ABM Industries (ABM) 7 Sep 232023 Q3 Earnings call transcript

Greetings and welcome to the ABM Industries Inc.

Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

pleasure Investor your Relations. my Senior Paul now President, Vice is to host, introduce Goldberg, It Thank you.

begin. may You

Good morning, and Vice I'm Financial everyone, Earnings and Scott our at welcome to ABM's Executive today me Officer; name President Investor are Paul Officer. and ABM. Vice Ellis, With Call. our Third Chief is Goldberg, Executive Senior President and President and the Salmirs, of Relations Chief My Quarter XXXX Earl

our issued note accompanying XXXX third earlier found announcing morning, abm.com. press Please of slide and website be quarter we results. release our copy that can A on financial our release this that presentation

Scott After presentation predictions, estimates, I prepared begin, would host will like statements. and to other today the contain forward-looking that we and Q&A and remind But call we Earl's session. before you remarks, our

expects, the Our these identify judgment and intended of words, use holds. the future similar of expressions are our to and they current what represent statements estimates,

believe and the statements While to These we reasonable, in with subject factors well actual accompanies presentation as are filings that the differ as cause uncertainties to our in results materially. our described these our inherently are that could slide SEC. them to be risks

non-GAAP financial the company's reconciliation website During the of GAAP the and on will available of presentation this call, historical at be under presented. is course Investor A non-GAAP measures information certain of financial to numbers the tab. end the

the to turn like I call to with And would now Scott. over that,

third Thanks, results. for us Paul. joining today to Good morning quarter discuss our thank and all you

billion, revenue organic grew X.X% quarter to $X including Third X.X% growth.

market in robust air distribution segments and M&D. and well, travel, our education by clients and driven aviation, manufacturing Our new education positioning strong performed

softening bundled and partially industry. conditions in lower market and activity project energy the for group Solutions solid results starts offset and services janitorial business by by These in solutions were our Technical delayed in

cost structure project environment and acting current the also to are our demand to resolve be transient better solutions, in delays we've believe proactively we technical to match adjusted teams and B&I. Our which

pursued our environment the price to we addition aggressively labor our cover for we groups. value to demand have provide. essential I'll reflects the increases In of of the industry each services the cost inflationary management discuss now environment efforts, and

B&I. with begin Let's

Office relatively at quarter blended around the density on static in rates remain third basis. XX% a

hybrid week increase we remains employees the the Although work prevalent, to office. expect a model their at days of see per spend gradual number in

per In office many day Day. clients plan mandate an fact, starting after to our week employees the of work sometime Labor in additional

help our density orders Accordingly, office should stabilize gradually work volume over which time. of is improve, likely to

been their re-leased beginning However, see the footprint the what side many macroeconomic we environment. clients expire, that XXXX. are office office This are has are vacant until and us for to media floors pressure models work will downsizing reoccupied. and demand the hybrid so into as This trend puts given continue prevalent on in leases likely

less and positioned well Class importantly, buildings. been impacted largely estate B leased remain C in than to flexible multi-tenant navigate profile up our commercial should A We commercial estate consists the These properties model. Class Also given real of newer be and fairly real labor and Class quickly. our properties have challenges

janitorial regardless of in constitute impacted maintained revenue density. be HVAC portion less In our must sizable services revenue systems stream Engineering B&I. This electrical is a addition, of and than occupancy services as

locations and perspective. B&I has from towers seen corporate our segment such a of corporate office of Finally, vacancy includes I would non-multi-tenant more a as This B&I portion campuses. large portion stability note that

manage and through structure. ability our we labor the see on all commercial protect to it our our impacting modestly real up, allowing the us to pressures estate revenue but model cost Summing line margin

demand. Moving travel, including continue strong pent-up be to given international markets, travel quite business The to Aviation. leisure and

recent a market also historically winning done through aviation Our business, while volumes as the above integrated environment, levels. as airports our known up service expansion ramping of APS which in such is team offering, job executed significant through the tight of Performance new has great to country's multiple one a ABM busiest They've Solutions service that this lines labor a marketplace. managing well pre-pandemic included in

expanded benefiting within the Demand segment clients from has remained distribution diversification and manufacturing our and efforts, in our and biopharma our and markets. semiconductor logistics manufacturing, solid core e-commerce from clients with including business

support can end operations and continue on growth to their focus clients core continuing. momentum services markets newer outsource strong the for they These as opportunities offer manufacturing is increasingly business so onshoring

leading company further third booked base. with our we significant contract energy Of quarter, client in diversifying the a a note,

their We as year. will opportunities next a ours prepare rebid for client continue to work growth rebalance to needs and the focus we on over large of new

