ABM Industries(ABM) - 2025 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue grew 4.6% year over year to $2.1 billion, driven by 3.8$54.1 million or $0.86 per diluted share, up from$52.3 million or $0.82 per diluted share last year [20] - Adjusted EBITDA was$125.9 million compared to $121 million last year, with an adjusted EBITDA margin flat at 6.2$1 billion, up 3% from last year, driven by expansion with existing clients and improved conditions in the US prime commercial office market [21] - M and D generated $398.1 million, a 2$39.9 million and a margin of 10% [23] - Technical solutions delivered 19% revenue growth to $210.2 million, with continued demand for microgrids and mission-critical power services [24] Market Data and Key Metrics Changes - The prime vacancy rate for commercial office space declined 50 basis points year over year to 14.8$300.2 billion, representing 16.2% of total retail [13] - Domestic air travel remains strong, with TSA data showing daily screenings frequently exceeding 2.5 million in May [14] Company Strategy and Development Direction - The company is focusing on high-quality office properties, manufacturing and distribution facilities, and energy resiliency [6][16] - There is a strategic shift in M and D from traditional cleaning to include ancillary support services, enhancing client relationships [9] - The company is investing in technical sales and industry-specific capabilities to capture growth in key sectors like semiconductors and data centers [9][16] Management's Comments on Operating Environment and Future Outlook - Management remains confident in core markets despite ongoing macroeconomic uncertainty, expecting delayed projects from Q2 to resume in Q3 [6][17] - The company is optimistic about sustaining healthy top-line growth and expanding margins over time [17] - Management highlighted the importance of the ERP implementation for operational efficiency and cash flow improvements [11][30] Other Important Information - Total indebtedness at the end of Q2 was $1.6 billion, with available liquidity of$657.8 million [26][27] - The company reaffirmed its full-year adjusted EPS guidance to be in the range of $3.65 to$3.80 [29] Q&A Session Summary Question: What is the expected earn-out on RavenBold? - The total earn-out for this year is expected to be about $30 million, with a total of approximately$280 million including previous amounts [36][38] Question: How is organic growth expected in the B and I business for the second half? - Management is optimistic about maintaining positive organic growth in B and I, despite potential choppiness [44] Question: Can you elaborate on the new service offerings in M and D? - The company is expanding its service offerings to include material handling and test balancing, which are expected to enhance client relationships and margins [49][53] Question: How is the company positioned in prime office markets? - The company has been winning in prime office markets due to strong execution, relationships, and investments in technology [86][88] Question: What is the outlook for ATS margins and project delays? - Project delays are expected to normalize in the second half, with margins anticipated to return to historical levels of 9% to 10% [68] Question: What is the current state of the education segment? - The education segment is stable, with a strong pipeline and good growth in renewals, supported by investments in facilities [70][72]