Record Full Year Revenues of $5.5
billion
ABM (NYSE:ABM), a leading provider of facility solutions, today
announced financial results for the fourth quarter and full year
that ended October 31, 2017.
|
|
|
Three Months EndedOctober 31, |
|
Increase/(Decrease) |
|
Years EndedOctober
31, |
|
Increase/(Decrease) |
($ in
millions, except per share amounts) (unaudited) |
|
2017 |
|
2016 |
|
|
2017 |
|
2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
|
$ |
1,497.9 |
|
|
$ |
1,322.3 |
|
|
13.3 |
% |
|
$ |
5,453.6 |
|
|
$ |
5,144.7 |
|
|
6.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating profit |
|
$ |
4.4 |
|
|
$ |
10.8 |
|
|
(58.8 |
)% |
|
$ |
101.9 |
|
|
$ |
54.7 |
|
|
86.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) Income from continuing operations |
|
$ |
(2.5 |
) |
|
$ |
9.0 |
|
|
NM* |
|
|
$ |
78.1 |
|
|
$ |
62.3 |
|
|
25.3 |
% |
(Loss) Income from continuing operations per diluted share |
|
$ |
(0.04 |
) |
|
$ |
0.16 |
|
|
NM* |
|
|
$ |
1.34 |
|
|
$ |
1.09 |
|
|
22.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted income from continuing operations |
|
$ |
23.5 |
|
|
$ |
29.2 |
|
|
(19.7 |
)% |
|
$ |
101.9 |
|
|
$ |
99.2 |
|
|
2.8 |
% |
Adjusted Income from continuing operations per diluted share |
|
$ |
0.37 |
|
|
$ |
0.51 |
|
|
(27.5 |
)% |
|
$ |
1.75 |
|
|
$ |
1.74 |
|
|
0.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income |
|
$ |
(3.6 |
) |
|
$ |
7.8 |
|
|
NM* |
|
|
$ |
3.8 |
|
|
$ |
57.2 |
|
|
(93.3 |
)% |
Net (loss) income per diluted share |
|
$ |
(0.06 |
) |
|
$ |
0.14 |
|
|
NM* |
|
|
$ |
0.07 |
|
|
$ |
1.01 |
|
|
(93.1 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities of continuing
operations |
|
$ |
19.1 |
|
|
$ |
9.8 |
|
|
94.9 |
% |
|
$ |
101.7 |
|
|
$ |
110.5 |
|
|
(8.0 |
)% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA |
|
$ |
70.8 |
|
|
$ |
61.5 |
|
|
15.1 |
% |
|
$ |
236.7 |
|
|
$ |
212.2 |
|
|
11.5 |
% |
Adjusted EBITDA margin |
|
4.7 |
% |
|
4.6 |
% |
|
10 bps |
|
4.3 |
% |
|
4.1 |
% |
|
20 bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful (due to variance greater than or equal to
+/-100%)
This release refers to certain non-GAAP
financial measures described as “Adjusted EBITDA” defined as
earnings before income from discontinued operations, net of taxes,
interest, taxes, depreciation and amortization and excluding items
impacting comparability, "Adjusted EBITDA margin", “Adjusted income
from continuing operations,” and “Adjusted income from continuing
operations per diluted share”. These adjustments have been
made with the intent of providing financial measures that give
management and investors a more representative understanding of
underlying operational results and trends as well as the Company’s
operational performance. Management also uses Adjusted EBITDA as a
basis for planning and forecasting future periods. Please refer to
the accompanying financial schedules for supplemental financial
data and corresponding reconciliation of these non-GAAP financial
measures to certain GAAP financial measures. We round amounts in
these schedules to millions and 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.
Fourth Quarter Performance
For the fourth quarter of 2017, revenues
increased 13.3% to $1.5 billion, reflecting acquisitions of $178.5
million of incremental revenues primarily related to the Company's
recent acquisition of GCA Services Group ("GCA"), which was
acquired on September 1, 2017. For fiscal 2017, this business
will be reported in the new segment "GCA Services". The
Company reported organic growth of 2.3%, compared to the fourth
quarter of fiscal 2016. The Company's organic revenue performance,
which excludes acquisitions and divestitures, was driven primarily
by both new business wins and expansions with existing clients
within the Aviation and Business & Industry segments.
The Company reported a loss from continuing
operations of $2.5 million, or $0.04 per diluted share, compared to
income from continuing operations of $9.0 million, or $0.16 per
diluted share last year.
Adjusted income from continuing operations for
the fourth quarter of 2017 was $23.5 million, or $0.37 per diluted
share, compared to $29.2 million, or $0.51 per diluted share for
the fourth quarter of fiscal 2016. These results exclude
items impacting comparability, predominantly related to as-expected
acquisition costs associated with one-time transaction, synergy,
and integration-related expenses following the closing of the
Company's strategic acquisition of GCA. Items impacting
comparability also include litigation and other settlement costs
primarily related to two lawsuits concerning the Aviation segment's
Seattle-area operations, a large portion of which the Company
expects to be reimbursed in future quarters. As a reminder,
income from continuing operations for the fourth quarter of fiscal
2016 reflects a non-cash, pre-tax impairment charge related to the
Company's divested Government business. A full
description of items impacting comparability can be found in the
"Reconciliation of Non-GAAP Financial Measures" table.
