ABM (NYSE: ABM), a leading provider of facility solutions, today
announced financial results for the second quarter of fiscal 2023.
“Our team’s focus on delivering exceptional
service, controlling costs, and passing through price increases was
key to generating our second quarter results,” said Scott Salmirs,
ABM’s President & Chief Executive Officer. “Our revenue growth
was driven by the RavenVolt acquisition, and also derived from our
diversified end-markets, including favorable market dynamics in
Aviation, Education and Manufacturing & Distribution.”
Mr. Salmirs continued, “We remain on target to
achieve our 2023 financial goals, despite a more challenging than
anticipated macro-environment, including a soft commercial real
estate market. I am proud that our results are well above
pre-pandemic levels, reflecting our resilient business model,
improved operational efficiency and a more dynamic service mix, all
of which we believe will be enhanced over time through our ELEVATE
initiatives. As we move forward, I am confident that our team will
continue to drive growth, execute on our strategy and build value
for our shareholders as we work tirelessly to achieve our
longer-term goals.”
Second Quarter Fiscal 2023
Results
For the second quarter of fiscal 2023, the
Company reported revenue of $2.0 billion, up 4.5% over the prior
year period, comprised of 2.3% organic growth, including $12.6
million of revenue recognized from parking project work completed
in prior periods, and 2.2% growth from acquisitions. In all,
revenue growth consisted of 22% organic growth in Aviation, driven
by healthy travel markets and the parking project. Education
organic revenue grew 6% on the strength of new accounts which came
online late last year, and Manufacturing & Distribution grew 5%
organically, driven by gains in the eCommerce, logistics and
semiconductor markets. Technical Solutions (“ATS”) revenue
increased 15%, reflecting the RavenVolt acquisition. On an organic
basis, ATS revenue declined 6% primarily due to the timing of large
projects in our backlog and program rollouts. Business &
Industry (“B&I”) revenue declined 1% in total, comprised of
acquisition growth of 1%, offset by a 2% decline in organic growth.
The decline in B&I organic growth was primarily due to less
work orders, partially offset by price increases.
GAAP net income increased to $51.9 million, or
$0.78 per diluted share, as compared to $48.8 million, or $0.72 per
diluted share last year, reflecting increases of 6.5% and 8.3%,
respectively. These increases were primarily due to higher Aviation
segment income, and the benefits of cost controls and price
increases, partially offset by higher interest expense, a decrease
in higher-margin virus protection services and work orders, and
higher direct and indirect costs, primarily for labor. Net income
margin was 2.6% compared to 2.6% last year.
Adjusted net income was $60.2 million, or $0.90
per diluted share, compared to $60.2 million, or $0.89 per diluted
share recorded in the second quarter of fiscal 2022. Adjusted
results exclude items impacting comparability. A description of
items impacting comparability can be found in the “Reconciliation
of Non-GAAP Financial Measures” table.
Adjusted EBITDA for the second quarter increased
15.2% to $137.0 million. Adjusted EBITDA margin for the quarter
improved to 7.2% versus 6.5% last year. The increases in adjusted
EBITDA and adjusted EBITDA margin reflect the benefit of earnings
attributable to the parking project, as well as cost controls and
price increases, partially offset by changes in service mix and
higher labor costs. Adjusted results exclude items impacting
comparability. A description of items impacting comparability can
be found in the “Reconciliation of Non-GAAP Financial Measures”
table.
Strategic Update
During the second quarter, the Company continued
to advance on its ELEVATE technology roadmap, including the initial
deployment of its cloud-based enterprise resource planning system
(“ERP”) and related boundary applications in its Education segment.
The Company also extended the reach of its workforce productivity
and optimization tool, which provides its operations teams with
advanced analytics into productivity levels across their
portfolios.
After the quarter closed, the Company announced
its plan to build an Electrification Center near Atlanta, GA, which
will support ABM’s position as a leader in electrification
infrastructure turn-key solutions. The planned facility will house
multiple solutions serving the eMobility, power resiliency and
electrification sectors.
