ABM Industries(US:ABM)2024-09-06 15:07Revenue Performance - Revenues increased by $66.0 million, or 3.3%, to $2,094.2 million during the three months ended July 31, 2024, driven by organic growth of 2.8% and acquisition growth of 0.4%[105] - Revenues increased by $178.5 million, or 3.0%, to $6,182.0 million for the nine months ended July 31, 2024, compared to the prior year period, driven by organic growth of 2.8% and acquisition growth of 0.1%[140] - Total revenues for the Business & Industry segment decreased by $10.8 million, or 1.1%, to $1,010.6 million in Q3 2024 compared to Q3 2023[123] - Manufacturing & Distribution revenues fell by $4.8 million, or 1.2%, to $377.1 million in Q3 2024, primarily due to customer rebalancing[126] - Education segment revenues increased by $9.2 million, or 4.2%, to $228.3 million in Q3 2024, driven by business expansion with existing customers[128] - Aviation revenues rose by $30.4 million, or 12.8%, to $268.4 million in Q3 2024, attributed to new business and recovery in travel volume[130] - Technical Solutions revenues increased by $41.8 million, or 24.9%, to $209.7 million in Q3 2024, with organic growth of 20.0% and acquisition growth of 4.9%[133] - Revenues in the Business & Industry segment decreased by $23.0 million, or 0.8%, to $3,033.4 million, primarily due to client attrition and soft market conditions[151] - Manufacturing & Distribution revenues increased by $31.1 million, or 2.7%, to $1,166.6 million, driven by expansion with existing customers[153] - Aviation segment revenues rose by $78.6 million, or 11.6%, to $756.1 million, reflecting strong performance in the sector[150] - Technical Solutions revenues increased by $68.5 million, or 14.2%, to $551.9 million, indicating growth in project completions and service demand[150] - Education revenues increased by $23.3 million, or 3.6%, to $674.0 million during the nine months ended July 31, 2024, compared to the prior year period[155] Operating Performance - Operating profit decreased by $101.5 million to $37.4 million during the same period, primarily due to fair value adjustments related to acquisitions and unfavorable self-insurance reserve adjustments[106] - Operating profit decreased by $110.3 million, or 36.4%, to $192.8 million, reflecting challenges in various segments[150] - Operating profit for Education increased by $2.8 million, or 7.1%, to $42.3 million during the nine months ended July 31, 2024[156] - Operating profit for Aviation decreased by $3.0 million, or 7.1%, to $40.6 million during the nine months ended July 31, 2024[158] - Operating profit for Technical Solutions increased by $12.6 million, or 43.6%, to $41.4 million during the nine months ended July 31, 2024[161] Expenses and Costs - Operating expenses increased by $65.2 million, or 3.7%, to $1,831.0 million, with a gross margin decrease of 37 basis points to 12.6%[113] - Selling, general and administrative expenses rose by $107.5 million to $211.8 million, primarily due to fair value adjustments related to acquisitions and the absence of employee retention credits[114] - Selling, general and administrative expenses increased by $114.8 million, or 27.9%, to $526.3 million, primarily due to fair value adjustments and increased costs associated with systems' go-live[142] - Corporate expenses surged to $130.6 million in Q3 2024, up $114.7 million from the prior year, mainly due to fair value adjustments related to the RavenVolt Acquisition[135] - Corporate expenses increased by $128.3 million, or 81.9%, to $285.0 million during the nine months ended July 31, 2024[162] Cash Flow and Borrowings - Net cash provided by operating activities was $196.3 million during the nine months ended July 31, 2024, an increase compared to the prior year period[108] - At July 31, 2024, total outstanding borrowings under the Amended Credit Facility were $1.3 billion, with a weighted average interest rate of 7.19%[171] - Total outstanding borrowings under the Amended Credit Facility were $1.3 billion as of July 31, 2024, with a borrowing capacity of up to $427.6 million[108] - Net cash used in investing activities increased by $113.0 million during the nine months ended July 31, 2024, primarily related to the Quality Uptime Acquisition[179] Taxation - Effective tax rate for the three months ended July 31, 2024, was 74.0%, significantly higher than 17.7% for the same period in 2023, influenced by discrete items related to energy efficiency incentives[107] - Effective tax rate for Q3 2024 was 74.0%, significantly higher than 17.7% in Q3 2023, resulting in tax provisions of $13.3 million and $21.2 million respectively[118] - The effective tax rate increased to 30.7% for the nine months ended July 31, 2024, compared to 22.8% for the same period in 2023[146] Strategic Initiatives - The ELEVATE strategy aims to strengthen industry leadership with investments totaling $200 - $215 million, focusing on client experience, team member experience, and technology utilization[97] Accounting Standards Updates - The company is currently evaluating the impact of the recently issued Accounting Standard Updates (ASUs) on its financial statements, specifically regarding segment reporting and income tax disclosures[184] - The ASU on segment reporting requires annual and interim disclosures of significant segment expenses, effective for fiscal years beginning after December 15, 2023[184] - The ASU on income taxes aims to enhance transparency and decision usefulness of income tax disclosures, effective for fiscal years beginning after December 15, 2024[184] Market Risk - There are no material changes related to market risk from the disclosures in the Annual Report on Form 10-K for the year ended October 31, 2023[186]