This of normal and part the after their bid. even business is process

revenue also we While we provided having service expect stellar disproportionate through some to business, a maintain a their share pressure, strong expect growth period. them of to

education. to Moving

of growth, addition including the clients. School executed by several learning on Public in-class won revenue during quarter, contracts sales driven and We third and to the sizable District. the win mid-single-digit with well Island continue XXX% Rhode organic new pipeline our new a We post by Providence

and one pleased opted Providence education wins third Beach College noted comprehensive the has quarter Prosper solution. Texas which, that I to are in the earlier, combines District service utilize School State offering, multiple We Palm offerings in Florida. Other Independent APS our as included into notable

pipeline share we Our opportunities new of to expect remain to going win forward. fair business our and continue strong

microgrids demand storage for Solutions. to strong. Technical global remains battery particularly environment systems Moving and infrastructure EV charging The

of Our ATS $XXX EV total. representing with now and XX% backlog exceeds million microgrid services over the

schools, This includes market by and which reduced are especially we electrical solutions, XX retrofits. time, to conditions is due spending and rates the on same investment project K primarily in the interest puts through system lighting pressure driven HVAC, bundled energy ROIs. that soft higher experiencing At and

anticipated not did third in we two for reasons. ATS quarter the key as perform

a supply constraints systems industrial the This to year. of first initially by the battery microgrid First, booked of project expected greater client. specifically half for we large a locations, in multiple chain was at large complete number projects impacted

supply the and delays issues. relating having we stabilized, utility permitting faced With to largely chain new local

new, is not requirements local the protracted. these large-scale relatively gets to Because storage of complex the are permitting with many deployment of projects and unique and dealing system governments battery accustomed

continue to to including with address our near-term executing and closely where a clients, work alternative we hurdles, are plan sites targeting We appropriate.

Turning to e-mobility.

new we began network. in for As we EV to of expected including last the a deliver accelerate of discussed second on year large on call, the automotive we materially half one pace our charger as installations several dealer programs, to the

Because rapidly its infrastructure their system the goals, have and project on slowed pushouts the the disruptive schedule. of OEM production dealerships in We match as experience view EV storage announced change as a markets well production this reflective in EV EV evolving delays battery change. particular auto transitory of to recently the as rollout

EV the record While given challenges XX,XXX of bidding space, of over infrastructure solutions. this encouraged. as really our technical the charging EV as activity address so we we never end-to-end our remain market, higher, in ABM has for and Also, near-term EV include and innovative capabilities track interest well well the remains in installations level been positioned that microgrid

now Turning ELEVATE initiative. our to

in to reaching continued our technology objectives. have progress make long-term We important

platform, our years remainder as of quarter, utilized to next our and system improvements efficiency be quarterly over two third which operational will This new we ABM the provides Education complete segment. the planned. the close to significant ERP rolled for the During cloud-based out

workforce which optimization productivity our to advanced across also their leverage and We continue into tool, analytics operations with productivity our provides levels teams portfolios.

seen been about on fact, piloted. gross the we've in the tool In improvement a has XX% margins jobs where

to going effectively critical This forward become the navigate as we manage landscape. even capability more office will labor utilization our commercial

client XXX feedback at across over has exceptionally have country the Additionally, we sites dashboards positive. now digital deployed been and

As some strength. we position, leading industry specific ABM by challenges, and diversified our financial manage groups resilient, through market supported remains

to to continue we and do through markets long-term leader services and investments fast-growing clear our will be the We so. strategic expanded in have growth facility opportunity in continue

large heavily B&I, new Class some and performance will market flexible confident We've more engineering done weighted our In A terrific as in with in as improve our combined we and services, real performing continue delays ATS, as education we better in commercial well we've towards stable portfolio to labor distribution matures. we're estate that although remains fortunate And the job model. a experienced our manufacturing aviation and expand. where are contracts winning

recent and the full expect adjusted at in we the come in to year B&I, outlook bottom EPS range. XXXX Given challenges our prior ATS of half

in year, to next me the that XXXX the ahead budget from process office its commercial early EPS our given further forecasting down in is sector. softness wouldn't it although adjusted was slightly Looking and fiscal surprise stages, XXXX

will share December. QX XXXX our We outlook earnings our call on in more formal

focused laser tightly to on near-term organization. across costs the adjust managing our structure cost including making decisions challenges and are these We tough overcoming

technology ELEVATE cash enhance new for the strong building Beyond in leveraging that, our future we returns. by attractive business flow winning our markets by free using to shareholder are and

also continue long-term invest to for position to ABM the sustainable will We success. for

to for it Earl the turn Now I'll financials. over

Scott, Thank you, good and morning, everyone.

