ABM (NYSE: ABM), a leading provider of facility solutions, today
announced financial results for the first quarter of fiscal 2024.
“ABM is off to an excellent start in 2024,
generating revenue growth of 3.9%,” said Scott Salmirs, President
& Chief Executive Officer. “We are particularly pleased with
the double-digit revenue growth we posted in our Aviation and
Technical Solutions segments, while Manufacturing &
Distribution and Education were solid as well. Despite soft demand
in the commercial real estate market, Business & Industry’s
revenue was essentially flat, benefiting from our focus on higher
performing Class A properties and exposure to the vibrant sports
and entertainment markets.”
Mr. Salmirs continued, “Our strategic
investments in enhanced services like ABM Performance Solutions and
ABM Clean, as well as in new markets such as microgrids, continued
to expand our market opportunities. We were pleased to book several
new programs in the first quarter, including a $180 million
multi-year microgrid project with a major retailer. As we continue
to pursue many attractive opportunities in our sales pipeline, we
will continue to invest in our team and capabilities to ensure ABM
delivers leading-edge technology and superior client satisfaction
to the benefit of all our stakeholders.”
“We are raising the outlook for full year
adjusted EPS based on our overall first quarter results, which
included the recognition of certain discrete tax benefits, further
supported by the resilience of B&I and solid revenue growth
across the rest of our segments. As such, we now expect full year
adjusted EPS to be in the range of $3.30 to $3.45, up from the
previous range of $3.20 to $3.40.”
(1) When the company provides
expectations for adjusted EPS on a forward-looking basis, a
reconciliation of the differences between these non-GAAP
expectations and the corresponding GAAP measure generally is not
available without unreasonable effort. See “Outlook” and “Use of
Non-GAAP Financial Information” below for additional
information.
First Quarter Fiscal 2024
Results
For the first quarter of fiscal 2024, the
Company reported revenue of $2.1 billion, up 3.9% over the prior
year period, all of which was organic growth. Aviation grew 17.5%
driven by strong travel activity and new business wins. Technical
Solutions’ revenue increased 12.9% due to project closeouts in our
microgrid service line. Manufacturing & Distribution grew 5.4%
reflecting solid eCommerce, logistics and industrial markets, and
Education grew 2.4% primarily driven by business wins last year.
Business & Industry’s revenue declined 0.3%, as strong sports
and entertainment markets and parking activity largely offset
ongoing softness in the commercial office market.
GAAP net income was $44.7 million, or $0.70 per
diluted share, compared to $38.5 million, or $0.58 per diluted
share, in the prior year period, representing increases of 16% and
21%, respectively. These increases were primarily attributable to
lower year-over-year ELEVATE costs, certain discrete tax benefits
of $4.4 million, and higher segment earnings on higher revenue.
These gains were partially offset by higher corporate investments,
primarily technology related, the impact of prior-year
self-insurance adjustments, and higher interest expense. Diluted
EPS was positively impacted by a lower share count as compared to
the prior year period.
Adjusted net income was $54.8 million, or $0.86
per diluted share, compared to $52.7 million, or $0.79 per diluted
share, in the prior year period, representing increases of 4% and
9%, respectively. These increases primarily reflected discrete tax
benefits and higher segment earnings, partially offset by higher
corporate investments and increased interest expense. Adjusted EPS
was also positively impacted by a lower share count as compared to
the prior year period. Adjusted results exclude items impacting
comparability. A description of items impacting comparability can
be found in the “Reconciliation of Non-GAAP Financial Measures”
table.
Adjusted EBITDA for the first quarter decreased
5% to $116.7 million and adjusted EBITDA margin was 5.9% versus
6.4% last year. The changes in adjusted EBITDA and adjusted EBITDA
margin were largely due to higher corporate investments and project
mix in Technical Solutions, partially offset by cost controls and
price increases. Adjusted results exclude items impacting
comparability. A description of items impacting comparability can
be found in the “Reconciliation of Non-GAAP Financial Measures”
table.