Liquidity & Capital
Structure
The Company ended the quarter with total debt of
$1,453.0 million, including $58.6 million in standby letters of
credit, resulting in a total leverage ratio, as defined by the
Company's credit facility of 2.6x. The Company had available
liquidity of approximately $503.2 million, inclusive of cash and
cash equivalents of $71.2 million.
Declaration of Quarterly Cash
Dividend
The Company’s Board of Directors declared a cash
dividend of $0.22 per common share payable on August 7, 2023 to
shareholders of record on July 6, 2023. This will be the Company’s
229th consecutive quarterly cash dividend.
Fiscal 2023 Outlook
For full fiscal year 2023, the Company now
expects GAAP EPS to be in the range of $2.52 to $2.72, compared to
$2.43 to $2.63 previously. This revised outlook reflects a $0.09
EPS benefit from changes in items impacting comparability,
primarily related to the fair value of contingent consideration.
Excluding these items, the Company is reaffirming its prior outlook
for adjusted EPS of $3.40 to $3.60. Adjusted EBITDA margin is now
expected to be in the range of 6.5% to 6.8%, reflecting a ten basis
point increase at the low-end of the prior forecast, and interest
expense is now expected to be approximately $80 million, roughly $6
million higher than the high-end of the Company’s previous
forecast.
Conference Call Information
ABM will host its quarterly conference call for
all interested parties on Tuesday, June 6, 2023, at 8:30 AM
(ET). The live conference call can be accessed via audio webcast at
the “Investors” section of the Company's website, located
at www.abm.com, or by dialing (877) 451-6152 (domestic) or
(412) 317-6671 (international) approximately 15 minutes prior to
the scheduled time.
A supplemental presentation will accompany the
webcast on the Company's website.
A replay will be available approximately two
hours after the webcast through June 20, 2023, and can be accessed
by dialing (844) 512-2921 and then entering ID #13738428. A replay
link of the webcast will also be archived on the ABM website for 90
days.
About ABM
ABM (NYSE: ABM) is one of the world’s largest
providers of integrated facility solutions. A driving force for a
cleaner, healthier, and more sustainable world, ABM provides
essential services and forward-looking solutions that improve the
spaces and places that matter most. From curbside to rooftop, ABM
provides comprehensive 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 universities, airports, hospitals, data
centers, manufacturing plants and distribution centers,
entertainment venues and more. Founded in 1909, ABM serves over
20,000 clients, with annualized revenue approaching $8 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: our success depends on our
ability to gain profitable business despite competitive market
pressures; our results of operations can be adversely affected by
labor shortages, turnover, and labor cost increases; we may not be
able to attract and retain qualified personnel and senior
management we need to support our business; 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 use of subcontractors or joint venture
partners to perform work under customer contracts exposes us to
liability and financial risk; 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; negative changes in general economic conditions, such as
recessionary pressures, durable and non-durable goods pricing,
changes in energy prices, or changes in consumer goods pricing, as
well as potential declines in our clients’ office spaces, could
reduce the demand for facility services and, as a result, reduce
our earnings and adversely affect our financial condition;
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 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; 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;
unfavorable developments in our class and representative actions
and other lawsuits alleging various claims could cause us to incur
substantial liabilities; we are subject to extensive legal and
regulatory requirements, which could limit our profitability by
increasing the costs of legal and regulatory compliance; 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;
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, pandemics, and
terrorist attacks could disrupt our services; actions of activist
investors could disrupt our business; and ongoing impacts of the
COVID-19 pandemic may adversely affect our liquidity, capital
resources, supply chain, operations and revenue. 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 net income and net income
per diluted share as adjusted for items impacting comparability for
the second quarter of fiscal years 2023 and 2022. 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 interest, taxes, depreciation and amortization, and
excluding items impacting comparability (adjusted EBITDA) for the
second quarter of fiscal years 2023 and 2022. 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 excluding management
reimbursement. 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 (used in) 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.)
We round amounts to millions but calculate all
percentages and per-share data from the underlying whole-dollar
amounts. As a result, certain amounts may not foot, crossfoot, or
recalculate based on reported numbers due to rounding. Unless
otherwise noted, all references to years are to our fiscal year,
which ends on October 31.