Operationally, the Company's adjusted income
from continuing operations for the fourth quarter of 2017 was
impacted by reserves recorded for historical years' multi-employer
union benefit obligations primarily impacting the Business &
Industry segment, as well as client costs stemming from a
previously-announced contract termination which occurred within the
Company's Aviation segment during the third quarter of fiscal
2017. Additionally, income from continuing operations per
diluted share for the quarter on an adjusted and non-adjusted basis
reflects GCA-related share count dilution of approximately 10% and
higher amortization expense.
Total net loss for the fourth quarter of 2017
was $3.6 million, or $0.06 per diluted share, compared to net
income of $7.8 million, or $0.14 per diluted share last
year.
Adjusted EBITDA for the fourth quarter was $70.8
million compared to $61.5 million in the fourth quarter of
2016. The increase in adjusted EBITDA was primarily driven by
the Company's newly-acquired GCA business, revenue contribution,
and higher procurement savings. Partially offsetting these
results were the aforementioned client costs associated with the
Company's Aviation segment, and an increase in reserves associated
with historical multi-employer union benefit
obligations. Adjusted EBITDA margin for the quarter was
4.7% versus 4.6% last year.
Scott Salmirs, President and Chief Executive
Officer of ABM Industries, commented, "We achieved record revenue
growth during the fourth quarter, reflecting our continued delivery
of solid organic growth and our
transformational acquisition of GCA. These results
demonstrate the ongoing execution of our 2020 Vision initiatives.
Our organization navigated the complexities of our highly
diverse business and continued
to accelerate, while beginning to integrate GCA's
40,000 employees and extensive client roster."
Fiscal 2017
Performance
The Company reported revenues of approximately
$5.5 billion, an increase of 6.0% for fiscal 2017 compared to
fiscal 2016. This performance was driven by
acquisitions of $208.1 million of incremental revenues during the
fiscal year, primarily related to GCA. Organic revenues grew
by 2.6%, stemming from new business wins, expansions with existing
clients including greater Work Order (tag) sales within the
Aviation and Business & Industry segments. Organic growth
for fiscal 2017 excludes the Company's divested Government Services
business, which was sold in May 2017.
On a GAAP basis, income from continuing
operations grew 25.3% to $78.1 million, or $1.34 per diluted share,
compared to income from continuing operations of $62.3 million, or
$1.09 per diluted share last year.
Adjusted income from continuing operations for
2017 grew 2.8% to $101.9 million, or $1.75 per diluted share,
compared to $99.2 million, or $1.74 per diluted share last
year. These results exclude items impacting comparability,
predominantly related to an impairment recovery related to the
Company's Government Services business, a lower self-insurance
adjustment, acquisition costs related to the GCA acquisition, and
lower restructuring and related expenses. A full description
of items impacting comparability can be found in the
"Reconciliation of Non-GAAP Financial Measures" table.
Operationally, the Company's adjusted income
from continuing operations was driven by procurement and
organizational savings stemming from the Company's 2020 Vision
initiative, which were partially offset by client costs stemming
from a contract termination within the Company's Aviation
segment. Additionally, income from continuing operations per
diluted share for the quarter on an adjusted and non-adjusted basis
reflects GCA-related share count dilution of approximately 3% and
higher amortization expense.
Total net income for 2017 was $3.8 million, or
$0.07 per diluted share, compared to net income of $57.2 million,
or $1.01 per diluted share last year.
Adjusted EBITDA for 2017 was $236.7 million
compared to $212.2 million in 2016. Adjusted EBITDA margin for 2017
was 4.3% versus 4.1% last year. The increases versus last year are
primarily attributable to procurement and organizational savings
from the Company's 2020 Vision initiatives, as well as the
Company's newly-acquired GCA Services business.
Liquidity & Capital
Structure
The Company ended the quarter with total debt, including standby
letters of credit of $1.3 billion.
Total debt to proforma adjusted EBITDA was approximately
3.93x.
In addition, the Company paid a quarterly cash dividend of
$0.170 per common share for a total distribution of $11.1
million.
Declaration of Quarterly Cash Dividend
The Company also announced that the Board of Directors approved
a 3.0% increase for the quarterly cash dividend to $0.175 per
common share, payable on February 5, 2018 to stockholders of record
on January 4, 2018. This marks ABM’s 207th consecutive quarterly
cash dividend.
Guidance
For fiscal 2018, the Company expects GAAP income
from continuing operations of $1.33 to $1.43 per diluted share, or
adjusted income from continuing operations of $1.70 to $1.80 per
diluted share. With the exception of the 2018 Work Opportunity Tax
Credits and anticipated excess tax benefits on stock-based awards,
this guidance does not include any potential benefits associated
with certain other discrete tax items and other unrecognized tax
benefits.
Mr. Salmirs continued, "Fiscal 2017 was a
momentous year for ABM as we operated for the first time under our
new vertical, industry group organizational structure. During
the year, we exceeded our Phase I expectations, and launched the
'ABM Way' which is the foundation of Phase II of our 2020 Vision
strategy. Simultaneously, we identified process and
technology tools and added talent to enable long term, profitable
growth. The hard work of our organization yielded a
substantial amount of progress in a short period of time.
