ABM - Earnings call transcript Q3 2020 | ABM Industries Incorporated

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Operator

Greetings and welcome to the ABM Industries Inc. Q3 2020 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star, zero on your telephone keypad.

conference recorded. this reminder, a is being As It Susan Relations Kim, my pleasure and your host, to introduce Vice is now Treasurer. President of Investor Thank you may you, begin.

Susan Kim

and are this Thank third Officer, our Executive quarter accompanying announcing can financial our Chin, an Financial XXXX With joining press all Chief Dean our results. us and be interim of We you us and fiscal for and this today presentation A our Officer. on Scott our Chief release Salmirs, President afternoon release morning. slide copy found issued website. yesterday corporate

begin, remind and and call would we Before predictions, forward-looking other I like you that estimates contain today to our statements. presentation

statements Our words of expressions expect, judgment intended represent what use the similar future These and our estimate, the holds. current to of are statements. identify these

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

information During financial call, the now the financial the tab. of is at of be presented. those to this to like certain the I measures available non-GAAP reconciliation company’s GAAP to and turn presentation Scott. website the on the end numbers over A under course would of Investor will call

Scott Salmirs

you us today’s on thank joining call our for morning results. and third discuss Thanks quarter Susie. Good to

we press in saw you of release, our revenues for $X.X As quarter. reported billion the

expect. of aviation contributes XX% represents more a the than this half probably decline, you’d decrease that segment versus year, last as While

than Excluding aviation, X%. revenue was less down

offset and pandemic-driven saw of and of the industry the reductions disruptions particularly as the work occurred another occupancies. technology business segments. our improve that scope record trends other progressed to quarter saw This reduced client of manufacturing we across and operations addition, and with within modified some and orders due quarter all we segments, In

such commerce to in as reductions of our were dynamic key so been access contrasted match as through essential strategic aligned we is our the the staffing efficiencies structured, we technical how backlog, through experienced labor direct of accounts resilient and manufacturing Because we facilities. churning and controls. nature quarter. as expanded within operations us able the solutions, site restart where other find the has during Even even we margin can preserves tight against for other work. reduction and especially it enhance when improved the also scope with labor strategies to and This revenue strong We advanced quarter

on front in quarter the and decisions staff also Our some difficult us. and included for which was temporary May, to team pandemic, certain in quarterly the board. instituted we performance made salary of financially right across we reductions the beginning which of the reflected At in of early executive prepare management uncertainty us the the

business We EBITDA $X.XX hours labor or Unlike $X.XX made expansion had also so from X.X% X.X% our million to share. versus suspended $XX.X efficiencies, reduced matches. margin we and performance. year-over-year last times. potentially Income combined impact during continuing actions basis temporarily to many liquidity The significant more per of protect led These with XXX-K really adjusted that for operations certain corporate million ensure staff. but profit. very benefits margin to such furloughed our to continuity year, rose an and work and our in reduced be we $XX corporate grew decisions necessary orders, be were and on couldn’t or per pleased to Adjusted share, as hard or higher firms, uncertain

enabled one flow payables a and was achieve $XXX highs of approximately free cash basis. leverage being million during disciplined X.X from and the was Cash flow times. continued on or This of to quarter. operations $XXX us our We collections all-time on million

team the and results how for speak this themselves. much was priority Our understood a of

months, of past successfully Now quarter. the reversed we’ve we’ve third many through the temporary occurring managed that six during cost the reductions

In adapted celebratory, event. clients focus ABM modified will nearly fact, mean members city’s much our business of operating Of past featured protect northwest relax customers own worked a as believe many Administrators our to government to disinfecting district four their managing sanitized and our of environment. on U.K., have system, have our through have a our the disinfection for and the procedures. for top their way; the highlighting district operating students I’m authorities, recognized course, after The our our the discipline clients during I Texas, and to of this and other shown practices the our and across guidelines We and of by helped The changing mayor, been in feedback example London to ABM and ceremonies fulfilling lasting likely facilities. been our members their safety you pandemic. during of has continues determination this critical members in have were of airports these agile few conditions team is and on proud any health among rapidly on only industry impact now Worth our instances could the the our transit were intense follow in members members as example graduation this our making airlines for examples of invoked tasked spend transport the team as to the we people the difference has education they employees, service a so aviation conduct our team create on and provider months the our In being a clean our hours of few responsive standard call have most work we time. during will touch as incorporated overwhelming team independent the as needs our council, this X,XXX retention. this team into outlets able changing Again, throughout mission priority, those time. our and doesn’t well of advisory quickly Fort and the the London’s to CDC hygienic, standard with and essential to made respond preserve this Khan safe frontline many, occasion by and as Prince the how were difference. media stressful school Sadiq keeping by and workers cleaning the seen, numerous contributions and special Charles been an

As the results the and continue like and events strong to how year happen time. still I results full by happen what concept release, we be imprudent What uncertainty As have in team we adversity feel pride. members determining accident. They guidance would dedication beyond? don’t our other, by next of operational be Recent relationships. client inspired These it to COVID excellence, mean our face each but daily through are persists, redefined some come Dean through will could these play are considered attempt for and all clients that with to out. commitment still the and we unsure on of stated will in to how this of in do for COVID still at this outlook the a are be look months few understand assumptions will juncture, detail can’t at recoveries, go a them, Is we and More continues top information and saw dynamic how this regions. throughout across the period. however, industries quarter. resurgences we Absolutely; very mentioned line the at trends I still ignore are encouraging? to earlier, point, different improve reopening and stages we as and

industries questions are this a how sustainable like, remain not a spike to How open does portfolio winter, long start variance The quickly means as at clarity be office there Will for diversity of could the mean comes Look will that and and returning? schools there a do manufacturing. our We at what variety when like aviation it re-occupancy? well. technology or of air closed? or versus fall COVID be between travel outcomes point yet within

headwinds is headwinds sector lower the necessarily other profitability. mean remaining faces strong, and don’t one As

a cost for awareness we performance-driven clean remains EnhancedClean us, to program continue is ever heightened to mix. spaces so here our in structure, needs. necessarily than term, our particular meet highly more fee Our in but invest with safe variable strength been the especially to we unknown to believe has not Longer our results, we contracts, and linear fixed and lot and a diversity portfolio and stay firmly of appreciate clients’

that Our disinfection EnhancedClean approach is three-step certified a delivers program healthy a spaces with process.

