ABM (NYSE: ABM), a leading provider of facility solutions, today
announced financial results for the third quarter of fiscal 2023.
“In a challenging operating environment, ABM
generated revenue growth of 3.4%. Strong growth in our Aviation,
Education and Manufacturing & Distribution segments was
partially offset by delayed project starts and lower bundled energy
solutions activity within our Technical Solutions segment.
Additionally, market conditions remained soft for our janitorial
service line in Business & Industry,” said Scott Salmirs, ABM’s
President & Chief Executive Officer. “Our teams have been
taking actions to accelerate projects and we also quickly
implemented measures to adjust our cost structure to the current
demand environment in certain of our businesses. This helped us
deliver solid adjusted margin and generate strong operating cash
flow in the quarter.”
Mr. Salmirs continued, “While we believe the
delayed project starts in Technical Solutions are transitory and
should be resolved in fiscal 2024, we expect that the commercial
real estate market, particularly commercial office building
occupancy, will likely remain soft throughout 2024. We are
tightening our forecast for fiscal full year 2023 adjusted EPS to
the lower end of the prior range and reaffirming our outlook for
fiscal full year 2023 adjusted EBITDA margin.“
“We will continue forward on our well-defined
path to win new business, invest for the future through our ELEVATE
program, and generate strong cash flow to drive shareholder
returns. We are encouraged by the resiliency, positioning and
growth potential of our business model and have a compelling
strategy in place to drive long-term shareholder value.”
Third Quarter Fiscal 2023
Results
For the third quarter of fiscal 2023, the
Company reported revenue of $2.0 billion, up 3.4% over the prior
year period, comprised of 2.5% organic growth, and 0.9% growth from
acquisitions. Aviation grew 17% organically, driven by strong
travel markets and expansion with existing customers. Manufacturing
& Distribution grew 7% organically, reflecting healthy
eCommerce, logistics and industrial markets. Education grew 6%
organically, aided by contributions from new clients. Business
& Industry’s (“B&I”) organic revenue declined 1%, primarily
due to ongoing softness in the commercial office space market.
Technical Solutions (“ATS’) revenue declined 6% organically,
reflecting softness in the bundled energy solutions market, while
overall ATS revenue increased 6%, driven by the RavenVolt
acquisition.
GAAP net income increased to $98.1 million, or
$1.47 per diluted share, as compared to $56.8 million, or $0.85 per
diluted share last year, reflecting increases of 72.7% and 72.9%,
respectively. These increases were primarily due to a $37.2 million
gain from an adjustment to the fair value of contingent
consideration related to the RavenVolt acquisition, receipt of an
Employee Retention Credit of $22.4 million, and the benefit of cost
controls and price increases. These gains were partially offset by
higher interest expense and slightly lower operating earnings. Net
income margin was 4.8% compared to 2.9% last year.
Adjusted net income was $52.8 million, or $0.79
per diluted share, compared to $63.2 million, or $0.94 per diluted
share recorded in the third quarter of fiscal 2022. This primarily
reflects higher interest expense and slightly lower income from
operations, largely driven by project delays in ATS and softness in
the commercial real estate market. 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 third quarter was $125.3
million, essentially flat year over year. Adjusted EBITDA margin
for the quarter was 6.4% versus 6.6% last year. The change in
margin was largely attributable to inefficiencies related to
project delays in ATS and the impact of lower volume in B&I,
partially offset by cost controls and price increases. Adjusted
results exclude items impacting comparability. A description of
items impacting comparability can be found in the “Reconciliation
of Non-GAAP Financial Measures” table.
Technology Transformation
During the third quarter, the Company
successfully completed its first quarterly financial close for the
Education segment utilizing its new cloud-based enterprise resource
planning system, including multiple boundary applications (“ERP”).
This ERP system will be rolled out in stages to the rest of the
organization over time. The Company continued to leverage and
expand its workforce productivity and optimization tool, which has
been critical to effectively managing labor utilization as the
Company navigates the current commercial real estate market.
Liquidity & Capital
Structure
The Company ended the third quarter with total
debt of $1,391.9 million, including $58.4 million in standby
letters of credit, resulting in a total leverage ratio, as defined
by the Company's credit facility of 2.3x. The Company had available
liquidity of approximately $582.6 million, inclusive of cash and
cash equivalents of $97.7 million.
