Revenue and Growth - Revenues increased by $45.3 million, or 2.2%, to $2,114.9 million during the three months ended January 31, 2025, compared to the prior year period, driven by organic growth of 1.6% and acquisition growth of 0.6%[107] - Total revenues for the three months ended January 31, 2025, increased by $45.3 million, or 2.2%, to $2,114.9 million compared to the prior year period[120] - Acquisition growth included a $12.7 million revenue increase from the Quality Uptime Acquisition, completed in June 2024[109] - Aviation segment revenues increased by $20.6 million, or 8.2%, to $270.1 million, driven by new business and scope expansions with existing clients[125] - Education segment revenues increased by $5.2 million, or 2.4%, to $225.3 million, primarily due to new business wins and increased work orders[127] - Technical Solutions segment revenues increased by $36.4 million, or 21.9%, to $202.3 million, with organic growth of 14.2% and acquisition growth of 7.7%[129] Profitability and Margins - Operating profit rose by $3.5 million, or 4.7%, to $77.6 million during the same period, attributed to revenue increases and operational efficiencies[107] - Gross margin improved by 53 basis points to 12.3% for the three months ended January 31, 2025, from 11.8% in the prior year period[110] - Operating profit for the Technical Solutions segment increased by $10.0 million to $16.6 million, with an operating profit margin increase of 424 bps to 8.2%[130] Expenses and Cash Flow - Selling, general and administrative expenses increased by $14.4 million, or 9.3%, to $169.0 million, primarily due to higher compensation expenses from headcount expansion and legal settlements[111] - Corporate expenses increased by $8.5 million, or 11.4%, to $83.2 million, primarily due to higher legal settlements and compensation expenses[131] - Net cash used in operating activities was $106.2 million during the three months ended January 31, 2025, compared to $0.1 million in the prior year period, driven by increased working capital needs[107] - Net cash provided by financing activities increased to $116.9 million during the three months ended January 31, 2025, from $0.5 million in the prior year[150] - Net cash used in investing activities increased by $1.4 million during the three months ended January 31, 2025, primarily due to purchases of property, plant, and equipment[149] Debt and Financing - Total outstanding borrowings under the Amended Credit Facility were $1.5 billion as of January 31, 2025, with a borrowing capacity of up to $238.0 million[107] - Total outstanding borrowings under the Amended Credit Facility were $1.5 billion in cash borrowings and $29.7 million in standby letters of credit, with a weighted average interest rate of 6.17%[140] - Principal payments under the term loan amounted to $8.1 million during the three months ended January 31, 2025[140] - As of January 31, 2025, the company was in compliance with its credit facility covenants, which include a maximum total net leverage ratio of 5.00 to 1.00[139] Strategic Initiatives - The ELEVATE strategy involves investments totaling $200 - $215 million aimed at strengthening industry leadership and enhancing core services[100] - The company anticipates long-term cash uses may include strategic acquisitions and ongoing technology transformation initiatives under the ELEVATE strategy[133] - The company plans to reinvest foreign earnings to fund future non-U.S. growth and expansion, without remitting such earnings to the United States[141] Market and Risk - A foreign currency translation loss of $7.6 million was recorded during the three months ended January 31, 2025, compared to a gain of $5.4 million in the prior year period[118] - There are no material changes related to market risk from the disclosures in the Annual Report for the year ended October 31, 2024[155]