During 2018, we will continue to strengthen our organization
through innovation and the continuation of the 'ABM Way', while
focusing on our integration of GCA.”
Beginning with the first quarter of 2018, the
Company will change its reportable operating segments based on its
recent acquisition of GCA Services Group. The Company expects
to announce these new reportable operating segments at its 2018
Investor Day.
2018 Investor Day
ABM will host an Investor Day in New York City
on Thursday, January 18, 2018 with presentations given by members
of executive management. A live audio webcast and
presentation slides will be posted on the "Investors" section of
the Company's website, located at www.abm.com.
Conference Call Information
ABM will host its quarterly conference call for
all interested parties on Thursday, December 14,
2017 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 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 recording through December 21, 2017 and
can be accessed by dialing (844) 512-2921 and then entering ID
#13673881. An archive will also be available on the ABM
website for 90 days.
ABOUT ABM
ABM (NYSE:ABM) is a leading provider of facility
solutions with revenues of approximately $5.5 billion and
approximately 140,000 employees in 350+ offices throughout the
United States and various international locations. ABM's
comprehensive capabilities include janitorial, electrical &
lighting, energy solutions, facilities engineering, HVAC &
mechanical, landscape & turf, mission critical solutions and
parking, provided through stand-alone or integrated solutions. ABM
provides custom facility solutions in urban, suburban and rural
areas to properties of all sizes - from schools and commercial
buildings to hospitals, data centers, manufacturing plants and
airports. ABM Industries Incorporated, which operates through its
subsidiaries, was founded in 1909. 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: (1) we may not realize the
growth opportunities and cost synergies that are anticipated from
the acquisition of GCA; (2) we have incurred a substantial amount
of debt to complete the acquisition of GCA, and to service our debt
we will require a significant amount of cash; (3) changes in our
businesses, operating structure, financial reporting structure or
personnel relating to the implementation of our 2020 Vision, may
not have the desired effects on our financial condition and results
of operations; (4) our success depends on our ability to gain
profitable business despite competitive pressures and on our
ability to preserve long-term client relationships; (5) our
business success depends on our ability to attract and retain
qualified personnel and senior management; (6) our use of
subcontractors or joint venture partners to perform work under
customer contracts exposes us to liability and financial risk; (7)
our international business involves risks different from those we
face in the United States that could have a negative effect on our
results of operations and financial condition; (8) unfavorable
developments in our class and representative actions and other
lawsuits alleging various claims could cause us to incur
substantial liabilities; (9) we insure our insurable risks through
a combination of insurance 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 of ultimate insurance losses that could result in a
material charge against our earnings; (10) our risk management and
safety programs may not have the intended effect of reducing our
liability for personal injury or property loss; (11) impairment of
goodwill and long-lived assets could have a material adverse effect
on our financial condition and results of operations; (12) changes
in general economic conditions could reduce the demand for facility
services and, as a result, reduce our earnings and adversely affect
our financial condition; (13) our business may be materially
affected by changes to fiscal and tax policies and negative or
unexpected tax consequences could adversely affect our results of
operations; (14) we could be subject to cyber-security risks,
information technology interruptions, and business continuity
risks; (15) a significant number of our employees are covered by
collective bargaining agreements which could expose us to potential
liabilities in relationship to our participation in multiemployer
pension plans, requirements to make contributions to other benefit
plans, and the potential for strikes, work slowdowns or similar
activity and union-organizing drives; (16) 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, investors’ perceptions, and the value of our
common stock; (17) our business may be negatively impacted by
adverse weather conditions; (18) catastrophic events, disasters,
and terrorist attacks could disrupt our services; and (19) actions
of activist investors could disrupt our business. The list of
factors above is illustrative and by no means exhaustive.
Additional information regarding these and other risks and
uncertainties we face is contained in our Annual Report on Form
10-K for the year ended October 31, 2016 and in other reports
we file from time to time with the Securities and Exchange
Commission (including all amendments to those reports). 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 income from continuing
operations as adjusted for items impacting comparability, for
the fourth quarter and twelve months of fiscal years 2017 and 2016.
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 marketplace performance. In addition, the Company has
presented earnings before income from discontinued operations, net
of taxes, interest, taxes, depreciation and amortization and
excluding items impacting comparability (adjusted EBITDA) for the
fourth quarter and twelve months of fiscal years 2017 and 2016.
Adjusted EBITDA is among the indicators management uses as a basis
for planning and forecasting future periods. 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.)