During the third quarter, the Company
repurchased 0.6 million shares of its common stock at an average
share price of $42.10, for a total cost of $27.1 million. The
Company has $170.3 million remaining under its standing share
repurchase authorization.
Declaration of Quarterly Cash
Dividend
The Company’s Board of Directors declared a cash
dividend of $0.22 per common share payable on November 6, 2023 to
shareholders of record on October 5, 2023. This will be the
Company’s 230th consecutive quarterly cash dividend.
Fiscal 2023 Outlook
For fiscal year 2023, the Company now expects
GAAP EPS to be in the range of $3.52 to $3.62, compared to $2.52 to
$2.72 previously. This revised forecast reflects changes in items
impacting comparability, primarily from an adjustment to the fair
value of contingent consideration related to the RavenVolt
acquisition and from the receipt of an Employee Retention Credit.
The Company is narrowing the range of its forecast for full year
2023 adjusted EPS to $3.40 to $3.50, as compared to its prior
forecast of $3.40 to $3.60. The Company’s expectations for adjusted
EBITDA margin of 6.5% to 6.8%, and interest expense of
approximately $80 million remain unchanged.
Conference Call Information
ABM will host its quarterly conference call for
all interested parties on Thursday, September 7, 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
(201) 389-0879 (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 September 21, 2023, and can be
accessed by dialing (844) 512-2921 and then entering ID #13739759.
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 third quarter and nine months 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 third quarter and nine months 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
SUBSIDIARIESCONSOLIDATED INCOME STATEMENT
INFORMATION (UNAUDITED) |
|
|
|
Three Months Ended July 31, |
|
Increase / (Decrease) |
(in millions, except per share
amounts) |
|
|
2023 |
|
|
|
2022 |
|
|
Revenues |
|
$ |
2,028.2 |
|
|
$ |
1,961.4 |
|
|
3.4 |
% |
Operating expenses |
|
|
1,765.8 |
|
|
|
1,696.4 |
|
|
4.1 |
% |
Selling, general and
administrative expenses |
|
|
104.3 |
|
|
|
158.6 |
|
|
(34.3 |
)% |
Amortization of intangible
assets |
|
|
19.2 |
|
|
|
17.7 |
|
|
8.5 |
% |
Operating
profit |
|
|
138.9 |
|
|
|
88.7 |
|
|
56.7 |
% |
Income from unconsolidated
affiliates |
|
|
1.2 |
|
|
|
0.8 |
|
|
52.2 |
% |
Interest expense |
|
|
(20.9 |
) |
|
|
(11.1 |
) |
|
(87.6 |
)% |
Income before income
taxes |
|
|
119.3 |
|
|
|
78.3 |
|
|
52.3 |
% |
Income tax provision |
|
|
(21.2 |
) |
|
|
(21.5 |
) |
|
1.7 |
% |
Net income |
|
$ |
98.1 |
|
|
$ |
56.8 |
|
|
72.7 |
% |
Net income per common
share |
|
|
|
|
|
|
Basic |
|
$ |
1.48 |
|
|
$ |
0.85 |
|
|
74.1 |
% |
Diluted |
|
|
1.47 |
|
|
$ |
0.85 |
|
|
72.9 |
% |
Weighted-average
common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
|
66.3 |
|
|
|
66.8 |
|
|
|
Diluted |
|
|
66.6 |
|
|
|
67.2 |
|
|
|
Dividends declared per
common share |
|
$ |
0.220 |
|
|
$ |
0.195 |
|
|
|
ABM
INDUSTRIES INCORPORATED AND
SUBSIDIARIESCONSOLIDATED INCOME STATEMENT
INFORMATION (UNAUDITED) |
|
|
Nine Months Ended July 31, |
|
Increase / (Decrease) |
(in millions, except per share
amounts) |
|
|
2023 |
|
|
|
2022 |
|
|
Revenues |
|
$ |