Contact: |
|
Investor Relations: |
Paul Goldberg |
|
(212) 297-9721 |
|
ir@abm.com |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
|
Three Months Ended April 30, |
|
|
(in millions, except per share
amounts) |
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
Revenues |
$ |
1,984.0 |
|
|
$ |
1,897.8 |
|
|
|
4.5 |
% |
Operating expenses |
|
1,715.2 |
|
|
|
1,648.3 |
|
|
|
4.1 |
% |
Selling, general and
administrative expenses |
|
156.6 |
|
|
|
156.8 |
|
|
|
(0.1 |
)% |
Amortization of intangible
assets |
|
19.5 |
|
|
|
17.6 |
|
|
|
10.7 |
% |
Operating
profit |
|
92.7 |
|
|
|
75.0 |
|
|
|
23.6 |
% |
Income from unconsolidated
affiliates |
|
0.6 |
|
|
|
0.6 |
|
|
|
17.5 |
% |
Interest expense |
|
(21.1 |
) |
|
|
(7.8 |
) |
|
|
NM* |
Income before income
taxes |
|
72.3 |
|
|
|
67.8 |
|
|
|
6.7 |
% |
Income tax provision |
|
(20.4 |
) |
|
|
(19.0 |
) |
|
|
(7.3 |
)% |
Net income |
$ |
51.9 |
|
|
$ |
48.8 |
|
|
|
6.5 |
% |
Net income per common
share |
|
|
|
|
|
Basic |
$ |
0.78 |
|
|
$ |
0.73 |
|
|
|
6.8 |
% |
Diluted |
|
0.78 |
|
|
$ |
0.72 |
|
|
|
8.3 |
% |
Weighted-average
common and common equivalentshares
outstanding |
|
|
|
|
|
Basic |
|
66.4 |
|
|
|
67.2 |
|
|
|
Diluted |
|
66.7 |
|
|
|
67.5 |
|
|
|
Dividends declared per
common share |
$ |
0.220 |
|
|
$ |
0.195 |
|
|
|
|
|
|
|
|
|
|
|
|
|
*Not meaningful
(due to variance greater than or equal to +/-100%) |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
|
Six Months Ended April 30, |
|
|
(in millions, except per share
amounts) |
|
2023 |
|
|
|
2022 |
|
|
Increase / (Decrease) |
Revenues |
$ |
3,975.3 |
|
|
$ |
3,834.1 |
|
|
|
3.7 |
% |
Operating expenses |
|
3,465.0 |
|
|
|
3,307.9 |
|
|
|
4.7 |
% |
Selling, general and
administrative expenses |
|
307.2 |
|
|
|
309.9 |
|
|
|
(0.9 |
)% |
Amortization of intangible
assets |
|
39.0 |
|
|
|
35.2 |
|
|
|
10.9 |
% |
Operating
profit |
|
164.1 |
|
|
|
181.0 |
|
|
|
(9.3 |
)% |
Income from unconsolidated
affiliates |
|
1.7 |
|
|
|
1.0 |
|
|
|
66.3 |
% |
Interest expense |
|
(40.9 |
) |
|
|
(14.1 |
) |
|
|
NM* |
Income before income
taxes |
|
125.0 |
|
|
|
168.0 |
|
|
|
(25.6 |
)% |
Income tax provision |
|
(34.5 |
) |
|
|
(43.2 |
) |
|
|
20.1 |
% |
Net income |
$ |
90.4 |
|
|
$ |
124.8 |
|
|
|
(27.5 |
)% |
Net income per common
share |
|
|
|
|
|
Basic |
$ |
1.36 |
|
|
$ |
1.85 |
|
|
|
(26.5 |
)% |
Diluted |
|
1.35 |
|
|
$ |
1.84 |
|
|
|
(26.6 |
)% |
Weighted-average
common and common equivalentshares
outstanding |
|
|
|
|
|
Basic |
|
66.4 |
|
|
|
67.5 |
|
|
|
Diluted |
|
66.7 |
|
|
|
67.9 |
|
|
|
Dividends declared per
common share |
$ |
0.220 |
|
|
$ |
0.390 |
|
|
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION
(UNAUDITED)
|
Three Months Ended April 30, |
(in millions) |
|
2023 |
|
|
|
2022 |
|
Net cash provided by
(used in) operating activities |
$ |
26.0 |
|
|
$ |
(43.9 |
) |
Additions to property, plant
and equipment |
|
(9.9 |
) |
|
|
(10.0 |