Liquidity & Capital
Structure
The Company ended the first quarter with total
indebtedness of $1,410.8 million, including $58.2 million in
standby letters of credit, resulting in a total leverage ratio, as
defined by the Company's credit facility of 2.4x. The Company had
available liquidity of $507.8 million, inclusive of cash and cash
equivalents of $58.0 million.
Quarterly Cash Dividend
The Company’s Board of Directors declared a cash
dividend of $0.225 per common share payable on May 6, 2024 to
shareholders of record on April 4, 2024. This will be the Company’s
232nd consecutive quarterly cash dividend.
Outlook
Based on solid first quarter results and the
recognition of certain discrete tax benefits, ABM is raising its
outlook for fiscal year 2024 (“FY24”) adjusted EPS. The Company now
expects FY24 adjusted EPS to be in the range of $3.30 to $3.45, as
compared to the prior range of $3.20 to $3.40. All other components
of the Company’s prior outlook remain unchanged. Adjusted EBITDA
margin is anticipated to be 6.2% to 6.5%. Interest expense is
expected to be $82 million to $86 million and the tax rate,
excluding discrete items and non-taxable items, is anticipated to
be 29% to 30%.
The Company cannot provide a reconciliation of
the differences between the non-GAAP expectations and corresponding
GAAP measures for Adjusted EPS and adjusted EBITDA margin in 2024
without unreasonable effort due to the uncertainty of timing of any
gains or losses related to, but not limited to, items such as
prior-year self-insurance adjustments, acquisition and integration
related costs, legal costs and other settlements, as well as
transformation initiative costs. Although we have attempted to
estimate the amount of gains and losses of such items for the
purpose of explaining the probable significance of these
components, this calculation involves a number of unknown
variables, resulting in a GAAP range that we believe is too large
and variable to be meaningful.
Conference Call Information
ABM will host its quarterly conference call for
all interested parties on Thursday, March 7, 2024, at 8:30 AM
(ET). The live conference call can be accessed via audio webcast at
the “Investors” section of the Company's website, located
at www.abm.com, or by dialing (877) 451-6152 (domestic) or
(201) 389-0879 (international) approximately 15 minutes prior to
the scheduled time.
A supplemental presentation will accompany the
webcast on the Company's website.
A replay will be available approximately two
hours after the webcast through March 21, 2024, and can be accessed
by dialing (844) 512-2921 and then entering ID #13743786. A
replay link of the webcast will also be archived on the ABM website
for 90 days.
About ABM
ABM (NYSE: ABM) is one of the world’s largest
providers of integrated facility solutions. A driving force for a
cleaner, healthier, and more sustainable world, ABM provides
essential services and forward-looking solutions that improve the
spaces and places that matter most. From curbside to rooftop, ABM
provides comprehensive facility services that includes janitorial,
engineering, parking, electrical & lighting, energy solutions,
HVAC & mechanical, landscape & turf, and mission critical
solutions. ABM delivers these custom facility solutions to
properties across a wide range of industries – from commercial
office buildings to universities, airports, hospitals, data
centers, manufacturing plants and distribution centers,
entertainment venues and more. Founded in 1909, ABM serves over
20,000 clients, with annualized revenue of over $8 billion and more
than 100,000 team members in 350+ offices throughout the United
States, United Kingdom and other international locations. For more
information, visit www.abm.com.