Contact: |
|
|
Investor
& Media Relations: |
|
Susie
Choi(212) 297-9721susie.choi@abm.com |
|
|
|
Financial Schedules
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
|
|
Three Months Ended October 31, |
(in
millions, except per share amounts) |
|
2017 |
|
2016 |
|
Increase / (Decrease) |
Revenues |
|
$ |
1,497.9 |
|
|
$ |
1,322.3 |
|
|
13.3 |
% |
Expenses |
|
|
|
|
|
|
Operating
expenses |
|
1,337.0 |
|
|
1,173.3 |
|
|
14.0 |
% |
Selling,
general and administrative expenses |
|
137.4 |
|
|
99.8 |
|
|
37.6 |
% |
Restructuring and related expenses |
|
4.9 |
|
|
9.7 |
|
|
(49.4 |
)% |
Amortization of intangible assets |
|
14.2 |
|
|
6.2 |
|
|
NM* |
|
Impairment loss |
|
— |
|
|
22.5 |
|
|
NM* |
|
Operating
profit |
|
4.4 |
|
|
10.8 |
|
|
(58.8 |
)% |
Income from
unconsolidated affiliates, net |
|
0.7 |
|
|
2.2 |
|
|
(69.9 |
)% |
Interest expense |
|
(10.1 |
) |
|
(2.7 |
) |
|
NM* |
|
(Loss) Income from
continuing operations before income taxes |
|
(5.0 |
) |
|
10.3 |
|
|
NM* |
|
Income tax benefit
(provision) |
|
2.5 |
|
|
(1.3 |
) |
|
NM* |
|
(Loss) Income from
continuing operations |
|
(2.5 |
) |
|
9.0 |
|
|
NM* |
|
Net loss from
discontinued operations |
|
(1.1 |
) |
|
(1.2 |
) |
|
(16.0 |
)% |
Net (loss)
income |
|
$ |
(3.6 |
) |
|
$ |
7.8 |
|
|
NM* |
|
Net (loss)
income per common share — Basic |
|
|
|
|
|
|
(Loss)
Income from continuing operations |
|
$ |
(0.04 |
) |
|
$ |
0.16 |
|
|
NM* |
|
Loss from
discontinued operations |
|
(0.02 |
) |
|
(0.02 |
) |
|
— |
% |
Net
(loss) income |
|
$ |
(0.06 |
) |
|
$ |
0.14 |
|
|
NM* |
|
Net (loss)
income per common share — Diluted |
|
|
|
|
|
|
(Loss)
Income from continuing operations |
|
$ |
(0.04 |
) |
|
$ |
0.16 |
|
|
NM* |
|
Loss from
discontinued operations |
|
(0.02 |
) |
|
(0.02 |
) |
|
— |
% |
Net
(loss) income |
|
$ |
(0.06 |
) |
|
$ |
0.14 |
|
|
NM* |
|
Weighted-average common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
62.8 |
|
|
56.2 |
|
|
|
Diluted
(1) |
|
62.8 |
|
|
56.9 |
|
|
|
Dividends
declared per common share |
|
$ |
0.170 |
|
|
$ |
0.165 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful (due
to variance greater than or equal to +/-100%) |
|
|
|
|
|
|
|
|
|
|
(1) The dilutive impact of the Company's PSUs, RSUs and stock
options has been excluded from the calculation of diluted (loss)
earnings per share for the three months ended October 31, 2017
because their inclusion would have an antidilutive effect on the
net loss per share.
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
CONSOLIDATED INCOME STATEMENT INFORMATION
(UNAUDITED)
|
|
Years Ended October 31, |
(in
millions, except per share amounts) |
|
2017 |
|
2016 |
|
Increase / (Decrease) |
Revenues |
|
$ |
5,453.6 |
|
|
$ |
5,144.7 |
|
|
6.0 |
% |
Expenses |
|
|
|
|
|
|
Operating
expenses |
|
4,881.2 |
|
|
4,603.4 |
|
|
6.0 |
% |
Selling,
general and administrative expenses |
|
436.6 |
|
|
410.1 |
|
|
6.5 |
% |
Restructuring and related expenses |
|
20.9 |
|
|
29.0 |
|
|
(28.1 |
)% |
Amortization of intangible assets |
|
31.6 |
|
|
25.0 |
|
|
26.5 |
% |
Impairment (recovery) loss |
|
(18.5 |
) |
|
22.5 |
|
|
NM* |
|
Operating
profit |
|
101.9 |
|
|
54.7 |
|
|
86.1 |
% |
Income from
unconsolidated affiliates, net |
|
4.2 |
|
|
7.6 |
|
|
(44.6 |
)% |
Interest expense |
|
(19.2 |
) |
|
(10.4 |
) |
|
84.3 |
% |
Income from continuing
operations before income taxes |
|
86.9 |
|
|
51.9 |
|
|
67.3 |
% |
Income tax (provision)
benefit |
|
(8.8 |
) |
|
10.4 |
|
|
NM* |
|
Income from continuing
operations |
|
78.1 |
|
|
62.3 |
|
|
25.3 |
% |
Net loss from