disinfection. customers value and will disease business council of return experts infectious cleaning spaces assurances provide clients advisory on group advise different public deliver by so This safely, and and of trustworthy ABM’s an many and industrial change, and navigate to in have to We their significant going they hygiene. demonstrating employees, as external internal forward and the to their our aspects leading consisting us

couldn’t During top clients margin of we them cornerstone will the our first our and deployment kicked a This targeting formally some unique for educating the be on offering. margin quarter, recently unveiled of Seen this regardless In sustaining off wave EnhancedClean plan we launch, of EnhancedClean penetration elevate of the higher Safety work Ultimately, reflective at six we our environment. campaign legacy operating providing. months a that the a the media total significantly conjunction profile can marketing commitments nine of we’re have to profile demand spanning terms IR the currently orders seeing. are higher Client with the generate are is plus website EnhancedClean of margin value called targeted the developed to we to Visit watch and EnhancedClean.com we video. at is be more or enthusiastic. This our firm to go demand. comprehensive the most strategy

mark EnhancedClean program. we thrilled sales I’m share recently $XXX the fact, that our to for crossed In million over

which want have the control. and like So even sign tremendous who United in healthcare clients services, is They many validation. are up, of infection Healthcare our understand our space prestigious to clients begun vested

We milestone return The are million especially accelerates. mark our re-occupancy base, the the At normalcy reached. we mark we optimistic end billion to sales. the across August, to our was dollar not will continue we in as end start new in markets growing of $XXX crossed only EnhancedClean and that we

but annual the we and this call. during executed, such of remarkably teams sales wanted in unusual would this to has where sure wait commerce know, As have we quarter August it our have is we another year paused so of our target. achieved you is fourth Normally an how the a for mentioned much testament until typically on yet make update, to

seen the and well-trained our invest build as enterprise. an in ingrained a results sales continue culture We sales force we’ve sales powerful and to effort the will of across

developed. Additionally, were Ruiz areas be have pleased like pandemic revisit to as map. road on restart Melanie Kirkwood on intend to hold the IT couldn’t that put We team. more will we the projects We our

the driving instrumental she extraordinary during As how the in future. towards committed a accelerate and Information financial, momentum projects by our Despite third times, strategic experienced determining new these of we Officer, our we operational within quarter managing will are re-engage Chief to control. these digital unpredictability be we elements and the the

our enable from service stronger. leveraging unparalleled on communities focused results strengths are organization, to pandemic our our and clients As our remains have excellence our emerge and we to our even demonstrated, this

call I wanted I to results, the financial currently social over that on comment Before cultural Dean turn for are movements our the sweeping the and country. to

who has and there country, a a team As members time trust. this powerful communities of contribute work and respect, representative in core integrity live values more never our XXX,XXX of company’s been to all across

themselves a those dedicate have ABM We to to day. every who responsibility

team endeavor that our quarter, members culture been diversity for beginning committee aligning year, since ABM. be launched overarching strategy inclusion developing responsible This council. have an business ABM’s the the will we and at with the of of During our we

organizational to workplace. priorities nurture continue an advance and inclusive our to shape will We

and City also among board, reassert executive leadership, York New Partnership joined inclusion York businesses commitment We the entire and our headquartered our diversity workforce. other to to our City through for New

steward is to priority ability programs and being supporting critical to be fulfill vision choice success will our that Fostering this enterprise. Dean I’ll the thanking going this not the being are and Dean? to We long ABM to for people. now, all turn call a diversity before over of our both reflect In for financially quarter culturally. to across ABM. excellence our and the and build that drive continuing continue clear term we reinforce is him but to a financial respects, top our stronger through our

Dean Chin

Scott. Thanks

for quarter performance like would our our acknowledge the another finance I I organization for through Before to exceptional quarter, end. persisting financial review

complex of I’ve deliver member a to during never prouder times continue these to been and be this team. teams Our

with wanted to I many past addition, it a you this months. these has call pleasure express been on and to few connect In what over meet of

the most full Now of reflecting $X.X demand our decreases a for our revenue orders, providing and the XX% $XX.X elevated were Revenues quarter quarter income for operations compared $X.XX pandemic. from quarterly GAAP decrease diluted results. per year, margin million in last which and or of through Partially total and $XX are orders billion, continuing year. services work we the compared offsetting Work to were COVID-XX or for have last million manufacturing. was share been industry particularly technology business higher business of was in this approximately to a record decline segments. $X.XX

million reserves. an year favorable current impact to self Our reflect prior insurance $X.X results related

to to improvement continue see claim sustained increased for per million our of compared diluted a GAAP significant a our ability adjusted services. by we $XX.X due quarter operations margin and adjusted by We with are to legacy year. earnings and to basis, in in $XX.X to decreased risk continuing $X.XX and mix increase an share On basis, achieve aligning labor and orders from the work result trends the program. last as versus $X.XX we impact a income safety or revenue encouraged achieved from growth year an last million higher efficiencies On or

actions Additionally, $XX offset primarily in we to B&I as approximately basis, Scott related and certain technical on million for $X.XX and share receivables quarter than implemented in debt temporary corporate, management. client solutions staff expenses, a These and in contributed primarily included or This in expenses. reduced per reductions, the certain pre-tax more including hours furloughs, other salary corporate and the and bad EnhancedClean. other referenced, increases segment

continue credit debt, particularly client we period. prudence within to sectors bad to conditions, as monitor certain overall relates it and this will receivables throughout As we exercise

of during margin X.X% or rate overall to performance $XXX.X $XX million to year. approximately of the Our EBITDA quarter and adjusted led a compared X.X% million last