of those following you slide please earnings along with presentation, turn our to five. For

billion, increased $X of Third contribution quarter X.X% revenue and roughly X%. comprised of growth of X.X% organic to acquisition revenue

related GAAP ATS by and The in $XX.X $X.XX delays XX% of per net last driven both volume. Moving expense in was contingent commercial a labor was offset by of or slide tight up year. of income diluted six. income increase million Net million office onto value the quarter retention from million. controls, third the share, partially lower credits and employee project gain The adjustment space expense as of $XX.X interest $XX.X in and to fair consideration higher costs, compared

per were in cost XX% from EPS slightly million and changes Adjusted higher price prior of interest and income net and expense $XX.X reflected income lower the from $X.XX partially net income share by benefits increase. from both offset operations, The of adjusted and down adjusted year year-over-year management period. primarily adjusted diluted earnings

was and B&I, prior largely was year was at versus of initiatives. decline adjusted Adjusted lower in in margin X.X% inefficiencies last with year. $XXX.X project delays The the partially million of EBITDA and offset impact EBITDA related essentially cost reflective to volumes ATS margin flat by X.X% the

B&I on turning in and X.X% results increases Operating revenue million by partially $X actions. office Now seven. decreased as mainly the X% to to declined price and operating to margin cost B&I due in $XX.X volume our beginning offset profit billion declined to the of was demand commercial year-over-year to lower segment market. slide impact reduced

driven by million, business XX% revenue leisure demand year-over-year grew quarter Aviation travel. strong for increase marking and of This was the revenue to growth. ninth $XXX consecutive

We costs. increased $XX.X versus and constructive operating $X.X period. year reflected margin expect the segment increases, within primarily basis remain in and XX increase higher volume expanded margin partially points operating to offset by X.X%. profit prior going The labor forward. And million profit Aviation's in demand price our Aviation million was to

Profit XX%. eight. increased operating was margin demand. to broad-based million in margin in slide reflecting to and wins and historical $XXX.X million, as XX this largely performance profit slightly new to to grew margin segment. while Operating mix our X% due $XX.X Manufacturing basis Turning came declined distribution revenue to points below

increased of XX% partially to the were growth largely period, million, to organic Education to was revenue labor efficiencies. the revenue the X% up XX X% profit from to clients. X% heading These expectations prior was growth new increased margin a our into grew operating $XXX.X from increases of revenue addition which RavenVolt Solutions by Education growth comprised XX% benefiting quarter. increased X.X%. points year Technical $XX.X Revenue basis offset below organic over $XXX.X million, decline. million attributable and while was

markets revenue pushout ATS being solutions storage installation large of as projects. higher rate namely are bundled interest three the charging environment thirdly, a program. delays As by softness by in our impacted and RavenVolt in EV battery impacted Scott decisions investment mentioned, Ongoing certain energy factors, was negatively

of over issues in supply Backlog ATS of in is convert which million, note, is to will to scheduled ATS helpful forward. $XXX in much revenue as have move we chain stabilized been Also XXXX. which now be

of ATS with related X.X% million acquisition. margin intangibles in the profit compared million of The profit in decrease was business operating amortization RavenVolt largely mix $XX.X operating margin and $XX.X year. X.X% last of the and project driven margin delays, inefficiency and by profit to was to and associated were changes

$XX.X million, debt in $XXX.X of million. times. total end was cash ended strong third at liquidity cash Moving pro slide of credit, ratio billion million. We cash equivalents resulting At $XX.X forma X.X quarter still of debt including in nine. total we million $X.X and of quarter the of in on $XXX third of the QX, to standby adjusted letters EBITDA had the available with Free flow to including

on prior we of down a primarily quarter, up sequential repurchased common was year stock third $XX.XX price the of at increase $XX.X but slightly period, million. During interest $XX rates. to a year-over-year the XXX,XXX average for cost total approximately Interest was from shares of higher basis. $XX.X an million attributable expense million, The

year outlook, full on credits from to and to to let's impacting comparability of driven by to changes on On in the an retention range move Now $X.XX to in GAAP from a $X.XX, be third occurring slide to fiscal we $X.XX employee XX. contingent prior as related now namely an value EPS adjustment $X.XX the gains fair basis, outlook quarter, shown the expect XXXX items up consideration. our our in related of incremental

As for are the commercial softness reflecting in largely the our the adjusted tightening EPS, pushouts end real of in market. range we estate lower ongoing to ATS project and prior