) |
Purchase of businesses, net of
cash acquired |
|
— |
|
|
|
(56.7 |
) |
Other |
|
0.3 |
|
|
|
3.6 |
|
Net cash used in
investing activities |
$ |
(9.6 |
) |
|
$ |
(63.1 |
) |
Proceeds from issuance of
share-based compensation awards, net |
|
0.7 |
|
|
|
0.8 |
|
Repurchases of common
stock |
|
— |
|
|
|
(30.0 |
) |
Dividends paid |
|
(14.5 |
) |
|
|
(13.0 |
) |
Borrowings from debt |
|
311.0 |
|
|
|
245.1 |
|
Repayment of borrowings from
debt |
|
(312.1 |
) |
|
|
(80.7 |
) |
Changes in book cash
overdrafts |
|
(17.8 |
) |
|
|
(15.0 |
) |
Financing of energy savings
performance contracts |
|
0.1 |
|
|
|
4.0 |
|
Repayment of finance lease
obligations |
|
(0.7 |
) |
|
|
(0.4 |
) |
Net cash (used in)
provided by financing activities |
$ |
(33.4 |
) |
|
$ |
110.9 |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
0.4 |
|
|
|
(1.6 |
) |
|
(a)Net cash used
in operating activities for the three months ended April 30, 2022
was unfavorably impacted by $143.8 million payment made for the
Bucio settlement. |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION
(UNAUDITED)
|
Six Months Ended April 30, |
(in millions) |
|
2023 |
|
|
|
2022 |
|
Net cash used in
operating activities(a) |
$ |
(45.0 |
) |
|
$ |
(137.5 |
) |
Additions to property, plant
and equipment |
|
(23.8 |
) |
|
|
(19.6 |
) |
Purchase of businesses, net of
cash acquired |
|
— |
|
|
|
(56.7 |
) |
Other |
|
1.6 |
|
|
|
0.9 |
|
Net cash used in
investing activities |
$ |
(22.2 |
) |
|
$ |
(75.5 |
) |
Taxes withheld from issuance of
share-based compensation awards, net |
|
(12.0 |
) |
|
|
(9.2 |
) |
Repurchases of common
stock |
|
— |
|
|
|
(43.3 |
) |
Dividends paid |
|
(29.0 |
) |
|
|
(26.2 |
) |
Borrowings from debt |
|
575.5 |
|
|
|
720.6 |
|
Repayment of borrowings from
debt |
|
(459.8 |
) |
|
|
(437.3 |
) |
Changes in book cash
overdrafts |
|
(11.0 |
) |
|
|
(9.1 |
) |
Financing of energy savings
performance contracts |
|
0.5 |
|
|
|
6.6 |
|
Repayment of finance lease
obligations |
|
(1.5 |
) |
|
|
(1.0 |
) |
Net cash provided by
financing activities |
$ |
62.8 |
|
|
$ |
201.2 |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
2.6 |
|
|
|
(2.2 |
) |
|
(a) The six months
ended April 30, 2022 was unfavorably impacted by $143.8 million
payment made for the Bucio settlement. The six months ended April
30, 2023 and 2022, was unfavorably impacted by a $66 million
payment for deferred payroll taxes under the Coronavirus Aid Relief
and Economic Security Act (“CARES Act”) |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION
(UNAUDITED)
(in millions) |
April 30, 2023 |
|
October 31, 2022 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and cash equivalents |
$ |
71.2 |
|
|
$ |
73.0 |
|
Trade accounts receivable, net of allowances |
|
1,345.1 |
|
|
|
1,278.7 |
|
Costs incurred in excess of amounts billed |
|
102.8 |
|
|
|
75.8 |
|
Prepaid expenses |
|
110.8 |
|
|
|
82.1 |
|
Other current assets |
|
63.1 |