Now turning results. segment to

the reflect revenues revenues quarterly COVID-XX results these expansion as direct management indirect well and to as operating compression full on of reminder, a due impact decline. As labor profit as

of growing debt in million decrease to facilitated in XX% at by with Additionally, results a bad X.X%. was a with increases $XX.X to million of facility also mentioned, B&I revenue the last lesser as more quarter, extent and these reserves operating previously EnhancedClean. I and reflect investments with segment-specific [indiscernible] profit $XXX.X driven were revenues rate margin declines than to revenues Consistent in led resilience the XX.X%. lower margin versus further reported more of the growth result quarter. $XXX.X during expansion more as well for created profit our our essential This from than was work The business higher X.X% us was loss offsetting a was favorable mix key at clients remain work and Partially last as to experiencing open. this the account This demand decline many increase client for profit on enabled services manufacturing providing from order higher COVID-related an has Revenue the strong markets. margin quarter. T&M in industrial side us million Operating last end impact of year within $XX.X up impact T&M of any million, in higher compression demand margin operating clients and profit logistics, the of $XX.X the reflecting last offset last year, losses and million, year. are an of our million of services. generally with pandemic-related substantially janitorial maintain as to last starts enabled a and margin of school $XXX.X orders end needs. as education and tech, the during at closures. pandemic quarter. down year new work certain manufacturing contracts and driven This even is particularly revenue

can varying of fee revenue of labor impact a associated experience contains in contracts. and result considerably segment last $XX.X on higher depending this performance of as degree increased of as related savings year’s the However, $XX.X results This particular COVID-XX. fixed with operating profit versus reduced million million a segment

segment match revenues still will aviation be for million. we managed the As higher with of important technical expand impacts. quarter, to schools reason deal will to more EnhancedClean we K-XX decline the revenue loss districts solutions and will Aviation education budget be expenses and schools accordingly, a an part $X.X we and school as the to offering, potential variable portfolio of sensitivity we this COVID continues in will reported given our operating hybrid on constraints for staffing pervade than be declines states, time, alleviate reductions our demand. for XX% can resurgence believe reopen, that economic revenues also million based industry. $XXX.X they continue With patterns. segment calibrate most our performing our ability the of remain Accordingly, continue of but travel have during impacted Conversely, as monitor if to to and pandemic’s so work Over be and meet have an global costs and must labor demand. pandemic flight we to the the

Our $X results U.K. accrual unique for million the to severance approximately an the quarter included

passenger ahead, will uncertain travel for Looking we believe future. remain the foreseeable

quarter, last we shuttle of and airport and we Recently airport York our shift deliberate Port New with won Authority a portfolio. bus away outlined New Jersey we a the As from are contract expanding pursuing airline actively services. for

As this acutely position. a expenses possible. improve towards Through these shift quarter labor goal our will continue is the strategies, by we and to breakeven fourth continues, manage where to

to of year. million, enabled profit strong Operating million, expand reflects to margin site solutions XX.X% down our of Finally impeded access $XXX.X million to technical our of which last the compared This solutions, decline limited and technical approximately from $XX.X $XXX during early particularly of to last expenses backlog revenues onto reported million. support us churn XX.X% $XXX.X quarter. part year’s the our still ability operating

municipalities as seek long solutions see overcome education and we in to opportunities more business solutions will budgeting our market COVID-XX. technical medium the to for believe Over the term, facilities

capital established quarter. office, approach demonstrate to our through which continue manage last internal disciplined our liquidity our working We to we

Due million U.S. operations $XXX achieved cash quarter $XX and result This XXXX flow be including As pay which a bank March. credit Act, precautionary in ended will borrowings to debt XXXX. cash our of substantial the from during deferred revolver taxes adjusted cash flow ratio the quarter and million. standby of CARES strong ratio letters $XXX of our down we of the the payroll as a includes position, a million This with and of total in of leverage free million in reflects of due $XXX times. leverage result, we X.X

cash business equivalents with uncertain manage highlighting drive Additionally, and most liquidity even the during we ended our times. million, $XXX the quarter of approximately our and to cash ample

As environment, the to approach to navigate allocation we demand. client we to continue our current as prudent need capital operating we liquidity maintain monitor and

We will our and prioritize dividend organic in endeavors such our longstanding as investment policy. EnhancedClean

opportunistic we We be what greater should will on visibility course have future holds. of the

XXXth quarter, XXXth earnings in of dividend I’m million, stated the a the $XX.X pleased and consecutive quarterly release, During as share cash for of cash approved board quarterly consecutive our we approximately our directors our paid dividend. total distribution to that

Now onto guidance.

As difficult on variability the provide would we fourth it this stated remains environment; our for quarter however, like an business. occur additional to that based release, some I accurate in provide in current of range our of to context press the outcomes given the can view

top to some business we compression. the believe wins, can line and offset continue Given the of QX month-to-month new COVID during saw we improvement we

to modest the revenue in As see fourth a result, we flat sequential organic for quarter. could improvement

on and Additionally, management our demand. be higher an we will a focus do the ongoing in work, on slowdown anticipate saw based also labor area dependent quarter, what of not margin material during we

level expense. varying $X The lead working day, quarter on we in approximately described, perform, have labor modulate could efficiencies. fourth which one to can labor less down the to leading will lower of and work labor million Scott of up degrees depending As

I therefore not ample As liquidity result earlier will and staff positive management the the fourth impact of position, performance concluded costs described the and quarterly materially under circumstances our quarter. temporary our current a and

potentially elements, well. and the In also for the addition discuss year for want assumptions our to I year these taxes expense, next operationally as capital remainder expenditures, to and driven of interest income

we the cash the interest, quarter. on position, anticipate borrowings on our not do and based fourth in increase significant operating First aforementioned assumptions a current for

be expense interest for such, will million we believe the $XX approximately As quarter.

