ABM Industries(ABM) - 2025 Q2 - Quarterly Report

Revenue Growth - Revenues increased by $93.5 million, or 4.6$2,111.7 million for the three months ended April 30, 2025, driven by organic growth of 3.7% and acquisition growth of 0.8%[100] - Revenues increased by $138.8 million, or 3.4$4,226.6 million for the six months ended April 30, 2025, compared to the prior year period, driven by organic growth of 2.6% and acquisition growth of 0.7%[125] - Business & Industry segment revenues rose by $25.9 million, or 2.6$1,015.5 million, primarily due to client expansions domestically and internationally[112] - Technical Solutions segment revenues increased by $34.0 million, or 19.3$210.2 million, with organic growth of 9.8% and acquisition growth of 9.5%[120] - Aviation segment revenues grew by $21.9 million, or 9.2$260.1 million, attributed to new business and scope expansions with existing clients[116] - Technical Solutions segment revenues increased by $70.3 million, or 20.5$412.4 million, driven by organic growth of 12.0% and acquisition growth of 8.5%[144] - Aviation segment revenues increased by $42.4 million, or 8.7$530.2 million, attributed to new business and scope expansions with existing clients[140] Operating Profit and Margins - Operating profit rose by $1.0 million to$82.3 million during the same period, attributed to revenue increases and operational efficiencies[100] - Operating profit for the consolidated entity increased by $4.5 million, or 2.9$159.9 million for the six months ended April 30, 2025[124] - Operating profit margin for the Business & Industry segment improved by 34 bps to 8.2%[113] - Operating profit margin for the Aviation segment increased by 85 bps to 6.3%[117] - Operating profit for the Technical Solutions segment increased by $6.5 million, or 27.6$30.0 million, with an operating profit margin increase of 40 bps to 7.3%[145] Operating Expenses - Operating expenses increased by $77.5 million, or 4.4$1,841.0 million, with a gross margin improvement of 19 basis points to 12.8%[103] - Corporate expenses rose by $3.2 million, or 4.0$82.9 million, primarily due to increased costs associated with systems' go-live and acquisition integration[122] - Operating expenses increased by $106.3 million, or 3.0$3,696.1 million for the six months ended April 30, 2025, compared to the prior year period[126] Cash Flow and Financing - Net cash used in operating activities was $73.9 million for the six months ended April 30, 2025, compared to net cash provided of$116.9 million in the prior year period[100] - Net cash provided by financing activities was $98.7 million for the six months ended April 30, 2025, compared to a cash outflow of$98.0 million in the prior year, driven by increased borrowings from the Amended Credit Facility[163] - The total outstanding borrowings under the Amended Credit Facility were $1.6 billion, with a weighted average interest rate of 6.07$1.3 billion to $1.6 billion and extend the maturity date to February 26, 2030[152] Strategic Initiatives - The ELEVATE strategy involves investments totaling$200 - $215 million aimed at enhancing client and team member experiences and leveraging technology[96] - The Quality Uptime Acquisition contributed an additional$16.6 million in revenue, completed in June 2024, supporting overall revenue growth[102] - The company anticipates long-term cash uses may include strategic acquisitions and plans to reinvest foreign earnings for non-U.S. growth[155][150] Other Financial Metrics - Interest expense increased by $3.3 million, or 16.1$23.9 million, driven by higher borrowings from the Amended Credit Facility[106] - Effective tax rate on income from operations increased to 25.6% for the six months ended April 30, 2025, from 24.0% in the prior year[130] - Foreign currency translation gain increased to $6.7 million during the six months ended April 30, 2025, compared to a gain of$3.7 million in the prior year[133] - The company remains in compliance with the covenants of the Amended Credit Facility, which includes a maximum total net leverage ratio of 5.00 to 1.00[153] Shareholder Returns - Dividends of $32.9 million were paid to shareholders, with a declared dividend of$0.530 per common share during the six months ended April 30, 2025[100] - The company has $133.2 million remaining under its share repurchase program as of April 30, 2025, although no shares were repurchased during the three months ended April 30, 2025[158]