6,003.5 |
|
|
$ |
5,795.5 |
|
|
3.6 |
% |
Operating expenses |
|
|
5,230.7 |
|
|
|
5,004.4 |
|
|
4.5 |
% |
Selling, general and
administrative expenses |
|
|
411.5 |
|
|
|
468.5 |
|
|
(12.2 |
)% |
Amortization of intangible
assets |
|
|
58.2 |
|
|
|
52.9 |
|
|
10.1 |
% |
Operating
profit |
|
|
303.1 |
|
|
|
269.7 |
|
|
12.4 |
% |
Income from unconsolidated
affiliates |
|
|
3.0 |
|
|
|
1.8 |
|
|
60.1 |
% |
Interest expense |
|
|
(61.8 |
) |
|
|
(25.2 |
) |
|
NM* |
|
Income before income
taxes |
|
|
244.2 |
|
|
|
246.3 |
|
|
(0.9 |
)% |
Income tax provision |
|
|
(55.7 |
) |
|
|
(64.8 |
) |
|
14.0 |
% |
Net income |
|
$ |
188.5 |
|
|
$ |
181.6 |
|
|
3.8 |
% |
Net income per common
share |
|
|
|
|
|
|
Basic |
|
$ |
2.84 |
|
|
$ |
2.70 |
|
|
5.2 |
% |
Diluted |
|
|
2.83 |
|
|
$ |
2.68 |
|
|
5.6 |
% |
Weighted-average
common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
|
66.3 |
|
|
|
67.3 |
|
|
|
Diluted |
|
|
66.7 |
|
|
|
67.7 |
|
|
|
Dividends declared per
common share |
|
$ |
0.660 |
|
|
$ |
0.585 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Not meaningful
(due to variance greater than or equal to +/-100%) |
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESSELECTED
CONSOLIDATED CASH FLOW INFORMATION
(UNAUDITED) |
|
|
Three Months Ended July 31, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by
operating activities |
|
$ |
149.1 |
|
|
$ |
40.7 |
|
Additions to property, plant
and equipment |
|
|
(10.9 |
) |
|
|
(18.1 |
) |
Other |
|
|
(12.0 |
) |
|
|
0.3 |
|
Net cash used in
investing activities |
|
$ |
(22.8 |
) |
|
$ |
(17.8 |
) |
Proceeds (taxes withheld) from
issuance of share-based compensation awards, net |
|
|
0.7 |
|
|
|
(1.5 |
) |
Repurchases of common
stock |
|
|
(27.1 |
) |
|
|
(31.2 |
) |
Dividends paid |
|
|
(14.5 |
) |
|
|
(12.9 |
) |
Borrowings from debt |
|
|
218.5 |
|
|
|
269.6 |
|
Repayment of borrowings from
debt |
|
|
(278.6 |
) |
|
|
(247.2 |
) |
Changes in book cash
overdrafts |
|
|
0.5 |
|
|
|
14.4 |
|
Financing of energy savings
performance contracts |
|
|
— |
|
|
|
2.1 |
|
Repayment of finance lease
obligations |
|
|
(0.7 |
) |
|
|
(0.2 |
) |
Net cash used
in financing activities |
|
$ |
(101.2 |
) |
|
$ |
(7.0 |
) |
Effect of exchange
rate changes on cash and cash equivalents |
|
|
1.3 |
|
|
|
(1.0 |
) |
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESSELECTED
CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED) |
|
|
Nine Months Ended July 31, |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
Net cash provided by
(used in) operating activities(a) |
|
$ |
104.1 |
|
|
$ |
(96.7 |
) |
Additions to property, plant
and equipment |
|
|
(34.6 |
) |
|
|
(37.7 |
) |
Purchase of businesses, net of
cash acquired |
|
|
— |
|
|
|
(56.7 |
) |
Other |
|
|
(10.3 |
) |
|
|
1.1 |
|
Net cash used in
investing activities |
|
$ |
(45.0 |
) |
|
$ |
(93.3 |
) |
Taxes
withheld from issuance of share-based compensation awards, net |
|
|
(11.3 |
) |
|
|
(10.7 |
) |
Repurchases of common
stock |
|
|
(27.1 |
) |
|
|
(74.5 |
) |
Dividends paid |
|
|
(43.5 |
) |
|
|
(39.0 |
) |
Borrowings from debt |
|
|
794.0 |
|
|
|
990.1 |
|
Repayment of borrowings from
debt |
|
|
(738.4 |
) |
|
|
(684.5 |
) |
Changes in book cash
overdrafts |
|
|
(10.5 |
) |
|
|
5.4 |
|