Financial Data and Key Metrics Changes - The company reported Q1 2025 revenue of $2.1 billion, an increase of 2.2%, with 1.6% organic growth and the remainder from the acquisition of Quality Uptime Services [29] - Adjusted EPS was $0.87, up from $0.86 in the prior year, while adjusted net income increased to $55.3 million from $54.8 million [31] - Adjusted EBITDA rose 3% to $120.6 million, with an adjusted EBITDA margin remaining flat at 5.9% [32] Business Line Data and Key Metrics Changes - **Business & Industry (B&I)**: Revenue was $1 billion, slightly below last year, but operating profit and margin remained consistent due to cost controls [33] - **Aviation**: Revenue grew 8% to $270.1 million, with operating profit up 26% to $12.2 million, reflecting strong travel markets [34] - **Manufacturing & Distribution (M&D)**: Revenue decreased to $394.3 million due to a client exit, but new wins are expected to drive mid-single-digit organic growth later in 2025 [36] - **Education**: Revenue grew 2% to $225.3 million, with operating profit increasing 10% to $14 million [37] - **Technical Solutions**: Revenue surged 22% to $202.3 million, driven by strong microgrid project activity, with operating profit more than doubling to $16.6 million [39] Market Data and Key Metrics Changes - The commercial office leasing activity in the US increased by 24% in Q4 2024, indicating a positive trend for B&I [19] - Strong performance in the semiconductor and data center markets is supporting growth in M&D [22] - The aviation sector is expected to continue its growth trajectory, with strong domestic flight volumes and TSA screenings indicating mid-single-digit market growth [23] Company Strategy and Development Direction - The company is focused on implementing a new ERP system to drive cost efficiencies and improve analytics for commercial growth opportunities [11][12] - A new brand platform was launched to reflect the company's evolution into a tech-enabled solution provider [13][14] - Continued investment in client-facing technology, such as ABM Connect, aims to enhance operational efficiency and user experience [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of commercial real estate markets and anticipates growth in B&I in the latter half of fiscal 2025 [10] - The company is closely monitoring immigration policy changes but remains confident in its talent acquisition strategies [17] - Full-year adjusted EPS guidance has been raised to a range of $3.65 to $3.80, reflecting a strong start to the year [45] Other Important Information - The company expanded its credit facility to $2.2 billion, reflecting strong growth and lender confidence [15][41] - Free cash flow for Q1 was negative $123 million due to increased working capital related to the ERP transition, but normalization is expected in the coming months [42][43] Q&A Session Summary Question: How does the recent improvement in commercial office leasing activity compare to previous quarters? - Management noted that there is no real seasonality in leasing activity, and the recent increase represents a positive trend in net absorption rates [52][54] Question: What is the company's exposure to federal projects? - Management indicated minimal risk from federal projects, as most work is in mission-critical areas that are not being cut [58][59] Question: How does the company plan to manage potential increases in labor costs? - Management stated that half of revenues come from union labor with set rates, and they typically pass labor increases to clients [66][67] Question: What is the expected impact of the new ERP system on cash flow? - Management anticipates a significant increase in cash flow in Q2 as invoicing delays are resolved [73][74] Question: Can you provide insights on the win rates for new business? - Management reported improved win rates due to increased business development efforts and the use of AI in responding to RFPs [84][85] Question: What is the outlook for the Technical Solutions segment? - Management expressed optimism for the microgrid business, supported by a strong backlog and sales pipeline [88][89] Question: How is the company addressing the impact of large client rebalancing in M&D? - Management indicated that the impact has been largely mitigated and expects incremental positive growth in the second half of the year [95][96] Question: What is the strategy for share repurchases? - Management clarified that share repurchases are aimed at offsetting dilution from share-based compensation and will evaluate further opportunities as they arise [108]

Group 1: Earnings Performance - ABM Industries reported quarterly earnings of $0.87 per share, exceeding the Zacks Consensus Estimate of $0.78 per share, and showing a slight increase from $0.86 per share a year ago [1] - The earnings surprise for this quarter was 11.54%, following a previous quarter where the company also surpassed expectations with earnings of $0.90 per share against an estimate of $0.86, resulting in a surprise of 4.65% [2] - Over the last four quarters, ABM Industries has consistently surpassed consensus EPS estimates [2] Group 2: Revenue Performance - The company posted revenues of $2.11 billion for the quarter ended January 2025, which was 0.69% above the Zacks Consensus Estimate and an increase from $2.07 billion in the same quarter last year [3] - ABM Industries has also topped consensus revenue estimates in each of the last four quarters [3] Group 3: Stock Performance and Outlook - Since the beginning of the year, ABM Industries shares have declined by approximately 2.6%, while the S&P 500 has seen a decline of 5.3% [4] - The company's future stock performance will largely depend on management's commentary during the earnings call and the trends in earnings estimate revisions [4][5] - The current consensus EPS estimate for the upcoming quarter is $0.88 on revenues of $2.07 billion, and for the current fiscal year, it is $3.71 on revenues of $8.56 billion [8] Group 4: Industry Context - The Business - Services industry, to which ABM Industries belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of ABM Industries may also be influenced by the outlook for the industry as a whole, with research indicating that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than 2 to 1 [9]