discontinued operations |
|
(74.3 |
) |
|
(5.1 |
) |
|
NM* |
|
Net
income |
|
$ |
3.8 |
|
|
$ |
57.2 |
|
|
(93.3 |
)% |
Net income per
common share — Basic |
|
|
|
|
|
|
Income
from continuing operations |
|
$ |
1.35 |
|
|
$ |
1.11 |
|
|
21.6 |
% |
Loss from
discontinued operations |
|
(1.29 |
) |
|
(0.09 |
) |
|
NM* |
|
Net
income |
|
0.07 |
|
|
1.02 |
|
|
(93.1 |
)% |
Net income per
common share — Diluted |
|
|
|
|
|
|
Income
from continuing operations |
|
$ |
1.34 |
|
|
$ |
1.09 |
|
|
22.9 |
% |
Loss
income from discontinued operations |
|
(1.27 |
) |
|
(0.09 |
) |
|
NM* |
|
Net
income |
|
$ |
0.07 |
|
|
$ |
1.01 |
|
|
(93.1 |
)% |
Weighted-average common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
57.7 |
|
|
56.3 |
|
|
|
Diluted |
|
58.3 |
|
|
56.9 |
|
|
|
Dividends
declared per common share |
|
$ |
0.680 |
|
|
$ |
0.660 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not meaningful (due
to variance greater than or equal to +/-100%) |
|
|
|
|
|
|
|
|
|
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESSELECTED CONSOLIDATED CASH FLOW
INFORMATION (UNAUDITED)
|
|
Three Months Ended October 31, |
(in millions) |
|
2017 |
|
2016 |
Net cash provided by
operating activities of continuing operations |
|
$ |
19.1 |
|
|
$ |
9.8 |
|
Net cash used in
operating activities of discontinued operations |
|
(38.9 |
) |
|
(1.4 |
) |
Net cash (used
in) provided by operating activities |
|
$ |
(19.8 |
) |
|
$ |
8.4 |
|
Purchase of businesses,
net of cash acquired |
|
$ |
(835.0 |
) |
|
$ |
(15.0 |
) |
Other |
|
(12.8 |
) |
|
(13.9 |
) |
Net cash used
in investing activities |
|
$ |
(847.8 |
) |
|
$ |
(28.9 |
) |
Taxes withheld from
issuance of share-based compensation awards, net |
|
$ |
(2.8 |
) |
|
$ |
(0.5 |
) |
Repurchases of common
stock |
|
— |
|
|
(15.4 |
) |
Dividends paid |
|
(11.1 |
) |
|
(9.2 |
) |
Deferred financing
costs paid |
|
(18.7 |
) |
|
— |
|
Borrowings from credit
facility |
|
1,209.1 |
|
|
273.0 |
|
Repayment of borrowings
from credit facility |
|
(282.6 |
) |
|
(229.0 |
) |
Payment of contingent
consideration |
|
— |
|
|
(1.5 |
) |
Financing of energy
savings performance contracts |
|
— |
|
|
7.4 |
|
Changes in book cash
overdrafts |
|
(10.7 |
) |
|
(1.0 |
) |
Repayment of capital
lease obligations |
|
(0.6 |
) |
|
(0.3 |
) |
Net cash
provided by financing activities |
|
$ |
882.7 |
|
|
$ |
23.5 |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
— |
|
|
(1.1 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended October 31, |
(in millions) |
|
2017 |
|
2016 |
Net cash provided by
operating activities of continuing operations |
|
$ |
101.7 |
|
|
$ |
110.5 |
|
Net cash used in
operating activities of discontinued operations |
|
(96.1 |
) |
|
(27.0 |
) |
Net cash
provided by operating activities |
|
$ |
5.6 |
|
|
$ |
83.5 |
|
Purchase of business,
net of cash acquired |
|
$ |
(853.6 |
) |
|
$ |
(96.0 |
) |
Proceeds from sale of
business |
|
$ |
35.5 |
|
|
$ |
— |
|
Other |
|
(53.6 |
) |
|
(35.7 |
) |
Net cash used in
investing activities of continuing operations |
|
(871.8 |
) |
|
(131.7 |
) |
Net cash used in
investing activities of discontinued operations |
|
— |
|
|
(3.1 |
) |
Net cash used
in investing activities |
|
$ |
(871.8 |
) |
|
$ |
(134.8 |
) |
(Taxes withheld) and
proceeds from issuance of share-based compensation awards, net |
|
$ |
(0.7 |
) |
|
$ |
5.3 |
|
Repurchases of common
stock |
|
(7.9 |
) |
|
(46.6 |
) |
Dividends paid |
|
(39.5 |
) |
|
(36.9 |
) |
Deferred financing
costs paid |
|
(18.7 |
) |
|
(0.1 |
) |
Borrowings from credit
facility |
|
1,880.1 |