Financing of energy savings
performance contracts |
|
|
0.5 |
|
|
|
8.7 |
|
Repayment of finance lease
obligations |
|
|
(2.2 |
) |
|
|
(1.2 |
) |
Net cash (used in)
provided by financing activities |
|
$ |
(38.4 |
) |
|
$ |
194.2 |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
|
3.9 |
|
|
|
(3.2 |
) |
(a) The nine months ended July 31, 2022, include a $143.8
million payment made for the Bucio settlement. The nine months
ended July 31, 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
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
INFORMATION (UNAUDITED) |
(in millions) |
|
July 31, 2023 |
|
October 31, 2022 |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
97.7 |
|
|
$ |
73.0 |
|
Trade accounts receivable, net of allowances |
|
|
1,331.8 |
|
|
|
1,278.7 |
|
Costs incurred in excess of amounts billed |
|
|
147.2 |
|
|
|
75.8 |
|
Prepaid expenses |
|
|
87.2 |
|
|
|
82.1 |
|
Other current assets |
|
|
65.4 |
|
|
|
51.6 |
|
Total current assets |
|
|
1,729.2 |
|
|
|
1,561.2 |
|
Other investments |
|
|
27.9 |
|
|
|
14.5 |
|
Property, plant and equipment,
net of accumulated depreciation |
|
|
126.1 |
|
|
|
125.4 |
|
Right-of-use assets |
|
|
107.2 |
|
|
|
115.2 |
|
Other intangible assets, net of accumulated amortization |
|
|
321.5 |
|
|
|
378.5 |
|
Goodwill |
|
|
2,495.6 |
|
|
|
2,485.6 |
|
Other noncurrent assets |
|
|
162.3 |
|
|
|
188.5 |
|
Total assets |
|
$ |
4,970.0 |
|
|
$ |
4,868.9 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities |
|
|
|
|
Current portion of long-term debt, net |
|
$ |
31.5 |
|
|
$ |
181.5 |
|
Trade accounts payable |
|
|
304.4 |
|
|
|
315.5 |
|
Accrued compensation |
|
|
212.7 |
|
|
|
246.6 |
|
Accrued taxes—other than income |
|
|
49.6 |
|
|
|
124.7 |
|
Insurance claims |
|
|
177.7 |
|
|
|
171.4 |
|
Income taxes payable |
|
|
7.3 |
|
|
|
6.6 |
|
Current portion of lease liabilities |
|
|
31.7 |
|
|
|
30.3 |
|
Other accrued liabilities |
|
|
361.6 |
|
|
|
276.5 |
|
Total current liabilities |
|
|
1,176.5 |
|
|
|
1,353.2 |
|
Long-term debt, net |
|
|
1,292.7 |
|
|
|
1,086.3 |
|
Long-term lease
liabilities |
|
|
93.7 |
|
|
|
104.5 |
|
Deferred income tax liability,
net |
|
|
87.0 |
|
|
|
89.7 |
|
Noncurrent insurance
claims |
|
|
400.4 |
|
|
|
387.7 |
|
Other noncurrent
liabilities |
|
|
55.1 |
|
|
|
126.0 |
|
Noncurrent income taxes
payable |
|
|
4.3 |
|
|
|
4.2 |
|
Total liabilities |
|
|
3,109.8 |
|
|
|
3,151.7 |
|
Total stockholders’
equity |
|
|
1,860.1 |
|
|
|
1,717.2 |
|
Total liabilities and
stockholders’ equity |
|
$ |
4,970.0 |
|
|
$ |
4,868.9 |
|
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESREVENUES
AND OPERATING PROFIT BY SEGMENT (UNAUDITED) |
|
|
Three Months Ended July 31, |
|
Increase / (Decrease) |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
Revenues |
|
|
|
|
|
|
Business & Industry |
|
$ |
1,021.4 |
|
|
$ |
1,033.8 |
|
|
(1.2 |
)% |
Manufacturing &
Distribution |
|
|
381.9 |
|
|
|
358.1 |
|
|
6.6 |
% |
Education |
|
|
219.1 |
|
|
|
207.5 |
|
|
5.6 |
% |
Aviation |
|
|
238.0 |
|
|
|
203.5 |
|
|
16.9 |
% |
Technical Solutions |
|
|
167.9 |
|
|
|
158.4 |
|
|
6.0 |
% |
Total
Revenues |
|
$ |
2,028.2 |
|
|
$ |
1,961.4 |
|
|
3.4 |
% |
Operating
profit |
|
|
|
|
|
|
Business & Industry |
|
$ |
78.9 |
|
|
$ |
82.4 |
|
|
(4.2 |
)% |