anticipate we occur to in conditions liquidity and do we prepared conservatively in we earlier, plan are the continue capital to as material quarter. Next, I expenditures Therefore, managing working increase during to not mentioned capital ensure the a near rapidly change fourth if term.

we adjust which investments the Scott additional over our As as be we discussed, will our new we will strategic norm. next priorities months determine reviewing re-engage to few to

will few when higher We over government through considered drive benefits the free should as have are related and free not cash will U.S, the months. Obviously Act, past also any that cash conversion in the This assuming U.K. continue flow we flow such the year. the to next for sharpened ascertaining we reoccur. CARES disciplines be

everyone will continue This next In Lastly, are pandemic, unprecedented hiring to taxes, consider navigate results practices there million we to for now wanted pre-COVID ability original I we variables to exceptionally executed. teams these continue are to than has this the towards related remind must to of into ready Operator, foundation be that clearly expectation conclusion, the number disruptions our believe future. have a less year $X could questions. how given to we profitable during and due while of traditional our well. times, strengthened underscore a our [indiscernible] that as our

Operator

line Tim Our of Please from the with [Operator question proceed Blair. Mulrooney William your of first comes instructions] questions.

Tim Mulrooney

on Scott, good quarter. Congrats great a Dean, morning.

Scott Salmirs

Hey, much. thanks so

Dean Chin

Thank you Tim.

Tim Mulrooney

a couple questions here. Yes, so

your your much higher expanded margin these buckets, what with furloughs, share X%? about I’m perspective thinking target we’re Can thinking term of EBITDA you as all, margin third a when margin talk that efficiencies three about broader and of range X.X% from was in implies us versus longer about little to you versus can by EnhancedClean from EBITDA of a First XXX the that basis consolidated how labor work quarter. points bit

Dean Chin

Tim. Thanks

our puts would point basis had As margin you XXX expansion takes. expect, and

positive items basis drove like basis gross that on points. describe would I XXX a to First, the

the COVID XXX you that certain managed of order furlough included clients, During during higher an revenue basis XXX monitor demand, points. efficiencies impact expect. compression, and of the was we we temporary salary, debt and continued work points basis the we related were demand also described, significant gross basis quarter, unable were investment had as work in had from the in impact was had the hour that as as in labor Also point we we that certain quarter, the XXX we and also costs bad credit EnhancedClean. overhead XXX worthiness points would to as our there fixed this our to Also leverage to basis reductions for

Scott Salmirs

the doing I what and too what the and for would I us, we’ve does--what think Yes, what zone term that of for to even COVID’s would think so Tim, say when medium was add, you in margin, that zone talked the now the is this right golden means for us, about us. this is X% and we accelerating past EBITDA X.X%

enthusiastic office Then continue inure road. to labor, benefit the bit with our payables, is ingrain That’s with about that been offices difficult normal, changes that there’s about adopt our Vision collections, and that of virus muscle building have - the are operating force of really standard years down we’ve be and COVID, practices. saying, seeing XXXX this was really they’re where set last imagine we’re resonated through disciplines can we’re going really operating talked foundational our more to going or protection. your over rigor branch embedded COVID certain to of it with and to in standard within really I landlord it think an head and forward. facilities last XXX EnhancedClean, up going to terms it, little or We few that in our employees to a through to no EnhancedClean we’re and to how really strength. the done pods don’t and quarter, talking there of to them so going we our the terms manage going is the about task getting to office Well, heading, back has SOPs to happened of back we’ve organization so benefit there’s about anybody talked practices, of

to to truly to I our so we just think that X% expand, do forward. X%, going determine optimistic Then to as about that’s even we’re going be, that plates think buildings, will maintain that. margins early find embedded be past out from to too completely break Then we’re in X.X% floor we re-staff we going the our efficiencies ability range. perspective the big it’s as and the right now question

Tim Mulrooney

this Okay, we of color. your subject and EnhancedClean, type how and the now in had in question T&M higher highlighted your about think My press Thank you Sticking your lot thinking you. good B&I of is, on a work quarter. here work was and much release stay? emergency work of the EnhancedClean much I’m margin segments, of you was higher that do is work you longer how other CAG tail it do think work? to much how versus In words, one-time margin

Scott Salmirs

tell just this tell. you, too to not Yes, like but answer to early have it’s I you may

hope was I there part to back. people QX, programmatic where and I speaking get was think create work, right? think it for was month was quarter, would more safety reactive this the wanting which it that the a generally of of March lot in

for that’s want EnhancedClean--remember, test property the for think real months much is of the the of I $XXX kind been it’s what us, means iceberg. it’s we tip so place this will be and in of nine averaging, future, to work program a the the EnhancedClean us in think - to put six my been EnhancedClean embedded sales orders. into million hit how than to I is Tim, mark for different in

educational building. year? whether whether I office you’re an you’re to double Aspirationally, big facility, you’re do thing protection do, next that here think an see to so I the want stay, I is airport or is that virus

program You safe, going can’t so feel move that’s people into we’re the to future without optimistic. a make

to we’ve think early. this a of better six that I have into embedded it’s much nine-month next we’ll I range probably quarter little window gotten of by believe how EnhancedClean. a into

Tim Mulrooney

Okay, was great a answer. great. That

think out of that laid quarter, term, work some quarter I type emergency this the so I short understand how it’s CAG last of EnhancedClean into than it--more transitioning now, more work sense. it. hear at I Scott, makes one I or answer That your to get could wanted EnhancedClean. really thoughts to higher on If this, your sneak margin least more, longer in because

as investors to your that customers more gauge work I now become your will with and heard recently many you may B& biggest he our think How CEO this the society. back of say permanent how dynamic vaccine a of wants business? everyone’s right having everyone impact how thinking right I Netflix’s it’s you. Thank is work differently. a to now. now from others debate is a issue fixture it are right discovered, trying about home customers know as We but thinking ultimately remain be might if soon

Scott Salmirs

not am ran Sachs, to Lehman tell manager facilities facilities bit I background a for Brothers, wish-washy little am so opinions. facility so I this. I used for I of you I have so optimistic CBRE, Goldman have I the for future be about I office. and on managed a very on Yes, strong will of - it.

