|
(2.1 |
) |
|
|
44.2% |
Total operating
profit |
|
206.3 |
|
|
|
95.7 |
|
|
|
NM* |
Income from unconsolidated
affiliates |
|
2.1 |
|
|
|
2.2 |
|
|
|
(3.9)% |
Interest expense |
|
(28.6 |
) |
|
|
(44.6 |
) |
|
|
35.9% |
Income from continuing
operations before income taxes |
|
179.8 |
|
|
|
53.3 |
|
|
|
NM* |
Income tax provision |
|
(53.5 |
) |
|
|
(53.1 |
) |
|
|
(0.8)% |
Income from continuing
operations |
|
126.3 |
|
|
|
0.2 |
|
|
|
NM* |
Income from discontinued
operations, net of taxes |
|
— |
|
|
|
0.1 |
|
|
|
NM* |
Net
income |
|
$ |
126.3 |
|
|
|
$ |
0.3 |
|
|
|
NM* |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful
(due to variance greater than or equal to +/-100%) |
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
($ in millions, except
per share amounts) |
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of
Income from Continuing Operations to Adjusted Income from
Continuing Operations |
|
|
|
|
|
|
|
|
Income from continuing operations |
|
$ |
34.3 |
|
|
|
$ |
53.1 |
|
|
|
$ |
126.3 |
|
|
|
$ |
0.2 |
|
|
Items impacting
comparability(a) |
|
|
|
|
|
|
|
|
Prior year self-insurance adjustment(b) |
|
(6.2 |
) |
|
|
(15.1 |
) |
|
|
(43.8 |
) |
|
|
(26.4 |
) |
|
Restructuring and related(c) |
|
— |
|
|
|
2.8 |
|
|
|
— |
|
|
|
7.6 |
|
|
Legal costs and other settlements(d) |
|
7.0 |
|
|
|
8.3 |
|
|
|
158.4 |
|
|
|
14.2 |
|
|
Acquisition and integration related costs |
|
19.7 |
|
|
|
— |
|
|
|
22.3 |
|
|
|
— |
|
|
Impairment loss |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
172.8 |
|
|
Transformation initiative costs(h) |
|
10.3 |
|
|
|
— |
|
|
|
10.3 |
|
|
|
— |
|
|
Other(g) |
|
0.4 |
|
|
|
0.1 |
|
|
|
9.4 |
|
|
|
(0.7 |
) |
|
Total items impacting comparability |
|
31.1 |
|
|
|
(3.9 |
) |
|
|
156.7 |
|
|
|
167.6 |
|
|
Income tax benefit(e) (f) |
|
(7.2 |
) |
|
|
(2.5 |
) |
|
|
(39.7 |
) |
|
|
(4.3 |
) |
|
Items impacting comparability, net of taxes |
|
23.9 |
|
|
|
(6.4 |
) |
|
|
117.0 |
|
|
|
163.3 |
|
|
Adjusted income from
continuing operations |
|
$ |
58.2 |
|
|
|
$ |
46.7 |
|
|
|
$ |
243.3 |
|
|
|
$ |
163.5 |
|
|
|
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of Net
Income to Adjusted EBITDA |
|
|
|
|
|
|
|
|
Net income |
|
$ |
34.3 |
|
|
|
$ |
53.1 |
|
|
|
$ |
126.3 |
|
|
|
$ |
0.3 |
|
|
Items impacting comparability |
|
31.1 |
|
|
|
(3.9 |
) |
|
|
156.7 |
|
|
|
167.6 |
|
|
Income from discontinued operations |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(0.1 |
) |
|
Income tax provision |
|
16.1 |
|
|
|
9.9 |
|
|
|
53.5 |
|
|
|
53.1 |
|
|
Interest expense |
|
6.0 |
|
|
|
10.1 |
|
|
|
28.6 |
|
|
|
44.6 |
|
|
Depreciation and amortization |
|
23.7 |
|
|
|
23.2 |
|
|
|
89.9 |
|
|
|
96.4 |
|
|
Adjusted EBITDA |
|
$ |
111.2 |
|
|
|
$ |
92.5 |
|
|
|
$ |
455.0 |
|
|
|
$ |
361.9 |
|
|
|
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of
Income from Continuing Operations per Diluted Share to Adjusted
Income from Continuing Operations per Diluted Share |
|
|
|
|
|
|
|
|
Income from continuing operations per diluted share |
|
$ |
0.50 |
|
|
|
$ |
0.78 |
|
|
|
$ |
1.86 |
|
|
|
$ |
— |
|
|
Items impacting comparability, net of taxes |
|
0.35 |
|
|
|
(0.09 |
) |
|
|
1.72 |
|
|
|
2.43 |
|
|
Adjusted income from
continuing operations per diluted share |
|
$ |
0.85 |
|
|
|
$ |
0.69 |
|
|
|
$ |
3.58 |
|
|
|
$ |
2.43 |
|
|
Diluted shares |
|
68.5 |
|
|
|
67.6 |
|
|
|
68.0 |
|
|
|
67.3 |
|
|
|
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2021 |
|
2020 |
|
2021 |
|
2020 |
Reconciliation of Net
Cash Provided by Operating Activities to Free Cash
Flow |
|
|
|
|
|
|
|
|
Net cash provided by operating activities |
|
$ |
55.6 |
|
|
|
$ |
198.7 |
|
|
|
$ |
314.3 |
|
|
|
$ |
457.5 |
|
|
Additions to property, plant and equipment |
|
(11.0 |
) |
|
|
(9.1 |
) |
|
|
(34.3 |
) |
|
|
(38.0 |
) |
|
Free Cash Flow |
|
$ |
44.6 |
|
|
|
$ |
189.6 |
|
|
|
$ |
280.1 |
|
|
|
$ |
419.5 |
|
|
(a) The Company adjusts income from continuing
operations to exclude the impact of certain items that are unusual,
non-recurring, or otherwise do not reflect management's views of
the underlying operational results and trends of the Company.