Manufacturing &
Distribution |
|
|
38.1 |
|
|
|
38.0 |
|
|
0.1 |
% |
Education |
|
|
15.9 |
|
|
|
14.5 |
|
|
10.1 |
% |
Aviation |
|
|
11.7 |
|
|
|
9.5 |
|
|
23.1 |
% |
Technical Solutions |
|
|
11.4 |
|
|
|
15.4 |
|
|
(25.7 |
)% |
Government Services |
|
|
— |
|
|
|
0.1 |
|
|
NM* |
|
Corporate(1) |
|
|
(15.9 |
) |
|
|
(70.3 |
) |
|
77.4 |
% |
Adjustment for income from
unconsolidated affiliates, included in Aviation and Technical
Solutions |
|
|
(1.2 |
) |
|
|
(0.8 |
) |
|
(52.2 |
)% |
Adjustment for tax deductions
for energy efficient government buildings, included in Technical
Solutions |
|
|
— |
|
|
|
(0.1 |
) |
|
NM* |
|
Total operating
profit |
|
|
138.9 |
|
|
|
88.7 |
|
|
56.7 |
% |
Income from unconsolidated
affiliates |
|
|
1.2 |
|
|
|
0.8 |
|
|
52.2 |
% |
Interest expense |
|
|
(20.9 |
) |
|
|
(11.1 |
) |
|
(87.6 |
)% |
Income before income
taxes |
|
|
119.3 |
|
|
|
78.3 |
|
|
52.3 |
% |
Income tax provision |
|
|
(21.2 |
) |
|
|
(21.5 |
) |
|
1.7 |
% |
Net
income |
|
$ |
98.1 |
|
|
$ |
56.8 |
|
|
72.7 |
% |
*Not meaningful (due to variance greater than or equal to
+/-100%)
(1) 2023 includes $22.4 million in Employee
Retention Credit (ERC) refund received from the IRS and $37.2
million adjustment to the estimate of the fair value of the
contingent consideration associated with the RavenVolt
acquisition.
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESREVENUES
AND OPERATING PROFIT BY SEGMENT (UNAUDITED) |
|
|
Nine Months Ended July 31, |
|
Increase / (Decrease) |
(in millions) |
|
|
2023 |
|
|
|
2022 |
|
|
Revenues |
|
|
|
|
|
|
Business & Industry |
|
$ |
3,056.4 |
|
|
$ |
3,067.0 |
|
|
(0.3 |
)% |
Manufacturing &
Distribution |
|
|
1,135.5 |
|
|
|
1,074.1 |
|
|
5.7 |
% |
Education |
|
|
650.7 |
|
|
|
617.6 |
|
|
5.4 |
% |
Aviation |
|
|
677.5 |
|
|
|
589.7 |
|
|
14.9 |
% |
Technical Solutions |
|
|
483.4 |
|
|
|
447.2 |
|
|
8.1 |
% |
Total
Revenues |
|
$ |
6,003.5 |
|
|
$ |
5,795.5 |
|
|
3.6 |
% |
Operating
profit |
|
|
|
|
|
|
Business & Industry |
|
$ |
231.1 |
|
|
$ |
242.4 |
|
|
(4.7 |
)% |
Manufacturing &
Distribution |
|
|
119.7 |
|
|
|
120.6 |
|
|
(0.7 |
)% |
Education |
|
|
39.5 |
|
|
|
38.8 |
|
|
1.8 |
% |
Aviation |
|
|
43.6 |
|
|
|
28.0 |
|
|
55.7 |
% |
Technical Solutions(1) |
|
|
28.8 |
|
|
|
42.8 |
|
|
(32.7 |
)% |
Government Services |
|
|
— |
|
|
|
(0.3 |
) |
|
NM* |
|
Corporate(2) |
|
|
(156.7 |
) |
|
|
(200.6 |
) |
|
21.9 |
% |
Adjustment for income from
unconsolidated affiliates, included in Aviation and Technical
Solutions |
|
|
(3.0 |
) |
|
|
(1.8 |
) |
|
(60.1 |
)% |
Adjustment for tax deductions
for energy efficient government buildings, included in Technical
Solutions |
|
|
(0.1 |
) |
|
|
(0.3 |
) |
|
50.2 |
% |
Total operating
profit |
|
|
303.1 |
|
|
|
269.7 |
|
|
12.4 |
% |
Income from unconsolidated
affiliates |
|
|
3.0 |
|
|
|
1.8 |
|
|
60.1 |
% |
Interest expense |
|
|
(61.8 |
) |
|
|
(25.2 |
) |
|
NM* |
|
Income before income
taxes |
|
|
244.2 |
|
|
|
246.3 |
|
|
(0.9 |
)% |
Income tax provision |
|
|
(55.7 |
) |
|
|
(64.8 |
) |
|
14.0 |
% |
Net
income |
|
$ |
188.5 |
|
|
$ |
181.6 |
|
|
3.8 |
% |
*Not meaningful (due to variance greater than or equal to
+/-100%)
(1) 2022 includes a $7.6 million gain on the
sale of certain healthcare customer contracts.