$X.XX EPS As XXXX year result, we to a to adjusted be $X.XX. now expect full

Interest margin X.X%. items is expense expense before to full expected and be tax to tax expected XX% items and between million margin, to and all rate X.X% approximately EBITDA unchanged. be is be are before Our the year is EBITDA to rate discrete Adjusted expected $XX XX%. for discrete outlook interest adjusted

grow We in to year before of of $XX of which million million cash CARES made expect the EBITDA in QX the and adjusted flow in also $XXX integration year mid-single and year $XX continue combined ELEVATE for $XXX free was repayment to million. range and Act million, $XX approximately be expenses million the -digits to full full to to full

me closing turn for let that, back With to comments. it Scott

of focus in Thanks, challenges our winning headwinds team's Their and Earl. macroeconomic more I face on couldn't pleased commercial new client the with of real estate. be mixture service resiliency talent the me the efforts gives great the our extraordinary confidence unrelenting in and the our markets, navigate business, successfully we of end teammates, combined will and challenges. our culture with near-term of any

some take questions. let's that, With

open of The questions. Tim is Instructions] for Blair. floor question go Mulrooney now ahead. Please William Thank Today's coming you. [Operator is first from

Kusswurm on hope is Scott, both are this you well. Sam Tim. Hey, Earl for doing

thanks. Hey,

be commercial in you terms goals that that XXXX. here, I If EPS guess you're XXXX start true, how proves to expecting think shared down estate in that guess you and to I in may reaching soft the market about real ELEVATE of remain wondering your I'm year-over-year.

ELEVATE to I Not market environment pressure Yes. the commercial for Thanks set the Look, in for is And multigenerational I question. to certainly mean work put since the macroeconomic we how think has I our right? goals about when with changed, we hybrid wage especially has we us, and segment. changed talk XXXX think to the real environment and structural have significantly happened between have this right? in much estate which us. going mention short-term on interest inflation, what's rate then, the blue-collar shift

the So on feel the of that at and maybe these going our to probably, a we see in we hyper and although the goals of day, to that But investments between metrics going compelling we're is on to flow our over, fifth early years. so we're put we're could firmly couple a tool believe targets. growth. out that's to making committed targeting not us definitely we strongly going margin, The year The year cash end ELEVATE. hit our pressure seeing consecutive free we're the ROI are hit is that sales pushing in and X.X%

uplift. about So XX% and in margin the we're the prepared that that. gross pilots, I my we're labor having excited tool productivity remarks mentioned seeing

of extended years. So It's again, we're targets. just, our couple committed maybe absolutely a firmly to

the are paused it more reverse pivoting Technical half have or was Appreciate the how projects you. looking projects us pulse some some Got XXXX. a Technical to them any I Solution, canceled last that in your clients are like But that was of pause your was now? altogether. Solution hope but to response. Maybe there considered now going in the feeling right think give back still And clients on in here. you that's Can quarter,

permitting, we're battery battery installations And is in you you No, farms one, we with chunky chain. of have a three delays I been supply two, all give And matured a battery initially get storage storage So a our utilities. size big it's you some for great now on question. This signed of context There's governments putting are of right? think backlog, projects, in, got I a terms We this that permitting. contracts. -- the Yes. deal because And these market have even of big is in these fields, football the are hurdles. new sometimes to to to these right? local projects. to the those which projects, But that's no that's really not And through are part this over think cancellations. yet, for go had these new

pushed our projects year. them seeing of two projected We're this we're out. So happen having nine

actually they're the a space. RavenVolt I happening. to of on reflection starts whole we of when But and really It's the the acquisition So microgrid delayed and you, reflect market. maturity just tell the have

in Officer forecast over on give is when the I in we're Louis this is alternative more an one quick kind noting much us for about give Danish weather Denmark, approaches of how amazing is this that and our in that is XXX% I Chief of right Operating mean operating give and think And summer. more. forecast was of acquisition country. country the they the the some energy the the only to they he happened space. absolutely talk they resolved thing days, alternative and that's the anecdote, was you weather just in power. the that it And last Denmark year or And future

We're excited So like about is the this future. it.

to going be you're to I ABM could that get basis. is a to the lumpy. think projects, on it we're is with quarter-by-quarter tough used chunky big be these just dealing at to going what timing have And when

as go as we well along. So of learning kind that we're

the for insights, Thanks you. Scott. Got

You got it.