|
|
|
51.6 |
|
Total current assets |
|
1,693.0 |
|
|
|
1,561.2 |
|
Other investments |
|
14.4 |
|
|
|
14.5 |
|
Property, plant and equipment,
net of accumulated depreciation |
|
126.1 |
|
|
|
125.4 |
|
Right-of-use assets |
|
111.7 |
|
|
|
115.2 |
|
Other intangible assets, net
of accumulated amortization |
|
340.8 |
|
|
|
378.5 |
|
Goodwill |
|
2,494.3 |
|
|
|
2,485.6 |
|
Other noncurrent assets |
|
152.5 |
|
|
|
188.5 |
|
Total assets |
$ |
4,932.9 |
|
|
$ |
4,868.9 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current liabilities |
|
|
|
Current portion of long-term debt, net |
$ |
31.5 |
|
|
$ |
181.5 |
|
Trade accounts payable |
|
263.6 |
|
|
|
315.5 |
|
Accrued compensation |
|
207.7 |
|
|
|
246.6 |
|
Accrued taxes—other than income |
|
50.6 |
|
|
|
124.7 |
|
Insurance claims |
|
182.1 |
|
|
|
171.4 |
|
Income taxes payable |
|
6.7 |
|
|
|
6.6 |
|
Current portion of lease liabilities |
|
32.6 |
|
|
|
30.3 |
|
Other accrued liabilities |
|
334.7 |
|
|
|
276.5 |
|
Total current liabilities |
|
1,109.5 |
|
|
|
1,353.2 |
|
Long-term debt, net |
|
1,352.5 |
|
|
|
1,086.3 |
|
Long-term lease
liabilities |
|
98.0 |
|
|
|
104.5 |
|
Deferred income tax liability,
net |
|
88.8 |
|
|
|
89.7 |
|
Noncurrent insurance
claims |
|
402.7 |
|
|
|
387.7 |
|
Other noncurrent
liabilities |
|
94.2 |
|
|
|
126.0 |
|
Noncurrent income taxes
payable |
|
4.3 |
|
|
|
4.2 |
|
Total liabilities |
|
3,150.1 |
|
|
|
3,151.7 |
|
Total stockholders’
equity |
|
1,782.8 |
|
|
|
1,717.2 |
|
Total liabilities and
stockholders’ equity |
$ |
4,932.9 |
|
|
$ |
4,868.9 |
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT
(UNAUDITED)
|
Three Months Ended April 30, |
|
Increase/ (Decrease) |
(in millions) |
|
2023 |
|
|
|
2022 |
|
|
Revenues |
|
|
|
|
|
Business & Industry |
$ |
998.5 |
|
|
$ |
1,003.6 |
|
|
|
(0.5 |
)% |
Manufacturing &
Distribution |
|
373.2 |
|
|
|
356.9 |
|
|
|
4.5 |
% |
Education |
|
216.7 |
|
|
|
204.4 |
|
|
|
6.0 |
% |
Aviation |
|
227.2 |
|
|
|
185.9 |
|
|
|
22.2 |
% |
Technical Solutions |
|
168.4 |
|
|
|
147.0 |
|
|
|
14.6 |
% |
Total
Revenues |
$ |
1,984.0 |
|
|
$ |
1,897.8 |
|
|
|
4.5 |
% |
Operating
profit |
|
|
|
|
|
Business & Industry |
$ |
76.2 |
|
|
$ |
76.7 |
|
|
|
(0.6 |
)% |
Manufacturing &
Distribution |
|
40.8 |
|
|
|
41.9 |
|
|
|
(2.7 |
)% |
Education |
|
11.8 |
|
|
|
11.7 |
|
|
|
0.3 |
% |
Aviation |
|
23.6 |
|
|
|
9.6 |
|
|
|
NM* |
Technical Solutions |
|
10.2 |
|
|
|
10.6 |
|
|
|
(3.8 |
)% |
Government Services |
|
— |
|
|
|
(0.3 |
) |
|
|
NM* |
Corporate |
|
(69.2 |
) |
|
|
(74.5 |
) |
|
|
7.1 |
% |
Adjustment for income from unconsolidated affiliates, included in
Aviation and Technical Solutions |
|
(0.6 |
) |
|
|
(0.6 |
) |
|
|
17.5 |
% |
Adjustment for tax deductions for energy efficient government
buildings, included in Technical Solutions |
|
— |
|
|
|
(0.2 |
) |
|
|
NM* |
Total operating
profit |
|
92.7 |
|
|
|
75.0 |
|
|
|
23.6 |
% |