(2) 2023 includes $22.4 million in Employee
Retention Credit (ERC) refund received from the IRS and $45.6
million adjustment to the estimate of the fair value of the
contingent consideration associated with the RavenVolt
acquisition.
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)(in millions, except per share
amounts) |
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net Income to Adjusted Net
Income |
|
|
|
|
|
|
|
|
Net
income |
|
$ |
98.1 |
|
|
$ |
56.8 |
|
|
$ |
188.5 |
|
|
$ |
181.6 |
|
Items
impacting comparability(a) |
|
|
|
|
|
|
|
|
Prior year self-insurance adjustment(b) |
|
|
(5.3 |
) |
|
|
(8.5 |
) |
|
|
(1.8 |
) |
|
|
(37.2 |
) |
Legal costs and other settlements |
|
|
— |
|
|
|
(2.3 |
) |
|
|
— |
|
|
|
0.8 |
|
Acquisition and integration related costs(c) |
|
|
3.9 |
|
|
|
3.2 |
|
|
|
11.1 |
|
|
|
12.6 |
|
Transformation initiative costs(d) |
|
|
15.3 |
|
|
|
16.3 |
|
|
|
45.9 |
|
|
|
44.8 |
|
Sale of healthcare customer contracts(e) |
|
|
— |
|
|
|
0.1 |
|
|
|
— |
|
|
|
(7.6 |
) |
Change in fair value of contingent consideration(f) |
|
|
(37.2 |
) |
|
|
— |
|
|
|
(45.6 |
) |
|
|
— |
|
Employee Retention Credit(g) |
|
|
(22.4 |
) |
|
|
— |
|
|
|
(22.4 |
) |
|
|
— |
|
Other |
|
|
0.5 |
|
|
|
— |
|
|
|
0.4 |
|
|
|
— |
|
Total
items impacting comparability |
|
|
(45.1 |
) |
|
|
8.8 |
|
|
|
(12.3 |
) |
|
|
13.5 |
|
Income
tax benefit (h)(i) |
|
|
(0.2 |
) |
|
|
(2.5 |
) |
|
|
(10.6 |
) |
|
|
(7.4 |
) |
Items
impacting comparability, net of taxes |
|
|
(45.4 |
) |
|
|
6.3 |
|
|
|
(22.9 |
) |
|
|
6.1 |
|
Adjusted
net income |
|
$ |
52.8 |
|
|
$ |
63.2 |
|
|
$ |
165.6 |
|
|
$ |
187.7 |
|
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net Income to Adjusted
EBITDA |
|
|
|
|
|
|
|
|
Net income |
|
$ |
98.1 |
|
|
$ |
56.8 |
|
|
$ |
188.5 |
|
|
$ |
181.6 |
|
Items impacting comparability |
|
|
(45.1 |
) |
|
|
8.8 |
|
|
|
(12.3 |
) |
|
|
13.5 |
|
Income tax provision |
|
|
21.2 |
|
|
|
21.5 |
|
|
|
55.7 |
|
|
|
64.8 |
|
Interest expense |
|
|
20.9 |
|
|
|
11.1 |
|
|
|
61.8 |
|
|
|
25.2 |
|
Depreciation and amortization |
|
|
30.2 |
|
|
|
27.2 |
|
|
|
91.3 |
|
|
|
82.4 |
|
Adjusted EBITDA |
|
$ |
125.3 |
|
|
$ |
125.5 |
|
|
$ |
384.9 |
|
|
$ |
367.4 |
|
|
|
|
|
|
|
|
|
|
Net income margin as a % of revenues |
|
|
4.8 |
% |
|
|
2.9 |
% |
|
|
3.1 |
% |
|
|
3.1 |
% |
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Revenues Excluding Management Reimbursement |
|
|
|
|
|
|
|
|
Revenues |
|
$ |
2,028.2 |
|
|
$ |
1,961.4 |
|
|
$ |
6,003.5 |
|
|
$ |
5,795.5 |
|
Management reimbursement |
|
|
(77.9 |
) |
|
|
(72.8 |
) |
|
|
(223.8 |
) |
|
$ |
(204.1 |
) |
Revenues
excluding management reimbursement |
|
$ |
1,950.3 |
|
|
$ |
1,888.6 |
|
|
$ |
5,779.7 |
|
|
$ |
5,591.4 |
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA margin as a % of revenues excluding
management reimbursement |
|
|
6.4 |
% |
|
|
6.6 |
% |
|
|
6.7 |
% |
|
|
6.6 |
% |
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