Bank. ahead. Alwy go coming is The next Deutsche Thank question of Faiza Please from you.

morning. Good hi. Yes,

I follow to So line that of up wanted questioning. on

few Scott, mentioned You delays. ATS to a as it relates things, the

higher and impact after You around delay have so this rates us those of think that government a mentioned charging year? sort follow-up when each resolve, much an issues these has how like and EV installations. the I the of through lower ROI, of expect been of permitting you to each do factors help sort that. interest potentially Can And you

before year going to that fact to for -- helpful a towards and why the more infrastructure EV had and dealerships projects, bridge focus discussed we I Pfizer pushed is have that, strategy that shifted for would little pipeline those projects, we with goals And and maybe But mean, shifting the dealership on to microgrids. 'XX just their their from be our rollout that's about I was But year. and that. had side. the bigger bridge the the guess because I fleet that with of don't of production Yes. And are this on line our on OEM big EV, dealership out because talked rest our I because away RavenVolt that projects bursting with we for got fractured they've of a sight we right? they a big this

that of program ramp pressure you coming pushed 'XX feel projects 'XX. the in dealership getting to that's that feel confident on why year it microgrid we the see that's And between and EV, going in QX. we'll on and But to the So great about into that's about pressure remainder it. next 'XX ATS up put saw why we Yes. so are

So of EV the that's kind story.

that. to add just I if And

financial years. was And news well those associated our by with at still couple our out were which mentioned, initiatives. of what really good ELEVATE driving look driven probably get is the very will pushed intact. benefits lot goals, of longer-term just are ELEVATE benefits Scott you A If the a

benefits reaped In fact, those of XX% already to-date. probably we've about

to, the the business continue. we've alluded softness will interest seeing in of inflation so that some we're seen those the of Now that actually the rate, continued the CRE, wage some things that experiencing, we're headwinds Scott in

teams into believe, down, great that into that expect built now XXXX. And to have and have I building to kind continue come. like of inflation, the increases. So price to plateaued, if be softness we've really CRE, wage done the rates, our job a interest it we that break counteracting going we're projections in with the we

actually expecting And news is we've benefits years seen regards the ELEVATE good with that are long-term we will still probably subside. of out. to hit the So headwinds that to therefore, two that benefits, have those offset some ELEVATE however, these

around rates of ATS That's then if I is on we what on guess the I guess, this about EPS sort to what it your have real in going see recovery and be your commercial that comment up helpful. Okay. commercial I estate And stabilized, more I market, follow market? seems is are might $XX to the in below opinion? really was XXXX it's if that. of going think interest wages estate your inning in, sort like opinion real million,

pinned Because in reduction solely that is demand of the when EPS tenants next And space, estate. I think taking that think the statistic to our our and commercial pull our going is it, margin compression have segments. This right? So about B&I, average XX% was real latest right? highest you on one happening, B&I revenue year. all is Faiza, demand for to Yes. that's base have is of on through are XX% to that you

that resilient our have which with estate we pressure that we that, And getting real condition segment of be there the can demand in revenue next guidance typically in that regardless the would X% in going stable that compression out is, is in become you around B&I that no for see space sentiment on, it clear that. of have say becomes that's and could on commercial is see so to get is even I we grow and X% the B&I. where we doesn't the reason third occupancy. other ahead because two-thirds more there's in air compression And a to But engineering, this the model. you will year, that. business on single-digit. the it So the real like you to But is it's could see massive in feel it mean, protect that and commercial everything look our be going to negative with -- that reverse. X%. And I and going ability to fact in down to we structural not to our I speaks with fact going pair the I we're to B&I going demand X% estate, think there's compression just flexible that's compelling, context be And low only labor could ahead And margin. on. around shift it but effect of resilience that no we we're our model think the to way the that's with mean becomes of again, wanted

Got it. Thank much. you so

Sure.

you. is Andy ahead. next question coming from Thank Wittmann of Please go The Baird.

taking morning. Okay. and guys good Thanks for my question

and thing Your remarks, response that prepared I very good to on context so have next where Scott, you very of pressure. is that helpful the like year-over-year incremental. far about here, seems you're to basis the there? just 'XX. on you other questions your the be been a I would maybe think wanted outlook through with response, being segments In the kind the I touch one the some for in you large B&I talked go regarding which going has said you there's segment, segment But several very segment last that can areas as that here, an you're revenue potential a that's looking These margins that guess a see that seeing clear is good M&D area here. pressure I a good M&D other at years, most expect pressure area very the been margin be some made pretty you Obviously, growth. because still in you for client rebid, good the Do over this might last good with show here. revenue some very the growth it year. in to ATS even got