Income from unconsolidated
affiliates |
|
0.6 |
|
|
|
0.6 |
|
|
|
17.5 |
% |
Interest expense |
|
(21.1 |
) |
|
|
(7.8 |
) |
|
|
NM* |
Income before income
taxes |
|
72.3 |
|
|
|
67.8 |
|
|
|
6.7 |
% |
Income tax provision |
|
(20.4 |
) |
|
|
(19.0 |
) |
|
|
(7.3 |
)% |
Net
income |
$ |
51.9 |
|
|
$ |
48.8 |
|
|
|
6.5 |
% |
|
*Not meaningful
(due to variance greater than or equal to +/-100%) |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT
(UNAUDITED)
|
Six Months Ended April 30, |
|
Increase/ (Decrease) |
(in millions) |
|
2023 |
|
|
|
2022 |
|
|
Revenues |
|
|
|
|
|
Business & Industry |
$ |
2,035.0 |
|
|
$ |
2,033.1 |
|
|
|
0.1 |
% |
Manufacturing &
Distribution |
|
753.7 |
|
|
|
716.0 |
|
|
|
5.3 |
% |
Education |
|
431.6 |
|
|
|
410.1 |
|
|
|
5.2 |
% |
Aviation |
|
439.5 |
|
|
|
386.1 |
|
|
|
13.8 |
% |
Technical Solutions |
|
315.5 |
|
|
|
288.8 |
|
|
|
9.3 |
% |
Total
Revenues |
$ |
3,975.3 |
|
|
$ |
3,834.1 |
|
|
|
3.7 |
% |
Operating
profit |
|
|
|
|
|
Business & Industry |
$ |
152.2 |
|
|
$ |
160.0 |
|
|
|
(4.9 |
)% |
Manufacturing &
Distribution |
|
81.7 |
|
|
|
82.5 |
|
|
|
(1.0 |
)% |
Education |
|
23.6 |
|
|
|
24.3 |
|
|
|
(3.1 |
)% |
Aviation |
|
31.9 |
|
|
|
18.5 |
|
|
|
72.4 |
% |
Technical Solutions(1) |
|
17.4 |
|
|
|
27.4 |
|
|
|
(36.7 |
)% |
Government Services |
|
— |
|
|
|
(0.3 |
) |
|
|
NM* |
Corporate |
|
(140.8 |
) |
|
|
(130.3 |
) |
|
|
(8.0 |
)% |
Adjustment for income from
unconsolidated affiliates, included in Aviation and Technical
Solutions |
|
(1.7 |
) |
|
|
(1.0 |
) |
|
|
(66.3 |
)% |
Adjustment for tax deductions
for energy efficient government buildings, included in Technical
Solutions |
|
(0.1 |
) |
|
|
(0.2 |
) |
|
|
16.5 |
% |
Total operating
profit |
|
164.1 |
|
|
|
181.0 |
|
|
|
(9.3 |
)% |
Income from unconsolidated
affiliates |
|
1.7 |
|
|
|
1.0 |
|
|
|
66.3 |
% |
Interest expense |
|
(40.9 |
) |
|
|
(14.1 |
) |
|
|
NM* |
Income before income
taxes |
|
125.0 |
|
|
|
168.0 |
|
|
|
(25.6 |
)% |
Income tax provision |
|
(34.5 |
) |
|
|
(43.2 |
) |
|
|
20.1 |
% |
Net
income |
$ |
90.4 |
|
|
$ |
124.8 |
|
|
|
(27.5 |
)% |
|
*Not meaningful
(due to variance greater than or equal to +/-100%) |
|
(1) 2022 includes
a $7.7 million gain on the sale of certain healthcare customer
contracts. |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)
(in millions, except per share amounts)
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net
Income to Adjusted Net Income |
|
|
|
|
|
|
|
Net income |
$ |
51.9 |
|
|
$ |
48.8 |
|
|
$ |
90.4 |
|
|
$ |
124.8 |
|
Items impacting
comparability(a) |
|
|
|
|
|
|
|
Prior year self-insurance adjustment(b) |
|
3.5 |
|
|
|
(3.5 |
) |
|
|
3.5 |
|
|
|
(28.7 |
) |
Legal costs and other settlements |
|
— |
|
|
|
1.2 |
|
|
|
— |
|
|
|
3.2 |
|
Acquisition and integration related costs(c) |
|
4.7 |
|
|
|
1.1 |
|
|
|
7.2 |
|
|
|
9.4 |
|
Transformation initiative costs(d) |
|
13.3 |
|
|
|
17.0 |
|
|
|
30.6 |
|