First Quarter 2025 Earnings Presentation March 12, 2025 Forward Looking Statements 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," "int ...

Revenue and Income - Revenue for Q1 fiscal 2025 was $2.1 billion, a 2.2% increase year-over-year, driven by 1.6% organic growth and contributions from acquisitions[5] - Net income for the period was $43.6 million, or $0.69 per diluted share, compared to $44.7 million, or $0.70 per diluted share in the prior year[8] - Adjusted net income was $55.3 million, or $0.87 per diluted share, up from $54.8 million, or $0.86 per diluted share in the prior year[9] - Operating profit rose by 4.7% to $77.6 million, up from $74.1 million year-over-year[31] - Basic and diluted net income per share both decreased by 1.4% to $0.69 from $0.70[27] Adjusted Metrics - Adjusted EBITDA for the period was $120.6 million, with an adjusted EBITDA margin of 5.9%, compared to $116.7 million and 5.9% in the prior year[10] - Adjusted EBITDA for the three months ended January 31, 2025, was $120.6 million, compared to $116.7 million in the prior year[33] Cash Flow and Working Capital - Net cash used in operating activities was $106.2 million, with free cash flow at negative $122.9 million, reflecting a temporary increase in working capital due to the new ERP system[11] - Free cash flow for the three months ended January 31, 2025, was $(122.9) million, a decline from $(13.7) million in the same period of 2024[36] Dividends and Share Repurchase - A cash dividend of $0.265 per common share was declared, marking the company's 236th consecutive quarterly cash dividend[15] - The company declared dividends of $0.265 per common share, an increase from $0.225 per common share in the previous year[27] - The company repurchased 0.4 million shares at an average price of $51.23 per share, totaling $21.3 million[14] Segment Performance - Technical Solutions and Aviation segments reported revenue increases of 22% and 8%, respectively, while Education grew by 2%[5] - The Technical Solutions segment saw a significant revenue increase of 21.9%, reaching $202.3 million compared to $165.9 million in the prior year[31] Assets and Liabilities - Total current assets increased to $1,921.5 million as of January 31, 2025, from $1,788.7 million as of October 31, 2024[30] - Total liabilities rose to $3,438.2 million as of January 31, 2025, compared to $3,315.2 million at the end of the previous quarter[30] Tax and Claims - The company's tax impact for FY2025 and FY2024 is calculated using a federal and state statutory rate of 28.11%[40] - The three months ended January 31, 2025, included a benefit of $0.1 million for uncertain tax positions with expiring statutes, compared to a benefit of $0.3 million for the same period in 2024[40] - For the three months ended January 31, 2025, self-insurance claims related to prior period accident years increased by $0 million, compared to an increase of $5.3 million for the same period in 2024[37] Outlook - The company raised the lower end of its fiscal 2025 adjusted EPS outlook by $0.05, now projecting adjusted EPS between $3.65 and $3.80[16]