I each an start to the I’m my In companies you special distancing. with the a CEO doesn’t home, conversation distributed talking if from all want they with more you of which even shift--let’s how I estate company fact to get but not talk you head recognize for about to even the their about to take how yesterday when create a happen, in don’t In sure space I can believe XXXX, important are me, building feet where do square the that, our just employee to super It down start is XXXX. to that from a get plates, lives. to about real where now space is you we’re ultimately office and of want want sense get of if starting that have heard come you sub-tenants’ looking person to the per to our people culture migrated We in our a part think and again--and People across I I’ll there It’s floor their back all You I’m to the networks, XX% office foot online per XXX collaboration be, that make some person. of internal about team. the back, office we optimistic people there’s some feet to they employees. frankly, so around. that that want average combine in at tenants talk work back, space will firm a important so XXX create an give management take makes we square to develop so work it and, had strong having to not shift in square to different country, with person all surveys was our tell say can and we or distancing. is want you whether experience People circulating work. distancing that per CEOs XX% facts. I’m

of XXX start I so and per going that’s to because frame person, just square as think heading up in a there was reference room social distancing, square here with XXXX it is to of that feet, feet XXX grow.

works come the going am so net you I gives minimally more up could on in think really my think direction end bringing of cleaning is it’s am and up feel think XXX,XXX neutral. heading side it a people CEO could I better that that’s Class going space. is. the so was people that of these of be proficient who The minority, in future tenants. the systems, process person and not be A who’s Class surprising where you have specs am--if running neutral, the their this for optimistic base, company I office robust doing because being ABM’s about of financial and back, I keep know client office invest and I and the thought also it’s technology buildings I in I us, expansions, have grounded wherewithal, perspective what to then but about fact saying that I accelerating. being from I’m wants hope to and to A air clarity, a like in there the for really I modifications, in But us, end

Tim Mulrooney

sense me, the asked. for back Yes, it queue. makes your Thanks in perspective. glad I’m hop to I’ll really Scott. I

Scott Salmirs

Thanks Tim.

Operator

Thank you.

question with Wittmann of Please of line your Our coming the from is next Andrew question. Baird. proceed

Andrew Wittmann

are we’re call I recurring a you that’s new contractual, just some given with work script, Good billion end, which so thank little businesses project technical questions. here. give that to would gave guess a at In your your you mentioned. but you I taking ago how disclosed you more is about just basically start Also, that in for talk--I a your of what sales, be that the you’re a my year things maybe dollars, versus said solutions, annuity backlog time. time. Maybe a focused? first I’d here. you that’s thanks. wanted to couple solutions, a compares a and this asking us one, I Great, of backlog Scott, the recurring much quarter you’re $XXX guess update billion the just well for that how number quarter by this plan, that gave in backlog year doing usually third work you on morning million bit work was ahead wondering a context of you technical Can just some

Scott Salmirs

it a think dollars, business--you majority. of ATF I if business of the proves, so Andy, the sales billion started demand. really What annuity know, quarter. just sales been it end the make investment is our majority Yes, towards We’ve the you far up pays the in great that has seeing culture, the this really off. by picking on been The just of back

reduced landlords. responsible That’s just people back, be with not to hours. mark them light expanding on sales tell we the were this don’t so just necessarily of just--it talking did proud we only because stopped, been facility on some sold come from to from of even this candidly, the from just hasn’t at hit their in speaks August, we and away come in focus. we sales sales we the thought start doing in what’s that We this The focus the and managers couldn’t is volumes has sales of pandemic, of I’m furloughed know, that. that things that put dollars You focus things been have field all people at people, going year much a remember more uncertainty you been and in on of the ABM. our you can I clients footprints. and our that operators they with be where billion to hit has to commerce but I would in commerce--not blown so that getting from

statistics I quarter, I a standout has put to dollars August year, billion one this this in of in point. think that’s is standout crazy for be a mean, on sales to in the

Dean Chin

however past time, said, would last that talked I $XXX also to year the healthy a two had wanted you at really this I think this we comparability Andy, what extended pandemic deals down, we healthy compare new comparability--equal and the that it’s with versus year year that that slightly year. stoppage to between backlog Scott we’ve and add to in in about today closed when sales, really over where And large and $XXX so million the being a million, above, last that you range I are remind don’t

Andrew Wittmann

churning businesses. the are That’s very helpful retention your should annuity on your strongly. rates, adds sounds have those. I like about in It asked context Scott,

have that the there’d of portfolio, the levels During that be on but three COVID, months? seen a seems hard out comment could of it in retention you last to lot just you churn the believe

Scott Salmirs

we’re no because just supply there we’re chain, done for in say being what be access lot and really a through I smaller about and our of of you taking all we’ve EnhancedClean dealing to same competitors with they as Andy, the thing, credit and have not Yes, been we’ll terms access stasis COVID tell clients, because in been hasn’t It��s anybody for our so--but will well know each you market, transparent of right? there supply and chain. to small not activity, program it, operations, did as but