|
|
28.5 |
|
Sale of healthcare customer contracts(e) |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(7.7 |
) |
Change in fair value of contingent consideration(f) |
|
(8.4 |
) |
|
|
— |
|
|
|
(8.4 |
) |
|
|
— |
|
Total items impacting
comparability |
|
13.1 |
|
|
|
15.8 |
|
|
|
32.8 |
|
|
|
4.6 |
|
Income tax benefit(g)(h) |
|
(4.8 |
) |
|
|
(4.4 |
) |
|
|
(10.3 |
) |
|
|
(4.9 |
) |
Items impacting comparability,
net of taxes |
|
8.3 |
|
|
|
11.4 |
|
|
|
22.5 |
|
|
|
(0.3 |
) |
Adjusted net income |
$ |
60.2 |
|
|
$ |
60.2 |
|
|
$ |
112.9 |
|
|
$ |
124.5 |
|
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net
Income to Adjusted EBITDA |
|
|
|
|
|
|
|
Net income |
$ |
51.9 |
|
|
$ |
48.8 |
|
|
$ |
90.4 |
|
|
$ |
124.8 |
|
Items impacting comparability |
|
13.1 |
|
|
|
15.8 |
|
|
|
32.8 |
|
|
|
4.6 |
|
Income tax provision |
|
20.4 |
|
|
|
19.0 |
|
|
|
34.5 |
|
|
|
43.2 |
|
Interest expense |
|
21.1 |
|
|
|
7.8 |
|
|
|
40.9 |
|
|
|
14.1 |
|
Depreciation and amortization |
|
30.6 |
|
|
|
27.5 |
|
|
|
61.1 |
|
|
|
55.1 |
|
Adjusted EBITDA |
$ |
137.0 |
|
|
$ |
118.9 |
|
|
$ |
259.7 |
|
|
$ |
241.9 |
|
|
|
|
|
|
|
|
|
Net income margin as a %
of revenues |
|
2.6 |
% |
|
|
2.6 |
% |
|
|
2.3 |
% |
|
|
3.3 |
% |
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues Excluding
Management Reimbursement |
|
|
|
|
|
|
|
Revenues |
$ |
1,984.0 |
|
|
$ |
1,897.8 |
|
|
$ |
3,975.3 |
|
|
$ |
3,834.1 |
|
Management reimbursement |
|
(73.5 |
) |
|
|
(66.4 |
) |
|
|
(146.0 |
) |
|
$ |
(131.3 |
) |
Revenues excluding management
reimbursement |
$ |
1,910.5 |
|
|
$ |
1,831.4 |
|
|
$ |
3,829.3 |
|
|
$ |
3,702.8 |
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin as
a % of revenues excluding management reimbursement |
|
7.2 |
% |
|
|
6.5 |
% |
|
|
6.8 |
% |
|
|
6.5 |
% |
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net
Income per Diluted Share to Adjusted Net Income per Diluted
Share |
|
|
|
|
|
|
|
Net income per diluted share |
$ |
0.78 |
|
|
$ |
0.72 |
|
|
$ |
1.35 |
|
|
$ |
1.84 |
|
Items impacting comparability, net of taxes |
|
0.12 |
|
|
|
0.17 |
|
|
|
0.34 |
|
|
|
— |
|
Adjusted net income per diluted
share |
$ |
0.90 |
|
|
$ |
0.89 |
|
|
$ |
1.69 |
|
|
$ |
1.83 |
|
Diluted shares |
|
66.7 |
|
|
|
67.5 |
|
|
|
66.7 |
|
|
|
67.9 |
|
|
Three Months Ended April 30, |
|
Six Months Ended April 30, |
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net
Cash Provided by (Used in) Operating Activities to Free Cash
Flow |
|
|
|
|
|
|
|
Net cash provide by (used in)
operating activities(i) |
$ |
26.0 |
|
|
$ |
(43.9 |
) |
|
$ |
(45.0 |
) |
|
$ |
(137.5 |
) |
Additions to property, plant and equipment |
|
(9.9 |
) |
|
|
(10.0 |
) |
|
|
(23.8 |
) |
|
|
(19.6 |
) |
Free Cash Flow |
$ |
16.0 |
|
|
$ |
(53.9 |
) |
|
$ |
(68.8 |
) |
|
$ |
(157.1 |
) |
(a) |
|
The Company adjusts income 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 net income is useful to investors by enabling them to better