Reconciliation of Net Income per Diluted Share to Adjusted
Net Income per Diluted Share |
|
|
|
|
|
|
|
|
Net
income per diluted share |
|
$ |
1.47 |
|
|
$ |
0.85 |
|
|
$ |
2.83 |
|
|
$ |
2.68 |
|
Items impacting comparability, net of taxes |
|
|
(0.68 |
) |
|
|
0.09 |
|
|
|
(0.34 |
) |
|
|
0.09 |
|
Adjusted
net income per diluted share |
|
$ |
0.79 |
|
|
$ |
0.94 |
|
|
$ |
2.48 |
|
|
$ |
2.77 |
|
Diluted
shares |
|
|
66.6 |
|
|
|
67.2 |
|
|
|
66.7 |
|
|
|
67.7 |
|
|
|
Three Months Ended July 31, |
|
Nine Months Ended July 31, |
|
|
|
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(j) |
|
$ |
149.1 |
|
|
$ |
40.7 |
|
|
$ |
104.1 |
|
|
$ |
(96.7 |
) |
Additions to property, plant and equipment |
|
|
(10.9 |
) |
|
|
(18.1 |
) |
|
|
(34.6 |
) |
|
|
(37.7 |
) |
Free
Cash Flow |
|
$ |
138.3 |
|
|
$ |
22.6 |
|
|
$ |
69.5 |
|
|
$ |
(134.5 |
) |
(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 nine
months ended July 31, 2023, our self-insurance general
liability, workers’ compensation, and automobile and medical and
dental insurance claims related to prior period accident years
decreased by $5.3 million and $1.8 million respectively. For the
three and nine months ended July 31, 2022, our self-insurance
general liability, workers’ compensation, and automobile and
medical and dental insurance claims related to prior period
accident years decreased by $8.5 million and $37.2 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 $7.6 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) Represents Employee Retention Credit (ERC)
refund received from the IRS.
(h) 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.
(i) The three and nine months ended July 31, 2023 include a $5.1
million charge related to ERC refunds received from IRS, and the
tax impact of non-taxable change in the fair value of the
contingent consideration related to the RavenVolt Acquisition. The
nine months ended July 31, 2022, includes a tax benefit of $3.6M
related to the expiring statute of limitations
(j) The nine months ended July 31, 2022, include
a $143.8 million payment made for the Bucio settlement. The nine
months ended July 31, 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) |
|
$ |
3.52 |
|
|
$ |
3.62 |
|
Transformation initiative costs (b) |
|
|
0.59 |
|
|
|
0.59 |
|
Acquisition and integration related costs (c) |
|
|
0.18 |
|
|
|
0.18 |
|
Change in fair value of contingent consideration(d) |
|
|
(0.68 |
) |
|
|
(0.68 |
) |
Employee Retention Credit(e) |
|
|
(0.26 |
) |
|
|
(0.26 |
) |
Other
adjustments (f) |
|
|
0.05 |
|
|
|
0.05 |
|
Adjusted net income per diluted share (a) |
|
$ |
3.40 |
|
|
$ |
3.50 |
|
(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 an adjustment to the estimate of
the fair value of the contingent consideration associated with the
RavenVolt acquisition.
(e) Represents Employee Retention Credit (ERC)
refund received from the IRS.
(f) 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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