Cautionary Statement under the Private
Securities Litigation Reform Act of 1995
This press release contains both historical and
forward-looking statements about ABM Industries Incorporated
(“ABM”) and its subsidiaries (collectively referred to as “ABM,”
“we,” “us,” “our,” or the “Company”). We make forward-looking
statements related to future expectations, estimates and
projections that are uncertain, and often contain words such as
“anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,”
“intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “should,”
“target,” or other similar words or phrases. These statements are
not guarantees of future performance and are subject to known and
unknown risks, uncertainties, and assumptions that are difficult to
predict. For us, particular uncertainties that could cause our
actual results to be materially different from those expressed in
our forward-looking statements include: our success depends on our
ability to gain profitable business despite competitive market
pressures; our results of operations can be adversely affected by
labor shortages, turnover, and labor cost increases; we may not be
able to attract and retain qualified personnel and senior
management we need to support our business; investments in and
changes to our businesses, operating structure, or personnel
relating to our ELEVATE strategy, including the implementation of
strategic transformations, enhanced business processes, and
technology initiatives may not have the desired effects on our
financial condition and results of operations; our ability to
preserve long-term client relationships is essential to our
continued success; our use of subcontractors or joint venture
partners to perform work under customer contracts exposes us to
liability and financial risk; our international business involves
risks different from those we face in the United States that could
have an effect on our results of operations and financial
condition; decreases in commercial office space utilization due to
hybrid work models could adversely affect our financial conditions;
negative changes in general economic conditions, such as
recessionary pressures, high interest rates, durable and
non-durable goods pricing, changes in energy prices, or changes in
consumer goods pricing, could reduce the demand for services and,
as a result, reduce our revenue and earnings and adversely affect
our financial condition; acquisitions, divestitures, and other
strategic transactions could fail to achieve financial or strategic
objectives, disrupt our ongoing business, and adversely impact our
results of operations; we may experience breaches of, or
disruptions to, our information technology systems or those of our
third-party providers or clients, or other compromises of our data
that could adversely affect our business; our ongoing
implementation of new enterprise resource planning and related
boundary systems could adversely impact our ability to operate our
business and report our financial results; we manage our insurable
risks through a combination of third-party purchased policies and
self-insurance, and we retain a substantial portion of the risk
associated with expected losses under these programs, which exposes
us to volatility associated with those risks, including the
possibility that changes in estimates to our ultimate insurance
loss reserves could result in material charges against our
earnings; our risk management and safety programs may not have the
intended effect of reducing our liability for personal injury or
property loss; unfavorable developments in our class and
representative actions and other lawsuits alleging various claims
could cause us to incur substantial liabilities; we are subject to
extensive legal and regulatory requirements, which could limit our
profitability by increasing the costs of legal and regulatory
compliance; a significant number of our employees are covered by
collective bargaining agreements that could expose us to potential
liabilities in relation to our participation in multiemployer
pension plans, requirements to make contributions to other benefit
plans, and the potential for strikes, work slowdowns or similar
activities, and union organizing drives; our business may be
materially affected by changes to fiscal and tax policies; negative
or unexpected tax consequences could adversely affect our results
of operations; future increases in the level of our borrowings or
in interest rates could affect our results of operations;
impairment of goodwill and long-lived assets could have a material
adverse effect on our financial condition and results of
operations; if we fail to maintain proper and effective internal
control over financial reporting in the future, our ability to
produce accurate and timely financial statements could be
negatively impacted, which could harm our operating results and
investor perceptions of our Company and as a result may have a
material adverse effect on the value of our common stock; our
business may be negatively impacted by adverse weather conditions;
catastrophic events, disasters, pandemics, and terrorist attacks
could disrupt our services; and actions of activist investors could
disrupt our business. For additional information on these and other
risks and uncertainties we face, see ABM’s risk factors, as they
may be amended from time to time, set forth in our filings with the
Securities and Exchange Commission, including our most recent
Annual Report on Form 10-K and subsequent filings. We urge readers
to consider these risks and uncertainties in evaluating our
forward-looking statements.
Use of Non-GAAP Financial Information
To supplement ABM’s consolidated financial
information, the Company has presented net income and net income
per diluted share as adjusted for items impacting comparability for
the first quarter of fiscal years 2024 and 2023. These adjustments
have been made with the intent of providing financial measures that
give management and investors a better understanding of the
underlying operational results and trends as well as ABM’s
operational performance. In addition, the Company has presented
earnings before interest, taxes, depreciation and amortization, and
excluding items impacting comparability (adjusted EBITDA) for the
first quarter of fiscal years 2024 and 2023. Adjusted EBITDA is
among the indicators management uses as a basis for planning and
forecasting future periods. Adjusted EBITDA margin is defined as
adjusted EBITDA divided by revenue excluding management
reimbursement. We cannot provide a reconciliation of
forward-looking non-GAAP adjusted EBITDA margin measures to GAAP
due to the inherent difficulty in forecasting and quantifying
certain amounts that are necessary for such reconciliation. The
Company has also presented Free Cash Flow which is defined as net
cash provided by (used in) operating activities less additions to
property, plant and equipment. The presentation of these non-GAAP
financial measures is not meant to be considered in isolation or as
a substitute for financial statements prepared in accordance with
accounting principles generally accepted in the United States of
America. (See accompanying financial tables for supplemental
financial data and corresponding reconciliations to certain GAAP
financial measures.)