$XX let last disperses in to electrostatic feel we put electrostatic surety. Organization, we scale chemicals, I put that? the mentioned We because which of think they order sprayers, scale, an stuff we always own such access can’t and $XX our clients cannot a for of which CDC, million sprayers of the the had us order access, and just equipment disinfection you think ABM, now say and that have on me help big think think and we for an bigger really worth supply an we in understand council. and is million another call I that such When the I the reading did call, chemicals with and scale clients can did the surety our they create advisory that--again, I of reading chain year. of matter I’m many is will not of standout how be like--you above, we test these, has business. business, I’m Health having tell with will just next down. one about have the know, rise our Did clients get our you thing from have we you the does retention, that World we’ve small the we customers get a I I it’s one talked panel, competitor When in your local advisory say,

proved resource has out supply pandemic advisory this standpoint that that and matters. a an scale thing There’s having chain else nothing one the think I from we between is in what council. do,

Andrew Wittmann

year-over-year can about in is half the in question for careful I revenue it want as today the as that you’re revenues today at outlook any decline and a this of so it’s schools the recognizing of performance, session. that mostly current now quarter, you’re be guess were it’s lost on your least quarter, revenue in with you extrapolating summer, partially on performance session, change anything the I in quarter, reopening not curious your point’s in the so anyone, for here. have to the education summer - performance I what but What’s school implications My segment cases third to margins does on season segment the be? last kind in just the down about seeing season. the into the in stands to - XX% guess lot trying fall what about of terms far, COVID are can seeing that start I’m new half

Scott Salmirs

that’s good question. Yes, a

say would with what Just we portfolio, online K-XX XX% in-person, higher now our ed, the either and business and to frame of a it is and or XX% only. the you is portfolio, across give of is of board kind ABM is XX% right of is--so within XX% reference, our hybrid now

But that actually least real quarter, there’s semester that next fourth the we so could feel starts, to to going I of whether guess segment’s about literally University going are segment. that like--we of it, in good be you not in in-person, classrooms, going the resilient. they’re what happen But the Will of what’s to in in either and or January. this of they they trends We’re healthcare were we’ve continuing stable care this be inside look the the online, You I most go the student they still is padlock do lush, we lot revenues facilities, this to to have be they’re through at for or at this that The XX% magnificent studying, online. all create mean, down semester facilities, from with take want have how where to for revenue was us. relatively as buildings, and spring the semester, terms there, know, there, right? happening, gravitating care question lessons and quarter. at one of fiscal a learned feel not schools disinfect. XXX% been fact use because--you it’s online I if you schools the analogy rate we’re I landscaping closed, has like of you is been they approach and variability know, the some that stuff that studying going take Andy to which pretty we day-by-day, at feel given the ’XX, is their to to some campus, our are going the the the no Miami, even campus, when teachers on of stability really attending, that’s happening hybrid have or the to of happening

Andrew Wittmann

Okay, you. great. Thank

Scott Salmirs

Sure.

Operator

you. Thank

is question the your Capital line from next Our with Please with Keybanc question. proceed Sean Eastman Markets. coming of

Sean Eastman

another compliments on Hi team, quarter. great

Scott Salmirs

Thank you.

Sean Eastman

you on start know, can us through tough any to year - comps, puts think you we wanted walk next just takes I as and Scott, about easy comps.

around think piece downswing, clear to environment as normalcy, some on think particular, have the upswing we’re manage how guys investment quarters. helpful. and it’s downswing, takes is the puts fold line, a next the some returning terrific where we would labor top think around programs to you in several that start done back the of year the about you past job and ability office the to Any labor those the be some of operating on to back talked about a what relative to guys but in over recovery I point in the your we scenario need have management items the to getting about context

Scott Salmirs

next do I Sure, they an to I March to little hard then for if employees It’s building figure question. staff, people, you COVID, there back as our us lot will is for could think to out year. But opportunity had and no was it impossible so oversized was because have to comps that because a QX do comps, they’re it pandemic there’s heightened there complicated, understand going a and orders, crazy be but amount was disinfection we Then be had trying all of QX will full and QX as unpack about about keep our just it’s efficiencies. March and QX going start think in returning we everyone right? we so COVID, because quarterly and If tenants, start work think QX the really was to get a didn’t funky. a ’XX,

you the our have way it of call as there re-sectioning they term when efficiencies labor so In piece we sections. the the so situation. important that’s up. an the really ours, we’ll labor different I business, to people Sean, get because rebuild. good buildings some is floors, what with think really That’s create re-section always the chance and we another this, grow, of on building call get efficiencies building, a You Then office

process it’s been to dealing double-digit need side really find X% anecdotal with at in guy going will it we’ve the where one two told We’ve unemployment is interview to be people through unemployment, you to how of as think I supply to us people. to the good with impossible XX unemployment for now, get For terms is the a last labor. years, janitor, you been and find what’s trying and get stories about happen

think being for actually of labor, I because going that kind We think don’t the to we and for we be hit us. don’t really unemployment be it’s hardest opportunistic think segment, will economy, segment, think of the to come that a labor costs where it to the go some you people are, stay I unfortunately the on see but down last only going - but retail are of but going for for a pretty tailwind it’s side. really the terms restaurant you anything supply the of is us ABM want you the tailwind. the good supply Then of to that, we it think not want work - have that cost that know I if to the so know, on that. good we’re Dean, I in don’t feeling share about of piece

Dean Chin

Scott. Thanks

that yet, our to More in we about also look all an with states increase day. be what then have to less we’ll will uptick and we’ll more as into in day, everyone, QX on less one more and will day, but the through year. next [indiscernible] rate. discussion. out the an one on QX our fourth will also less one Not have fiscal conversations the in quite of we and that for will we I one reminder working ’XX in wanted deficiencies, an that year be QX, come and overall as we rate that that a expect we one year-end As distribution also as day, read clients quarter have look so exactly will how have rate to follows. quarter basis, we we In in day, point have have to see in the sure

Sean Eastman

fiscal responses. cash Maybe getting excellent vein helpful around in really really door the free in Okay, in clearly just similar cash done a ’XX. flow, job