|
|
1,052.3 |
|
Repayment of borrowings
from credit facility |
|
(957.2 |
) |
|
(942.0 |
) |
Payment of contingent
consideration |
|
(3.8 |
) |
|
(1.5 |
) |
Financing of energy
savings performance contracts |
|
6.8 |
|
|
22.6 |
|
Changes in book cash
overdrafts |
|
15.8 |
|
|
0.7 |
|
Repayment of capital
lease obligations |
|
(0.9 |
) |
|
(1.2 |
) |
Net cash
provided by financing activities |
|
$ |
874.0 |
|
|
$ |
52.6 |
|
Effect of
exchange rate changes on cash and cash equivalents |
|
1.5 |
|
|
(3.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEET
INFORMATION (UNAUDITED)
|
October 31, |
(in millions) |
2017 |
|
2016 |
ASSETS |
|
|
|
Current assets |
|
|
|
Cash and
cash equivalents |
$ |
62.8 |
|
|
$ |
53.5 |
|
Trade
accounts receivable, net of allowances |
1,038.1 |
|
|
803.7 |
|
Prepaid
expenses |
101.8 |
|
|
68.0 |
|
Other
current assets |
32.8 |
|
|
30.0 |
|
Assets
held for sale |
— |
|
|
36.1 |
|
Total
current assets |
1,235.5 |
|
|
991.3 |
|
Other investments |
17.6 |
|
|
17.4 |
|
Property, plant and
equipment, net of accumulated depreciation |
143.1 |
|
|
81.8 |
|
Other intangible
assets, net of accumulated amortization |
430.1 |
|
|
103.8 |
|
Goodwill |
1,864.2 |
|
|
912.8 |
|
Deferred income tax
asset, net |
— |
|
|
37.4 |
|
Other noncurrent
assets |
122.1 |
|
|
134.3 |
|
Total assets |
$ |
3,812.6 |
|
|
$ |
2,278.8 |
|
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
Current
liabilities |
|
|
|
Current
portion of long-term debt, net |
$ |
16.9 |
|
|
$ |
— |
|
Trade
accounts payable |
230.8 |
|
|
174.3 |
|
Accrued
compensation |
159.9 |
|
|
130.7 |
|
Accrued
taxes—other than income |
52.5 |
|
|
40.6 |
|
Insurance
claims |
112.5 |
|
|
92.2 |
|
Income
taxes payable |
13.4 |
|
|
6.3 |
|
Other
accrued liabilities |
171.8 |
|
|
135.9 |
|
Liabilities held for sale |
— |
|
|
16.8 |
|
Total
current liabilities |
757.8 |
|
|
596.8 |
|
Noncurrent income taxes
payable |
16.3 |
|
|
33.4 |
|
Long-term debt,
net |
1,161.3 |
|
|
268.3 |
|
Deferred income tax
liability, net |
57.3 |
|
|
3.5 |
|
Noncurrent insurance
claims |
382.9 |
|
|
331.6 |
|
Other noncurrent
liabilities |
61.3 |
|
|
71.2 |
|
Total
liabilities |
2,436.9 |
|
|
1,304.8 |
|
Total
stockholders’ equity |
1,375.7 |
|
|
974.0 |
|
Total liabilities and
stockholders’ equity |
$ |
3,812.6 |
|
|
$ |
2,278.8 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESREVENUES AND OPERATING PROFIT BY
SEGMENT (UNAUDITED)
|
|
Three Months Ended October 31, |
|
|
($ in millions) |
|
2017 |
|
2016 |
|
Increase/(Decrease) |
Revenues |
|
|
|
|
|
|
Business &
Industry |
|
$ |
755.0 |
|
|
$ |
741.7 |
|
|
1.8 |
% |
Aviation |
|
264.8 |
|
|
225.8 |
|
|
17.3 |
% |
Emerging Industries
Group |
|
193.9 |
|
|
207.2 |
|
|
(6.4 |
)% |
Technical
Solutions |
|
114.4 |
|
|
115.5 |
|
|
(0.9 |
)% |
GCA Services |
|
169.7 |
|
|
— |
|
|
NM* |
|
Government
Services |
|
— |
|
|
32.1 |
|
|
NM* |
|
Total
revenues |
|
$ |
1,497.9 |
|
|
$ |
1,322.3 |
|
|
13.3 |
% |
Operating
profit |
|
|
|
|
|
|
Business &
Industry |
|
$ |
38.4 |
|
|
$ |
33.6 |
|
|
14.3 |
% |
Aviation |
|
9.6 |
|
|
10.0 |
|
|
(4.0 |
)% |
Emerging Industries
Group |
|
9.9 |
|
|
16.3 |
|
|
(39.6 |
)% |
Technical
Solutions |
|
10.4 |
|
|
10.6 |
|
|
(1.3 |
)% |
GCA Services |
|
3.4 |
|
|
— |
|
|
NM* |
|
Government
Services |
|
0.1 |
|
|
(21.2 |
) |
|
NM* |
|
Corporate excluding
items impacting comparability |
|
(27.6 |
) |
|
(25.0 |
) |
|
10.1 |
% |
Corporate items
impacting comparability |
|
(39.0 |
) |
|
(11.7 |
) |
|
NM* |
|
Adjustment for income
from unconsolidated affiliates, net included in Aviation and