We round amounts to millions but calculate all
percentages and per-share data from the underlying whole-dollar
amounts. As a result, certain amounts may not foot, crossfoot, or
recalculate based on reported numbers due to rounding. Unless
otherwise noted, all references to years are to our fiscal year,
which ends on October 31.
Contact: |
|
Investor Relations: |
Paul Goldberg |
|
(212) 297-9721 |
|
ir@abm.com |
ABM
INDUSTRIES INCORPORATED AND
SUBSIDIARIESCONSOLIDATED INCOME STATEMENT
INFORMATION (UNAUDITED) |
|
|
Three months ended January 31, |
|
|
(in millions, except per share
amounts) |
|
|
2024 |
|
|
|
2023 |
|
|
Increase / (Decrease) |
Revenues |
|
$ |
2,069.6 |
|
|
$ |
1,991.3 |
|
|
3.9 |
% |
Operating expenses |
|
|
1,826.3 |
|
|
|
1,749.8 |
|
|
4.4 |
% |
Selling, general and
administrative expenses |
|
|
154.6 |
|
|
|
150.6 |
|
|
2.7 |
% |
Amortization of intangible
assets |
|
|
14.6 |
|
|
|
19.5 |
|
|
(24.8 |
)% |
Operating
profit |
|
|
74.1 |
|
|
|
71.4 |
|
|
3.7 |
% |
Income from unconsolidated
affiliates |
|
|
1.3 |
|
|
|
1.1 |
|
|
16.4 |
% |
Interest expense |
|
|
(21.3 |
) |
|
|
(19.8 |
) |
|
(7.6 |
)% |
Income before income
taxes |
|
|
54.0 |
|
|
|
52.7 |
|
|
2.5 |
% |
Income tax provision |
|
|
(9.3 |
) |
|
|
(14.2 |
) |
|
34.4 |
% |
Net income |
|
$ |
44.7 |
|
|
$ |
38.5 |
|
|
16.1 |
% |
Net income per common
share |
|
|
|
|
|
|
Basic |
|
$ |
0.70 |
|
|
$ |
0.58 |
|
|
20.7 |
% |
Diluted |
|
$ |
0.70 |
|
|
$ |
0.58 |
|
|
20.7 |
% |
Weighted-average
common and common equivalent shares
outstanding |
|
|
|
|
|
|
Basic |
|
|
63.5 |
|
|
|
66.3 |
|
|
|
Diluted |
|
|
63.9 |
|
|
|
66.8 |
|
|
|
Dividends declared per
common share |
|
$ |
0.225 |
|
|
$ |
0.220 |
|
|
|
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESSELECTED
CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED) |
|
|
Three months ended January 31, |
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
Net cash used in
operating activities (a) |
|
$ |
(0.1 |
) |
|
$ |
(70.9 |
) |
Additions to property, plant
and equipment |
|
|
(13.6 |
) |
|
|
(13.8 |
) |
Other |
|
|
0.5 |
|
|
|
1.3 |
|
Net cash used in
investing activities |
|
$ |
(13.1 |
) |
|
$ |
(12.5 |
) |
Taxes withheld from issuance
of share-based compensation awards, net |
|
|
(9.5 |
) |
|
|
(12.7 |
) |
Dividends paid |
|
|
(14.1 |
) |
|
|
(14.4 |
) |
Borrowings from debt |
|
|
301.0 |
|
|
|
264.5 |
|
Repayment of borrowings from
debt |
|
|
(284.1 |
) |
|
|
(147.6 |
) |
Changes in book cash
overdrafts |
|
|
8.2 |
|
|
|
6.8 |
|
Financing of energy savings
performance contracts |
|
|
— |
|
|
|
0.4 |
|
Repayment of finance lease
obligations |
|
|
(1.0 |
) |
|
|
(0.8 |
) |
Net cash provided by
financing activities |
|
$ |
0.5 |
|
|
$ |
96.2 |
|
Effect of exchange
rate changes on cash and cash equivalents |
|
|
1.2 |
|
|
|
2.2 |
|
(a) The three months ended January 31, 2023,
include a $66 million payment for deferred payroll taxes under the
Coronavirus Aid Relief and Economic Security Act (“CARES Act”).