I of other cash a becomes around that - relative free headwind CARES and ’XX? puts the we fiscal guess deferral any tax half for million You should ’XX, flow Act takes fiscal to generation about out think fiscal did but call for $XX ’XX

Dean Chin

a start I’ll there. Yes comments Sean, few with off

utilize the As we continue and a Scott pandemic in pod approach standard mentioned, pod disciplined cash. about those have operating we collect utilizing the talked to structures established will we to that structures procedure to

continue months, in payroll we we would from As the change quarter. we get deferral what Then next material had quarter expenditures expect during you over in mentioned, align wouldn’t about equally look taxes also capital of QX. a also to strategic as this our mentioned, U.S. and we’ll the the priorities few approximate to as Scott

Scott Salmirs

vigilant around paying commerce - what we has know read, down, where, in about talk we time companies and I’m and being flow it, have so cash team companies on are to in about this people be country or with right? the to how first For rigor of involved, our and the again, shut space struggling talk outside we bills almost is Yes, incredible. maybe sure firm liquidity to other I emotional this how of collecting have about this and I it and proud free go, has and let before am because our this an and it’s historic To response accomplished. they of I cash just to even cash it’s just space, we so more one the embarrassing have flow what doing. well stay and thing on we’re our

and where strength and let Dean am have not what people the we’ve proud a how are enthusiastic done done what seriously so mentioned, concept of again of we’ve to muscle as cash. cash, our am I about go. taken we on I So is collecting going we’re and this so going

highlight this quarter. of amazing Another

Sean Eastman

time. leave the much for right, there. All very I’ll it Thanks

Scott Salmirs

Sure.

Operator

Thank you.

Riddick next Our the of with & with line comes Sidoti Marc questions. proceed your from question Company. Please

Marc Riddick

touch mentioned or sense we most should client this and How or service I you month wanted maybe or the frame, a on well who’s could about of of of were to Good spend little little signed what how you, if businesses time on--you was maybe a bit as client six up? proceed future morning receptivity. we then to EnhancedClean receptive think about to areas types for wondering offerings, have if time as a everyone. could extensions? those on renewal touch particular might how that that bit a should think you nine I get the

Scott Salmirs

have may temporary I order really a like doing, on not between you going strip six Yes, is so or this a so I I said going for you we’ve EnhancedClean like imagine work when because board months. disinfection do on protect basis, landlord and programmatic a little the a seen make to a anyone, receptivity it’s EnhancedClean the nine this more back, programmatic, about saying question to COVID, to question between--and it’s it stuff earlier, think you to anything. any going we’re do do it to across to work it’s you manager facility the want to do couldn’t a any and give are or want against Everyone month, is I’m

want should a about here’s vaccine, this EnhancedClean about to about now getting to or probably bridge probably basis. a you be three two very talking from think horizon a back. that’s we’re about to put I next the EnhancedClean, thinking six ultimately then a won’t time back, think getting anymore. years think nine program bridge let’s proper people people talking it. we in to for temporary to to--so when way Work start on months place over I now, the and order, reactive,

a oh, when as EnhancedClean and include start general are start box for - $XXX to facility spectacular a going bathroom the say, in its for you infancy landlords to for to from to as you Day the putting doing the trigger It are this EnhancedClean, as is to pantry service million office because hope to plan a We’re accelerate order regular work XXXX, manager transition the have so start every we EnhancedClean in of again more a know they getting we saying, we next so coming it people about may back think a so aspirational quarter do January handle for to people is managers, through us office, the We incorporate when be for see get bid getting the a not all us. reason is a back this to was a right, handle so for re-occupancy, margin then future better of better in being going may it. still to people why going to yet, I of kind are gravitate when the we but things talk contracts Labor EnhancedClean that that’s not us handle. out also that’s is calling The that right fourth that into a I’m to specifications the higher of on disinfection, facility a it have on mean, will used going re-occupancy we’re specification year understands trigger fiscal to going until what’s talked of have to space. patterns the and the quarter, in which doing the it’s But of from office, in sense when ’XX happened. on

ours give doesn’t don’t on highest to because think of safety. your an educational sound an any I a not employees we It only This is do and airport, imagine facility you to or it, level, especially office building feeling doing rational, with EnhancedClean. have can a ownership your because the us certification. an I think Marc, get the you way having just tenants saying, are of

facility EnhancedClean sticker get that is certified. says, literally You door that on the this

we’re unless disinfection, want future you’re think you to right doing that of send optimistic EnhancedClean. kids to be, super going so the my schools, back I’m don’t are like, I If guaranteeing about about the parents

Marc Riddick

or higher was very Then to could--I on a of a wanted moment ed. to and the--I but sense K-XX That’s to get sense to helpful. of versus I maybe I for I bit, back though as area something like Thanks. circle ed on wanted to that great. if wondering I in just this of get implementing touched around--you environment this, wondering that the have seems and pockets an the could these be mentioned you wanted more are a education Okay, when not of brought touch whether are--it you’re timing seeing active a if things think sense a maybe deeper maybe the differences onboard. you be higher the on you’d would there so was activity get of on funding could impact

Scott Salmirs

the we’ve of our group within because a so I think term early side, in much it’s industry think little of cuts. still I K-XX on budget Yes, education, seen

cut, how school but be If paper sacrosanct the again, can cut right? could are You in cut think, for cleaning? That’s read how you Then cleaning? you the it area. higher - That’s thing ed are know going about superintendants. day that the area budgets being to with school all cut, you is let’s really about same budgets one one

going to may look where our also, may service, make cleaning, space. But cut--you want than many solutions cuts, other to at think about cut want to you You food to know, places technical right? other there’s you’re so

can are I going a we know just we’re PTA jobs, afterschool K-XX you’re market much target budget mechanical I board they say, our enough to - XX% find side superintendants cuts so that’s program. energy they especially seeing education reaching again, out tailwind a school enough cleaning solutions I a so programs, a as be electrical - the imagine save Typically save the to having calling do cuts to on big group, where for I and business industry we your budget our for to see interestingly we save systems. the is come can’t budget just with the can’t and it. teachers’ savings back technical retrofit or go of will ways to save say Those right money in and say, cuts jobs. Our look, us making and world are teacher deficit, to our now so to find actually activity education,

Marc Riddick

you Thank it. I appreciate very much.