I area get M&D to Please? So better this segment. sense a want one I is guess the on that

give Yes. we're up want to That's guidance budgets, great. finishing and a be Great, I advance of in providing Andy. right, in you color, like And but you. to I weird do to our because responsive and like I'm position, want

one up us. whole grew a good that ideas makes with, the But And years, large as the end early a is paid of of of little going M&D through of margin the their from next to if going very, be probably success see we for compression year. such few put going there's saying a of pressure segment. of point. start So this grow But your M&D outside best pressure because revenue is management own process, the one that the one or not it's of compelling sense, low let victim going again, has feel terrific M&D, me on segment do to we But And tell work. you part It's in we of too to bit kind that's have is share dividends very segment be going business about by here about team factors together to It kind flat, be the think still just their to some to kind It's and with we have our a up still think it's like and as right? the that client think we of a a all we're -- accretive impediment disproportionate last to normal reaffirming, single-digit, they're high We'll rebid just just M&D. double-digit. whether we're it. side. to just there. about going to I just this but right? on expecting It with but still rebid, revenue it's But

event an about is this So than change. structural of I more kind any think episodic

impacted you're them capital of much the of was mean, correct makes gone Many I'm in sense. schools that and about federal some wrong, my of And one good. money guess several your I let's ahead the talk did for being seeing from government those. benefit in ventilation on That that that. of, I think projects. How follow-up from schools have I pressures talked me, done Okay. The part conditioning for business, if you EV air maybe ways, and COVID about early ATS. but projects

of Energy for a know compare some mentioned up rates. dollars Solutions bundled largely for business, the today do see there? the market it education federal You -- one the kind you Is but there talked the you this about reasons Or which microgrids of interest that just it being seeing of from is years. not is a some being business of other as propped tough good, pressure. But effect pressure is you're that is I seeing couple as this well? that's

Yes.

aren't happening. they our just this pressure, oversimplify zero, got put and that when more It's of their just their move but that on what highly them. forward, to lot the to ROIs to happens, it's And start of because think almost place schools these I project canceling looking they puts are this, like seeing systems go like conditioning is projects BES right? get air school of because XXX% a is it ahead. but they're it. pressure when but the a and Where they of these to they infrastructure that have against right? ROI are Andy, still have. I that's to against even them, where It's triage want kicking are to towards some rates to process can now we're still that environment And and it, the to -- pressure ROI financed, what nice that starts going through -- make interest so large-scale much isn't fringe, it's then is them it's the want is on just this up protracting there a And financed, rates the ROIs. do those don't you why the rate and weighted there want at the So are irregardless where do the those happening interest interest as that projects, segment changes they're a projects the lighting a all

takes BES that's we in change and have to We're alive about pressure ROI is rates think could as at is they up, pressure. now a interest interest majority like we to we're the these five-year more and -- is necessarily and But the projects. just why the if it's as we again, become interest get looking of time a districts going where at hunting the kind -- to as we there hunting have that compelling, we start because on it, don't view, anytime projects think soon, like Andy. And we're rates relief a little ever. So the as environment 'XX. not lead you school do dramatically it And well. it, it's on for to be segment think fringe. now look on ROIs that. just it's time. I take finish were rate But But of until where they'll There's excited But

Okay. Thanks Have a good guys. commentary, day. for the

Appreciate it.

Thanks.

Sean next Markets. go KeyBanc Eastman The is Capital you. of coming from Please question Thank ahead.

the to more This I Sean Yes, you guys. comment today. model just the how are to those about Breckenridge about in Hey, 'XX. is flow wanted CRE of sort particularly in through for that of Nick remarks ask prepared made, some going Scott, conditions

into provide mean, are market color Could tightness out-year I just guess, visibility more less that less give labor could that, the less, sort on would you maybe the rates going being on margin with if trends you drive. more that sort color please? improve occupancy I flexibility. more mean, just to of of I Just more, how

is have I this B&I foundation fact look, labor model. think mean, flexible I of the that Sure. our segment the we

four end simplistic just is to gets vacated, model. on through staff have five tenant's this If it in staff, flexible right? like terms, I'll the we this they floor we're that put allowed So labor got our what a right? up So we and release floors, building how margin protecting go down because that the happens floors that that's to

trends, terms or taking back we coming people it there less positive of some But work. clients in not, there's we -- think environment believe So and this that's to still are happening space. think is macroeconomic

And we that's B&I flexibility we the going why So the demand see that's side. love But B&I. the that side. this we has And been key successful always contraction the are years. that on fact to so to on through again, have cost

more around sort ATS. just Awesome. of And then for Thanks that. one follow-up

that fair assuming you'd sort going is positive of sustained would starts back growth say and have the getting would projects of ATS And terms you visibility -- of a to of sort say? BES be everything out forward flow sort income taken to of on line. coming Just op trend in more that getting onto through backlog the

Absolutely, absolutely.

see it's many growth over been As double-digit there we we two, line what to well. out next look ATS over historically the double-digit as is top or bottom year going back years, which line growth and

be continue one our to this of and most so. is segments will So exciting

guys. Awesome. Thanks,

Thank you.