Core Insights - ABM reported a revenue of $2.1 billion for the first quarter of fiscal 2025, marking a 2.2% increase year-over-year, driven by 1.6% organic growth and contributions from acquisitions [4][24] - The company experienced strong growth in Technical Solutions and Aviation, with revenue increases of 22% and 8% respectively, while Education grew by 2% [4][29] - Net income for the quarter was $43.6 million, or $0.69 per diluted share, compared to $44.7 million, or $0.70 per diluted share in the previous year [5][30] - Adjusted net income was $55.3 million, or $0.87 per diluted share, reflecting an increase from $54.8 million, or $0.86 per diluted share in the prior year [6][30] - The company raised the lower end of its fiscal 2025 adjusted EPS outlook by $0.05, now projecting a range between $3.65 and $3.80 [14] Financial Performance - Adjusted EBITDA for the period was $120.6 million, with an adjusted EBITDA margin of 5.9%, consistent with the prior year [7][30] - Net cash used in operating activities was $106.2 million, with free cash flow at negative $122.9 million, primarily due to a temporary increase in working capital related to the new ERP system [8][30] - Total indebtedness at the end of the first quarter was $1,590.2 million, with a leverage ratio of 2.9X [10][11] Strategic Developments - The company successfully launched a cloud-based ERP system for Business & Industry and Manufacturing & Distribution, which is expected to drive cost efficiencies and enhance operational capabilities [3][4] - ABM's confidence in the commercial real estate market is bolstered by a 24% sequential increase in U.S. commercial office leasing activity during the fourth quarter of the previous calendar year [3][4] Market Outlook - The company anticipates that the commercial real estate markets, particularly high-quality office buildings, will return to growth in 2025 [3][4] - ABM expects its other end markets to remain broadly healthy, supported by a strong sales pipeline and market-leading technology [3][4]

Core Viewpoint - ABM Industries Incorporated (ABM) has demonstrated strong performance over the past year, with a stock price increase of 24%, significantly outperforming the industry and the S&P 500 composite growth rates of 5.1% and 15.2% respectively [1] Group 1: Factors Driving Performance - ABM's diversified service portfolio, including janitorial, engineering, and facility services, has shown resilience during economic uncertainty, with consistent demand particularly from healthcare, education, and commercial real estate sectors [2] - The company has reported strong quarterly earnings over the past four quarters, exceeding the Zacks Consensus Estimate, with an average earnings surprise of 11.6% [3] - ABM's focus on sustainability and energy efficiency initiatives has attracted ESG-focused investors, enhancing its market appeal and differentiating it from competitors [4] Group 2: Market Sentiment and Position - Positive investor sentiment in the facility management sector is driven by increasing demand for services that ensure workplace safety and operational efficiency, benefiting ABM's market position [5] - ABM currently holds a Zacks Rank of 2 (Buy), indicating strong investment potential, alongside other top-ranked stocks in the business services sector [6] - Competitors like AppLovin Corporation and Booz Allen Hamilton also show strong performance, with AppLovin having a long-term earnings growth expectation of 20% and an average earnings surprise of 23.5% [6][7]

Group 1 - ABM Industries Inc. has good growth potential moving forward, particularly in its Business & Industry (B&I) segment, which is expected to see positive sales in the second half of 2025 due to improvements in office occupancy rates and the return-to-office trend [1] - The Manufacturing & Distribution segment is also anticipated to recover, contributing to the overall growth of the company [1]

Core Viewpoint - Investors in the Business - Services sector should consider ABM Industries and Cintas as potential undervalued stocks, with ABM currently appearing to be the superior value option based on various valuation metrics [1][6]. Valuation Metrics - Both ABM Industries and Cintas have a Zacks Rank of 2 (Buy), indicating positive earnings estimate revisions and an improving earnings outlook for both companies [3]. - ABM has a forward P/E ratio of 14.13, significantly lower than Cintas's forward P/E of 47.58, suggesting that ABM may be undervalued relative to Cintas [5]. - The PEG ratio for ABM is 2.73, while Cintas has a PEG ratio of 3.96, further indicating that ABM is more favorably valued when considering expected earnings growth [5]. - ABM's P/B ratio stands at 1.85, compared to Cintas's P/B of 19.28, reinforcing the notion that ABM is a better value option [6]. - Based on these valuation figures, ABM earns a Value grade of A, while Cintas receives a Value grade of D, highlighting the relative undervaluation of ABM [6].

Company Overview - ABM Industries Incorporated (NYSE: ABM) is an industrial company with over a century of history, originally starting in window washing and evolving into a recognized name in facilities management [1]. Industry Position - The company has established itself in the facilities management sector, indicating a strong presence and expertise in this industry [1].