Scott Salmirs

Sure.

Operator

Thank you.

We have time one more for question.

proceed is Silver Our next line King. with questions. with of Please question David the from CL your coming

David Silver

Thanks. hi. Yes,

question effort go EnhancedClean. the a marketing did to have ask you for but or on, maybe back going I Just strategy the I’m go-to-market about to of a areas couple

I’ve Just and online in me the personally, marketing. advertising seen industrial

You you touched that is EnhancedClean for either it your different you done, or you’ve significantly characterize, one you. reaching rollout client Is cross-selling on? do are at Then base? you the disseminate point if way new other there the qualitatively the this vehicles Thank or and for spend marketing responding use split quantitatively, in versus any just to with about existing is than advertising in the EnhancedClean, the you that on customers, could marketing maybe between remarks business programs that either the program. groups could the to your that service, the didn’t to qualitatively, out maybe you’re customers talk

Scott Salmirs

This PR firm. done proper true product of a Sure. way media anything been We’ve on the hired nothing we’ve in agency like is the company social at we and we’ve ever now, rollout, service never advertising a terms are rollout. so

webinar, be a which I’ll part webinar. it’s of and as resource less part if the of of We tell advertising, the about to you’ve a more can for is do what? webinar that the give you of good opportunity webinar right? this accomplished to will a we Part position XX so because clients a could brand back as know get you view that right said, brand so We how We get something the Tomorrow and importantly, a expert doing we seeing how mission it’s your with Even advertising, really about It’s advertising it itself. EnhancedClean, we but, and be knowledgeable people, the doing panel seen see much are reference clients safely. interesting. we’re you on the doing social way. in channels a point we’re is our webinar

We we are said going to outset would we important XX if have--so we the can XX registrations, great. that be people, people, and track obviously get at the again

away. has have which X,XXX registered this blown already, us to for close webinar We’re people that

hits for tracking customers new go even we’re through. existing are analytically that customers tracking and metrics, tracking our website it We’re to

changing more campaign I ever nothing is really like cycle, set. done It’s insight it, go that this leveraging before. you too We’ll demand it’s the tell, us the really like the channels through going but quarter. give change to QX It’s what we’re now really for is has versus taking and early think to be customers in of hoping anything game we’ve to too gone approach, and new have we’ve existing one social once this done never back definitely one early to customers. to again split

it. enthusiastic about so We’re

David Silver

Okay, three - and pulling so some have kind data uncertainties pandemic after let’s now, safely from of shifts might that. it I’m question you company, together, This Scott, apologize question, to years points I’ll some I The try be, other keep say the from thanks the see for next induced but areas. where passed.

in and or your You your XXX,XXX so grade EBITDA going company resources particular where and other your target shorter drive that’s head, you high employees; mentioned, line aggressively maybe question this pursue figure line growth the and evolving towards and maybe very alternatively you’re where one labor you and capital. returns where my maybe you’ve one on mentioned margin top whether below and I operating target, aggressive to historical trending level margin term, efforts see margin is target a this but above a the have you’re

margin employees will a or X.X% you have current you years target have will now than than margin, three more X% from you XXX,XXX fewer now, or Thank higher and was? So and what the

Scott Salmirs

to we’d tough Yes, on be it on revenue, growing you - speculate. growing levels would I is margin. think all be know, really I we’ll suspect

making in investments We be our are to IT digital. and infrastructure going

digital give scale recognizing learned matters, said drive customers this connect COVID before some and our how now especially shape. that’s and could stickier, going to and on if think get our our value, going an of think to us in starts place, it through opportunity and technology technology Again, of competition as is I our chain leapfrog put Things council, we to supply technology kind we’re taking client-facing with to to advisory we on I incredible we Internet really on analytics.

super stick going important to are proficiency for We super, to with operational going be that’s - us. our

discipline practices collections, sales standard people around to We’re like in going going are rigor operating in this our and in company to cash stick with platform. but the we IT and invest

Dean Chin

Dean. is this David,

buybacks. organic share has looking We’ll to historically about focused capital being our add to on policy, Scott. dividend M&A or maintaining continue our onto been wanted investment, Just longstanding and be and opportunistic thoughtful which and strategy, allocation

holistically, to three-year capital we that. into look at do looking we’ll our continue As the allocation period,

Scott Salmirs

great, point. great That’s

David Silver

it. Okay, thank very much. I appreciate

Scott Salmirs

you. Thank

Operator

management session. Thank back I remarks. to any you. and for hand call That the answer does end the question now over closing will

Scott Salmirs

got thank want of tenor this hopefully and to the Just everyone for call. you again their time,

our like firing risen EnhancedClean really margins, new more to initiatives. impressed just and the profit way our management We just enthusiastic and cylinders about revenue, firm through elevation. cash heading our so value all proposition we’re and with is it’s whether our The is free our so has come are maintaining this brand about in team super QX. it. team our say I resiliency doing all team so has feel the of I’m sales, flow, this on where We platforms can’t it’s our just excited, performed, up. across this just and enough pandemic what

Don’t lot you super, We’re healthy, again us, a all, country Stay going weather, so with of great you’re the going parts indoors. - so and safe and it’s more I important. much. Thank though and social guard on the distancing to into in the down. let super call colder be appreciate patience heading of a practice have everybody. your this

Operator

conclude today’s does conference. you. Thank That

this for may You lines at participation disconnect your your great day. you time. and have Thank a

ABM Industries (ABM) 9 Sep 202020 Q3 Earnings call transcript