Marc Sidoti. from The question Riddick of go is coming Please ahead. Thank next you.

morning. good Hey,

morning. Good

Good morning.

there give a seeing might sort as So a can my you maybe I questions some been answered. that of and your of sense curious see in whether appetite to of some update out that far to acquisition you're if the an you sort of as sort are there was of us maybe valuations in things that this make bit as environment? lot have as might opportunities pipeline, the of

Yes.

leverage. at biggest our capital structure, X.X right? opportunities of is our I One times we're mean

plenty share our from So standpoint, dividend an we have of powder only standpoint. but M&A from not buyback

lot we're you pipeline working stuff our a one forward. our happens. move structure on, a probably about. as the was update of a for that and have strong of robust is in we pipeline capital of there as markets, excited flow have ABM But And Mark, as cash pull thankfully that still accelerators levers the right? we because the We free just as ago we're 'XX, M&A not But years which is it financial couple to of and we'll

or you of timing areas spending that some of than as pull be prepare there what thought Excellent. accelerated maybe able are any the changed And technology personnel so it Are trigger of areas like need know with there have any investments? the Has being there's may that though really actually those as be year for all? a to you that the been types Or on lines, ago? for at to that might future maybe more opportunities. along those as I you some feel the investment and

-- have we think I we No, still our ELEVATE plan.

We in funds here, out we're going behind have ELEVATE now on that's wanted, if deployed for to is to have the why see next our free us, going over CADENCE. good, The couple and which majority been an and flow the cash you're is have lot earlier, of what to plan. on said And ROI but I I years. right you, tell be better. a proving we got of is as We've exactly not uptick the

over availability, term talk me, labor far little just -- wise, little it's or are the bit as And Okay. to where -- changed can particular -- much a six want areas for they've then of as kind improved finally so I has or just last a maybe even little any difficult? or about more just areas be that broad gotten particular a that tricky. months there and maybe I it's know always

was you I should I asked probably No, have no, -- glad because that. question that I'm addressed

that we in we Mark, headwind predict X% X% the didn't in allowed able there. of seeing We We terms because range. are is seeing in that overtime better. labor positive the reduce been when we've It's in the though, a still flow. It like and is We're markets started this to participation were wage rate change absolutely signs us the hire to applicant inflation range ELEVATE. our which doesn't fact,

at team a of is And So price and we've we've amazing now, but job on operations best-in-class. big that deal, said in an it's to to XX% such recovery. our be recovery is kind XX% X% which been increases range,

just better solve for wage people necessarily have coming down this that -- moment. is and We news to good Canada more need inflation we get at a the but the flow, So don't in.

much. very you Thank Great.

Thanks, Marc.

next Thank ahead. you. question coming of is Josh go UBS. from Chan The Please

to and that otherwise, questions. least thought guess comments give Hi. could ATS EPS Good some be of recovery have couple your that Scott, Because require small about EPS taking on down, Earl scenario down? I would year. the guess, next and does a items XXXX growth my being morning you I Thanks Yes, Paul. for slightly I total at revenue

that three of total you possibly it as an think And got be is got two focus, don't I be down. right? will is to I mix be to revenue But B&I where Yes. going business, or that to going Josh, points. enterprise we our -- down necessarily on impeded. Certainly, to the means think when is

So as EPS a segment so Now book being and it's have really of remember, flows a business that pressure through and one as through our it. highest could B&I about mix flow being of B&I margin is of us, down of why XX% on the that segments, our performing for right? to

you will believe firm whole. down clearly just So the as shouldn't that it's let be organically business a mix, but

right on cylinders firing are all that segments now. have We

Just, revenue that's one again, overcome hard XX% margin. of and to high segment our

then color you. good up. That's And right. That's follow Thank there. my

in past, do to even a during maybe maintaining margins guess the flattish So downturn. able been I to of you've good job higher

within achieving ability You the What are pluses flexible Could the talk you again model. mentioned about this to of labor do the year? in and downturn that that B&I? next minuses

early it's right to now. think tell I Yes,

We flexible model. haven't hit formed you head with it our 'XX our labor again, on guidance. But the

now. Flex protect say would the I margins -- our give I just on field. of in and out margin segment. and like I come each guidance don't to top But in We want -- able don't of again again And are to on top

guess changes we I still of is, -- also still right? And do as cost enterprise-wide, X.X% point structural have We have to to the have be labor. we the ability So believe ELEVATE call even going grounding future. we're the on firmly we our at in plenty

going always a said that But have real hit this even don't be line. think commercial massive change So it could again we straight we're I in that, structural wasn't with our X.X%. we've resolved predicted to And to estate.