(b) Represents the net adjustments to our
self-insurance reserve for general liability, workers’
compensation, automobile and medical and dental insurance claims
related to prior period accident years. Management
believes these prior period reserve changes do not illustrate
the performance of the Company’s normal ongoing operations given
the current year's insurance expense is estimated by management in
conjunction with the Company's outside actuary to take into
consideration past history and current costs and regulatory trends.
Once the Company develops its best estimate of insurance expense
premiums for the year, the Company fully allocates such costs out
to the business leaders to hold them accountable for the current
year costs within operations. However, since these prior period
reserve changes relate to claims that could date back many years,
current management has limited ability to influence the ultimate
development of the prior year changes. Accordingly, including the
prior period reserve changes in the Company's current operational
results would not depict how the business is run as the Company
holds its management accountable for the current year’s operational
performance. The Company believes the exclusion of the
self-insurance adjustment from income from continuing operations is
useful to investors by enabling them to better assess our operating
performance in the context of current year profitability. For the
three months ended October 31, 2021 and 2020, our self-insurance
general liability, workers’ compensation, automobile and medical
and dental insurance claims related to prior period accident years
was decreased by $6.2M and by $15.1M, respectively. For the years
ended October 31, 2021 and 2020, the liability decreased by $43.8M
and by $26.4M, respectively.
(c) Represents restructuring costs related to
the integration of GCA acquisition in September 2017.
(d) The year ended October 31, 2021 includes a
reserve for an ongoing litigation of $142.9 million, which will be
detailed in the Company’s Form 10-K.
(e) The Company's tax impact is calculated using
the federal and state statutory rate of 28.11% for US and 19% for
UK for FY 2021 and FY 2020. We calculate tax from the underlying
whole-dollar amounts, as a result, certain amounts may not
recalculate based on reported numbers due to rounding.
(f) The three months ended October 31, 2021 include $1.5 million
tax benefit related to the expiring statute of limitations and $3.0
million tax charge related to non-deductible acquisitions costs.
Year ended October 31, 2021 include $1.5 million tax benefit
related to the expiring statute of limitations, $2.8 million charge
from change of tax reserves and $3.0 million tax charge related to
non-deductible acquisitions costs. The three months ended October
31, 2020 includes a $3.6 million tax benefit related to the
expiring statute of limitations. Year ended October 31, 2020
includes a $3.6 million tax benefit related to the expiring statute
of limitations and a $45.2 million tax charge related to impairment
of nondeductible goodwill.
(g) The year ended October 31, 2021, includes $9.1 million of
non-cash impairment charge for previously capitalized internal-use
software related to our ERP system implementation as we determined
that certain components developed will no longer be incorporated
into the new ERP system.
(h) Represents discrete transformational costs that primarily
consists of general and administrative costs for developing
technological needs and alternatives, project management, testing,
training and data conversion inclusive of internal costs,
consulting and professional fees for i) new enterprise resource
planning system, ii) client facing technology, iii) workforce
management tools and iv) data analytics. These costs are not
expected to recur beyond the deployment of these initiatives.
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
2022 GUIDANCE
|
|
Year Ending October 31, 2022 |
Reconciliation of
Estimated Income from Continuing Operations per Diluted Share to
Estimated Adjusted Income from Continuing Operations per Diluted
Share |
|
Low Estimate |
|
High Estimate |
Income from continuing operations per diluted share (a) |
|
$ |
2.05 |
|
|
$ |
2.30 |
|
Transformation initiative
costs (b) |
|
0.76 |
|
|
0.76 |
|
Acquisition and integration
related costs (c) |
|
0.25 |
|
|
0.25 |
|
Other adjustments (d) |
|
0.24 |
|
|
0.24 |
|
Adjusted Income from
continuing operations per diluted share (a) |
|
$ |
3.30 |
|
|
$ |
3.55 |
|
(a) With the exception of the 2022 Work
Opportunity Tax Credits and anticipated excess tax benefits on
stock-based awards, this guidance does not include any potential
effects associated with certain other discrete tax items and other
unrecognized tax benefits.
(b) Represents discrete transformational costs
that primarily consists of general and administrative costs for
developing technological needs and alternatives, project
management, testing, training and data conversion inclusive of
internal costs, consulting and professional fees for i) new
enterprise resource planning system, ii) client facing technology,
iii) workforce management tools and iv) data analytics. These costs
are not expected to recur beyond the deployment of these
initiatives.
(c) Represents acquisition and integration
related costs associated with Able acquisition.
(d) Represents other contingencies that could
include legal settlements, adjustments to self-insurance reserves
pertaining to prior year's claims and other unique items impacting
comparability.
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