assess our operating performance in the context of current year
profitability. For the three and six months ended April 30,
2023, our self-insured medical and dental insurance claims related
to prior period increased by $3.5 million. For the three and six
months ended April 30, 2022, our self-insurance general
liability, workers’ compensation, and automobile insurance claims
related to prior period accident years decreased by $3.5 million
and $28.7 million respectively. |
|
|
|
(c) |
|
Represents acquisition and integration related costs primarily
associated with Able acquisition. |
|
|
|
(d) |
|
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, 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. |
|
|
|
(e) |
|
Represents a $7.7 million gain on the sale of certain healthcare
customer contracts. |
|
|
|
(f) |
|
Represents an adjustment to the estimate of the fair value of the
contingent consideration associated with the RavenVolt
acquisition. |
|
|
|
(g) |
|
The
Company's tax impact is calculated using the federal and state
statutory rate of 28.11% for FY2023 and FY 2022. We calculate tax
from the underlying whole-dollar amounts, as a result, certain
amounts may not recalculate based on reported numbers due to
rounding. |
|
|
|
(h) |
|
The three
and six months ended April 30, 2023, include the tax impact of
non-taxable change in the fair value of contingent consideration
related to RavenVolt. The six months ended April 30, 2022, includes
a tax benefit of $3.6M related to the expiring statute of
limitations. |
|
|
|
(i) |
|
The three
and six months ended April 30, 2022, include a $143.8 million
payment made for the Bucio settlement. The six months ended April
30, 2023 and 2022, include a $66 million payment for deferred
payroll taxes under the Coronavirus Aid Relief and Economic
Security Act (“CARES Act”). |
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
2023 GUIDANCE
|
Year Ending October 31, 2023 |
|
Low Estimate |
|
High Estimate |
Reconciliation of
Estimated Net Income per Diluted Share to Estimated Adjusted Net
Income per Diluted Share |
|
Net income per diluted share(a) |
$ |
2.52 |
|
|
$ |
2.72 |
|
Transformation initiative
costs(b) |
|
0.55 |
|
|
|
0.55 |
|
Acquisition and integration
related costs(c) |
|
0.15 |
|
|
|
0.15 |
|
Other adjustments(d) |
|
0.18 |
|
|
|
0.18 |
|
Adjusted net income per
diluted share(a) |
$ |
3.40 |
|
|
$ |
3.60 |
|
(a) |
|
With the
exception of the 2023 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, 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 primarily
associated with Able acquisition. |
|
|
|
(d) |
|
Represents other contingencies that could include legal
settlements, adjustments to self-insurance reserves pertaining to
prior year's claims, gain on sale of certain assets and other
unique items impacting comparability. |
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