spent. for the time color Okay. Great. the Thanks thanks and for

Thanks.

coming Silver ahead. go King. Thank you. is David CL of question next Please from The

in couple a the retention this nonrecurring Yeah, hi. Good start Earl. I'd a for But to positive morning. couple quarter, credit and contingent big of were maybe adjustment. employee items, with there consideration like the

credit number. an that the the you period the that just that the incentive purchase this where structure if firstly Is incremental time words, you're about know adjustment purchase some an adjusted if asked or mentioned think I wondering project price. there laden RavenVolt delays. will this issues -- secondly, little million all value, the And the you unanticipated of you is adjusted or full the the its could and benefiting be then just maybe this question I last delays talk other cited. when the that coming to this was are for established. case It's potentially incentive employee in that of credits business And of the light, $XX In Is benefit? future? retention, EBITDA? longer retains But -- smaller. was a or is term, by is but revenues this the adjustment be I'm total with So sum these permitting could you

So two, just some comments please. on those

Sure. Yes.

question So ERC. with regards the the let me start to with

The most yes, actually the in. We significant. With trickle more the some credits. come see maybe of come all eligible majority in. in, We'll but for nothing probably has apply majority has So, credit to as regards liability, contingent this earlier, delays based RavenVolt of result seen in just of we've lot mentioned year within Scott -- permitting. been delays on has notably the actually the a the what a

you year. it virtually in from when perspective, So the at consideration when Then perspective for an discount results forward contingent the you first accounting than or in risk it, just like an going year, lower of you that no liability. accounting kind then to result this a forecast look from at that's adjust and look secondly, earn-out going

Now and teams more EBITDA the ever driving as committed than are profit motivated to having that, as said much and possible.

model One want and and bullish actually is value did going still not that And I to the And is a are so very we note earn very thing that payback. this did deal when create. in we optimistic acquisition it. significant to for it it long-term, assume the do RavenVolt, has

value accretive, So look see be we I still going to opportunities you long-term. it's when great long-term, think and

could growth back think that million guess, mean end July kind at maybe I you. as of, backlog beginning benchmark like we guess how maybe months you to the comment medium backlog that? of the go Okay. fiscal -- like I over or the does year in Great. Thank backlog should of to $XXX the the ago? how about term? XX about to that of compare I'd ATS I Just the this

the as high backlog backlog know, of that's so years. strong. that's couple is areas of EV the it's the as investment part of that in been. think over been the and you I it's is firm And significant last because mean is compelling for as I And the microgrids. This Yes. the what's it's happening

I it that validates the think space. So right playing in we're

backlog is strong. So

let's cylinders, up the maybe pick like so one, certain firing your bread at know there I Scott's your the historically So you all numbers. offering? or to highlight, common could service And said. those Is And bundled last in morning. and areas then procurement But you mean, I and manufacturing you're to I'd overall, growth say, and organic are growth? organic some And looking in I of the recipe a a what labor if regarding comment aviation well gaining just was. of I'm on the are just the or above I parts the evaluation? of where kind mean it wondering real driving there business and mean, And not these that average estate sentiment I ago on due education. issues are minute maybe core by, believe numbers commercial I Okay. is some you Is historically, are organic affected that driving that's are great butter better was this growth -- and organic distribution themes? it kind in segments look growth

Yes.

business development. a development, strong about more focus it's think on I a strong focus on

in where a just space right to is we business and development here dividends do we we use for out and win in just -- approach the CRM have It's invested model, after sales effectiveness that a you utilizing tools We kind of hypertargeting like whole go and in with ELEVATE and on focus. we us. strategic to very have term that Salesforce with zero where been them opportunities can it's a tool paying been the our area, figuring

So I think that's the key.

management to like you. turn closing this At comments. I time, would over floor the Thank to for back

But ever to see December. quarter back we our have talked for I and and in impediments, and results to going are thank full want good to come confident but at we've fall you Yes. the of our guidance. participating Again, with year ABM Thanks, as excited as about we'll everybody. on about what's some today. everybody just you next a

today's Ladies event. concludes gentlemen and this

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