Government Services |
|
(0.7 |
) |
|
(1.9 |
) |
|
(65.5 |
)% |
Adjustment for tax
deductions for energy efficient government buildings, included in
Technical Solutions |
|
(0.1 |
) |
|
— |
|
|
NM* |
|
Total operating
profit |
|
4.4 |
|
|
10.8 |
|
|
(58.8 |
)% |
Income from
unconsolidated affiliates, net |
|
0.7 |
|
|
2.2 |
|
|
(69.9 |
)% |
Interest expense |
|
(10.1 |
) |
|
(2.7 |
) |
|
NM* |
|
(Loss) Income from
continuing operations before income taxes |
|
(5.0 |
) |
|
10.3 |
|
|
NM* |
|
Income tax benefit
(provision) |
|
2.5 |
|
|
(1.3 |
) |
|
NM* |
|
(Loss) Income from
continuing operations |
|
(2.5 |
) |
|
9.0 |
|
|
NM* |
|
Net loss from
discontinued operations |
|
(1.1 |
) |
|
$ |
(1.2 |
) |
|
(16.0 |
)% |
Net (loss)
income |
|
$ |
(3.6 |
) |
|
$ |
7.8 |
|
|
NM* |
|
|
|
|
|
|
|
|
|
|
|
|
|
* Not
meaningful (due to variance greater than or equal to
+/-100%) |
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESREVENUES AND OPERATING PROFIT BY
SEGMENT (UNAUDITED)
|
|
Years Ended October 31, |
|
|
($ in millions) |
|
2017 |
|
2016 |
|
Increase/(Decrease) |
Revenues |
|
|
|
|
|
|
Business &
Industry |
|
$ |
2,992.5 |
|
|
$ |
2,949.1 |
|
|
1.5 |
% |
Aviation |
|
988.1 |
|
|
851.8 |
|
|
16.0 |
% |
Emerging Industries
Group |
|
777.1 |
|
|
801.9 |
|
|
(3.1 |
)% |
Technical
Solutions |
|
439.6 |
|
|
425.3 |
|
|
3.4 |
% |
GCA Services |
|
169.7 |
|
|
— |
|
|
NM* |
|
Government
Services |
|
86.5 |
|
|
116.7 |
|
|
(25.8 |
)% |
Total
revenues |
|
$ |
5,453.6 |
|
|
$ |
5,144.7 |
|
|
6.0 |
% |
Operating
profit |
|
|
|
|
|
|
Business &
Industry |
|
$ |
154.0 |
|
|
$ |
135.4 |
|
|
13.7 |
% |
Aviation |
|
28.8 |
|
|
27.7 |
|
|
3.8 |
% |
Emerging Industries
Group |
|
45.9 |
|
|
61.0 |
|
|
(24.9 |
)% |
Technical
Solutions |
|
39.0 |
|
|
28.9 |
|
|
34.8 |
% |
GCA Services |
|
3.4 |
|
|
— |
|
|
NM* |
|
Government
Services |
|
21.8 |
|
|
(23.4 |
) |
|
NM* |
|
Corporate excluding
items impacting comparability |
|
(105.5 |
) |
|
(96.3 |
) |
|
9.6 |
% |
Corporate items
impacting comparability |
|
(79.5 |
) |
|
(70.9 |
) |
|
12.1 |
% |
Adjustment for income
from unconsolidated affiliates, net included in Aviation and
Government Services |
|
(4.1 |
) |
|
(6.5 |
) |
|
(37.3 |
)% |
Adjustment for tax
deductions for energy efficient government buildings, included in
Technical Solutions |
|
(1.9 |
) |
|
(1.2 |
) |
|
52.9 |
% |
Total operating
profit |
|
101.9 |
|
|
54.7 |
|
|
86.2 |
% |
Income from
unconsolidated affiliates, net |
|
4.2 |
|
|
7.6 |
|
|
(44.6 |
)% |
Interest expense |
|
(19.2 |
) |
|
(10.4 |
) |
|
84.3 |
% |
Income from continuing
operations before income taxes |
|
86.9 |
|
|
51.9 |
|
|
67.3 |
% |
Income tax (provision)
benefit |
|
(8.8 |
) |
|
10.4 |
|
|
NM* |
|
Income from continuing
operations |
|
78.1 |
|
|
62.3 |
|
|
25.3 |
% |
Net loss from
discontinued operations |
|
(74.3 |
) |
|
(5.1 |
) |
|
NM* |
|
Net
income |
|
$ |
3.8 |
|
|
$ |
57.2 |
|
|
(93.3 |
)% |
|
* Not
meaningful (due to variance greater than or equal to
+/-100%) |
|
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIESRECONCILIATIONS OF NON-GAAP FINANCIAL
MEASURES (UNAUDITED)
($ in millions,
except per share amounts) |
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of (Loss) Income from Continuing Operations to Adjusted Income from
Continuing Operations |
|
|
|
|
|
|
|
|
(Loss) Income from
continuing operations |
|
$ |
(2.5 |
) |
|
$ |
9.0 |
|
|
$ |
78.1 |
|
|
$ |
62.3 |
|
Items
impacting comparability(a) |
|
|
|
|
|
|
|
|
Prior
year self- insurance adjustment(b) |
|
(0.3 |
) |
|
1.1 |
|
|
22.0 |
|
|
31.6 |
|
U.S.