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESCONDENSED
CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED) |
(in millions) |
|
January 31, 2024 |
|
October 31, 2023 |
ASSETS |
|
|
|
|
Current assets |
|
|
|
|
Cash and cash equivalents |
|
$ |
58.0 |
|
$ |
69.5 |
Trade accounts receivable, net of allowances |
|
|
1,382.0 |
|
|
1,365.0 |
Costs incurred in excess of amounts billed |
|
|
120.4 |
|
|
139.2 |
Prepaid expenses |
|
|
92.6 |
|
|
78.5 |
Other current assets |
|
|
70.9 |
|
|
58.6 |
Total current assets |
|
|
1,723.9 |
|
|
1,710.7 |
Other investments |
|
|
28.3 |
|
|
28.8 |
Property, plant and equipment,
net of accumulated depreciation |
|
|
142.1 |
|
|
131.5 |
Right-of-use assets |
|
|
109.0 |
|
|
113.4 |
Other intangible assets, net
of accumulated amortization |
|
|
288.5 |
|
|
302.9 |
Goodwill |
|
|
2,494.3 |
|
|
2,491.3 |
Other noncurrent assets |
|
|
169.3 |
|
|
155.0 |
Total assets |
|
$ |
4,955.4 |
|
$ |
4,933.7 |
LIABILITIES AND
STOCKHOLDERS’ EQUITY |
|
|
|
|
Current liabilities |
|
|
|
|
Current portion of long-term debt, net |
|
$ |
31.6 |
|
$ |
31.5 |
Trade accounts payable |
|
|
243.5 |
|
|
299.1 |
Accrued compensation |
|
|
201.6 |
|
|
249.7 |
Accrued taxes—other than income |
|
|
62.0 |
|
|
58.9 |
Deferred revenue |
|
|
104.6 |
|
|
90.1 |
Insurance claims |
|
|
190.5 |
|
|
177.0 |
Income taxes payable |
|
|
19.9 |
|
|
17.9 |
Current portion of lease liabilities |
|
|
30.4 |
|
|
32.5 |
Other accrued liabilities |
|
|
281.3 |
|
|
261.2 |
Total current liabilities |
|
|
1,165.3 |
|
|
1,217.9 |
Long-term debt, net |
|
|
1,296.9 |
|
|
1,279.8 |
Long-term lease
liabilities |
|
|
95.9 |
|
|
98.8 |
Deferred income tax liability,
net |
|
|
84.5 |
|
|
85.0 |
Noncurrent insurance
claims |
|
|
417.4 |
|
|
387.5 |
Other noncurrent
liabilities |
|
|
69.0 |
|
|
61.1 |
Noncurrent income taxes
payable |
|
|
3.8 |
|
|
3.7 |
Total liabilities |
|
|
3,132.7 |
|
|
3,133.8 |
Total stockholders’
equity |
|
|
1,822.7 |
|
|
1,799.9 |
Total liabilities and
stockholders’ equity |
|
$ |
4,955.4 |
|
$ |
4,933.7 |
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIESREVENUES
AND OPERATING PROFIT BY SEGMENT (UNAUDITED) |
|
|
Three months ended January 31, |
|
Increase/ (Decrease) |
(in millions) |
|
|
2024 |
|
|
|
2023 |
|
|
Revenues |
|
|
|
|
|
|
Business & Industry |
|
$ |
1,033.1 |
|
|
$ |
1,036.6 |
|
|
(0.3 |
)% |
Manufacturing &
Distribution |
|
|
400.9 |
|
|
|
380.5 |
|
|
5.4 |
% |
Education |
|
|
220.1 |
|
|
|
214.9 |
|
|
2.4 |
% |
Aviation |
|
|
249.5 |
|
|
|
212.3 |
|
|
17.5 |
% |
Technical Solutions |
|
|
165.9 |
|
|
|
147.0 |
|
|
12.9 |
% |
Total
Revenues |
|
$ |
2,069.6 |
|
|
$ |
1,991.3 |
|
|
3.9 |
% |
Operating
profit |
|
|
|
|
|
|
Business & Industry |
|
$ |
79.6 |
|
|
$ |
75.9 |
|
|
4.8 |
% |
Manufacturing &
Distribution |
|
|
41.3 |
|
|
|
40.9 |
|
|
1.1 |
% |
Education |
|
|
12.7 |
|
|
|
11.8 |
|
|
7.6 |
% |
Aviation |
|
|
9.7 |
|
|
|
8.3 |
|
|
17.4 |
% |
Technical Solutions |
|
|
6.6 |
|
|
|
7.2 |
|
|
(8.8 |
)% |
Corporate |
|
|
(74.7 |
) |
|
|
(71.5 |
) |
|
(4.4 |
)% |
Adjustment for income from
unconsolidated affiliates, included in Aviation and Technical
Solutions |
|
|
(1.3 |
) |
|
|
(1.1 |
) |
|
(16.4 |
)% |
Adjustment for tax deductions
for energy efficient government buildings, included in Technical
Solutions |
|
|
— |
|
|
|
(0.1 |
) |
|
NM* |
|
Total operating
profit |
|
|
74.1 |
|
|
|
71.4 |
|
|
3.7 |
% |
Income from unconsolidated
affiliates |
|
|
1.3 |
|
|
|
1.1 |
|
|
16.4 |
% |
Interest expense |
|
|
(21.3 |
) |
|
|
(19.8 |
) |
|
(7.6 |
)% |
Income before income
taxes |
|
|
54.0 |
|
|
|
52.7 |
|
|
2.5 |
% |
Income tax provision |
|
|
(9.3 |
) |
|
|
(14.2 |
) |
|
34.4 |
% |
Net
income |
|
$ |
44.7 |
|
|
$ |
38.5 |
|
|
16.1 |
% |
*Not meaningful (due to variance greater than or equal to
+/-100%)
ABM
INDUSTRIES INCORPORATED AND SUBSIDIARIES
RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES
(UNAUDITED)(in millions, except per share amounts) |
|
Three months ended January 31, |
|
|
2024 |
|
|
2023 |
|
Reconciliation of Net
Income to Adjusted Net Income |
|
|
Net income |
$ |
44.7 |
|
$ |
38.5 |
|
Items impacting
comparability(a) |
|
|
Prior year self-insurance adjustment(b) |
|
5.3 |
|
|
— |
|
Acquisition and integration related costs(c) |
|
1.4 |
|
|
2.5 |
|
Transformation initiative costs(d) |
|
7.0 |
|
|
17.2 |
|
Other |
|
0.8 |
|
|
— |
|
Total items impacting
comparability |
|
14.5 |
|
|
19.7 |
|
Income tax benefit (e)(f) |
|
(4.4 |
) |
|
(5.5 |
) |
Items impacting comparability,
net of taxes |
|
10.1 |
|
|
14.2 |
|
Adjusted net income |
$ |
54.8 |
|
$ |
52.7 |
|
|
Three months ended January 31, |
|
|
2024 |
|
|
2023 |
|
Reconciliation of Net
Income to Adjusted EBITDA |
|
|
Net income |
$ |
44.7 |
|
$ |
38.5 |
|
Items impacting comparability |
|
14.5 |
|
|
19.7 |
|
Income tax provision |
|
9.3 |
|
|
14.2 |
|
Interest expense |
|
21.3 |
|
|
19.8 |
|
Depreciation and amortization |
|
26.9 |
|
|
30.5 |
|
Adjusted EBITDA |
$ |
116.7 |
|
$ |
122.7 |
|
|
|
|
|
|
|
|
Net income margin as a
% of revenues |
|
2.2 |
% |
|
1.9 |
% |
|
Three months ended January 31, |
|
|
2024 |
|
|
2023 |
|
Revenues Excluding
Management Reimbursement |
|
|
Revenues |
$ |
2,069.6 |
|
$ |
1,991.3 |
|
Management reimbursement |
|
(80.1 |
) |
|
(72.4 |
) |
Revenues excluding management
reimbursement |
$ |
1,989.5 |
|
$ |
1,918.8 |
|
|
|
|
|
|
|
|
Adjusted EBITDA margin
as a % of revenues excluding management reimbursement |
|
5.9 |
% |
|
6.4 |
% |
|
Three months ended January 31, |
|
2024 |
2023 |
Reconciliation of Net
Income per Diluted Share to Adjusted Net Income per Diluted
Share |
|
|
Net income per diluted share |
$ |
0.70 |
|
$ |
0.58 |
|
Items impacting comparability, net of taxes |
|
0.16 |
|
|
0.21 |
|
Adjusted net income per diluted
share |
$ |
0.86 |
|
$ |
0.79 |
|
Diluted shares |
|
63.9 |
|
|
66.8 |
|
|
Three months ended January 31, |
|
|
2024 |
|
|
2023 |
|
Reconciliation of Net
Cash Used in Operating Activities to Free Cash Flow |
|
|
Net cash used in operating
activities(g) |
$ |
(0.1 |
) |
$ |
(70.9 |
) |
Additions to property, plant and equipment |
|
(13.6 |
) |
|
(13.8 |
) |
Free Cash Flow |
$ |
(13.7 |
) |
$ |
(84.8 |
) |