Foreign Corrupt Practices Act investigation(c) |
|
— |
|
|
— |
|
|
(3.2 |
) |
|
0.2 |
|
Restructuring and related(d) |
|
4.9 |
|
|
9.7 |
|
|
20.9 |
|
|
28.6 |
|
Acquisition costs |
|
23.9 |
|
|
0.8 |
|
|
27.0 |
|
|
1.8 |
|
Litigation and other settlements(e) |
|
10.5 |
|
|
0.6 |
|
|
12.9 |
|
|
10.1 |
|
Gain from
equity investment(f) |
|
— |
|
|
(0.5 |
) |
|
— |
|
|
(1.4 |
) |
Impairment loss (recovery) |
|
— |
|
|
22.5 |
|
|
(18.5 |
) |
|
22.5 |
|
Total items impacting
comparability |
|
39.0 |
|
|
34.2 |
|
|
61.0 |
|
|
93.5 |
|
Income tax
benefit(g)(i) |
|
(13.0 |
) |
|
(14.1 |
) |
|
(37.2 |
) |
|
(56.6 |
) |
Items impacting
comparability, net of taxes |
|
26.0 |
|
|
20.2 |
|
|
23.8 |
|
|
36.8 |
|
Adjusted income from
continuing operations |
|
$ |
23.5 |
|
|
$ |
29.2 |
|
|
$ |
101.9 |
|
|
$ |
99.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of Net (Loss) Income to Adjusted EBITDA |
|
|
|
|
|
|
|
|
Net (loss)
income |
|
$ |
(3.6 |
) |
|
$ |
7.8 |
|
|
$ |
3.8 |
|
|
$ |
57.2 |
|
Items
impacting comparability |
|
39.0 |
|
|
34.2 |
|
|
61.0 |
|
|
93.5 |
|
Net loss
from discontinued operations |
|
1.1 |
|
|
1.2 |
|
|
74.3 |
|
|
5.1 |
|
Income
tax (benefit) provision |
|
(2.5 |
) |
|
1.3 |
|
|
8.8 |
|
|
(10.4 |
) |
Interest
income from energy efficient government buildings(h) |
|
— |
|
|
(0.3 |
) |
|
(0.4 |
) |
|
(1.3 |
) |
Interest
expense |
|
10.1 |
|
|
2.7 |
|
|
19.2 |
|
|
10.4 |
|
Depreciation and amortization |
|
26.6 |
|
|
14.5 |
|
|
70.1 |
|
|
57.7 |
|
Adjusted
EBITDA |
|
$ |
70.8 |
|
|
$ |
61.5 |
|
|
$ |
236.7 |
|
|
$ |
212.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended October 31, |
|
Years Ended October 31, |
|
|
2017 |
|
2016 |
|
2017 |
|
2016 |
Reconciliation
of (Loss) Income from Continuing Operations perDiluted Share to
Adjusted Income from Continuing Operationsper Diluted
Share |
|
|
|
|
|
|
|
|
(Loss) Income from
continuing operations per diluted share |
|
$ |
(0.04 |
) |
|
$ |
0.16 |
|
|
$ |
1.34 |
|
|
$ |
1.09 |
|
Items
impacting comparability, net of taxes |
|
0.41 |
|
|
0.35 |
|
|
0.41 |
|
|
0.65 |
|
Adjusted Income from
continuing operations per diluted share |
|
$ |
0.37 |
|
|
$ |
0.51 |
|
|
$ |
1.75 |
|
|
$ |
1.74 |
|
Diluted shares |
|
62.8 |
|
|
56.9 |
|
|
58.3 |
|
|
56.9 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) The Company adjusts income from continuing
operations 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 adjustments to our self-insurance
reserve for general liability, workers’ compensation and automobile
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 income from continuing operations is
useful to investors by enabling them to better assess our operating
performance in the context of current year profitability.
(c) FY17 represents reimbursement of previously
expensed legal and other costs incurred in connection with an
internal investigation into a foreign entity affiliated with a
former joint venture partner.
(d) Represents costs for 2020 Vision
Transformation Initiative, net of the reversal of certain
share-based compensation costs.
(e) YTD FY16 amount includes costs related to a
reserve established for an outstanding client receivable that is
being litigated, and a significant portion of the outstanding
receivable amount is no longer deemed collectible.
(f) The Company's share of a gain associated
with property sales completed by one of its investments in a low
income housing partnership.
(g) The Company's tax impact is calculated using
the federal and state statutory rate of 39.9% for QTD FY17, 40.7%
for YTD FY17, and 41.5% for QTD and YTD FY16. The tax
impact of the impairment recovery and gain on sale related to the
Company’s Government Services business was calculated using a 39.0%
tax rate for all periods presented. We calculate tax from the
underlying whole-dollar amounts, as a result, certain amounts may
not recalculate based on reported numbers due to rounding.
(h) Adjusted EBITDA does not include interest
income for certain long term energy contracts, in which case a
gross up of both interest income and interest expense is being
recorded.
(i) FY17 QTD includes a $2.6M tax charge
related to non-deductible acquisitions costs. FY 17 YTD includes a
tax benefit of $14.6M related to expiring statute of limitations
and $2.6M tax charge related to non-deductible acquisitions costs.
FY16 QTD AND FY16 YTD includes a tax benefit of $0.4M and
$18.4M,respectively, related to expiring statute of
limitations.
ABM INDUSTRIES INCORPORATED AND
SUBSIDIARIES
2018 GUIDANCE
|
|
Year Ending October 31, 2018 |
Reconciliation
of Estimated Income from Continuing Operations per DilutedShare to
Estimated Adjusted Income from Continuing Operations per
DilutedShare |
|
Low Estimate |
|
High Estimate |
|
|
|
|
|
|
|
|
Income from continuing
operations per diluted share (a) |
|
$ |
1.33 |
|
|
$ |
1.43 |
|
Adjustments (b) |
|
0.37 |
|
|
0.37 |
|
Adjusted Income from
continuing operations per diluted share (a) |
|
$ |
1.70 |
|
|
$ |
1.80 |
|
|
|
|
|
|
|
|
|
|
(a) With the exception of the 2018 Work
Opportunity Tax Credits and ASU 2016-09, this guidance does not
include any potential benefits associated with certain other
discrete tax items and other unrecognized tax benefits.
(b) Adjustments include costs associated with
the Company's strategic review and realignment, acquisition-related
integration and transaction costs, legal settlements, adjustments
to self-insurance reserves pertaining to prior year's claims and
other unique items impacting comparability.
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