(a) The Company adjusts income to exclude
the impact of certain items that are unusual, non-recurring, or
otherwise do not reflect management's views of the underlying
operational results and trends of the Company.
(b) Represents the net adjustments to our
self-insurance reserve for general liability, workers’
compensation, automobile and medical and dental insurance claims
related to prior period accident years. Management
believes these prior period reserve changes do not illustrate
the performance of the Company’s normal ongoing operations given
the current year's insurance expense is estimated by management in
conjunction with the Company's outside actuary to take into
consideration past history and current costs and regulatory trends.
Once the Company develops its best estimate of insurance expense
premiums for the year, the Company fully allocates such costs out
to the business leaders to hold them accountable for the current
year costs within operations. However, since these prior period
reserve changes relate to claims that could date back many years,
current management has limited ability to influence the
ultimate development of the prior year changes. Accordingly,
including the prior period reserve changes in the Company's current
operational results would not depict how the business is run as the
Company holds its management accountable for the current year’s
operational performance. The Company believes the exclusion of the
self-insurance adjustment from net income is useful to investors by
enabling them to better assess our operating performance in the
context of current year profitability. For the three months ended
January 31, 2024, and 2023, our self-insurance general
liability, workers’ compensation, and automobile and medical and
dental insurance claims related to prior period accident years
increased by $5.3 million and $0 million, respectively.
(c) Represents acquisition and integration
related costs primarily associated with Able acquisition.
(d) Represents discrete transformational costs
that primarily consists of general and administrative costs for
developing technological needs and alternatives, project
management, testing, training and data conversion, consulting and
professional fees for i) new enterprise resource planning system,
ii) client facing technology, iii) workforce management tools and
iv) data analytics. These costs are not expected to recur beyond
the deployment of these initiatives.
(e) The Company's tax impact is calculated using
the federal and state statutory rate of 28.11% for FY2024 and FY
2023. We calculate tax from the underlying whole-dollar amounts, as
a result, certain amounts may not recalculate based on reported
numbers due to rounding.
(f) The three months ended January 31, 2024
include a $0.3 million benefit for uncertain tax positions with
expiring statues.
(g) The three months ended January 31, 2023,
include a $66 million payment for deferred payroll taxes under the
Coronavirus Aid Relief and Economic Security Act (“CARES Act”).
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