UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 7, 2011
ABM Industries
Incorporated
(Exact name of registrant as
specified in its charter)
| Delaware | 1-8929 | 94-1369354 | ||
| (State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 551 Fifth Avenue, Suite 300,
New York, New York |
10176 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (212) 297-0200
| N/A |
| (Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 7, 2011, ABM Industries Incorporated (the “Company”) issued a press release announcing financial results related to the first quarter of fiscal year 2011. A copy of the press release is attached as Exhibit 99.1, which is incorporated into this item by reference.
As disclosed in the press release attached as Exhibit 99.1, the Company will hold a live web cast on March 8, 2011 relating to the Company’s financial results for the first quarter of fiscal year 2011. A copy of the slides to be presented at the Company’s web cast and discussed in the conference call relating to such financial results is being furnished as Exhibit 99.2 to this Form 8-K.
Item 7.01 Regulation FD.
The Company’s Annual Meeting of Shareholders is on March 8, 2011. A copy of the slides to be presented at the annual meeting will be available at www.abm.com under the “Investor Relations” tab.
Item 8.01. Other Events.
On March 7, 2011, the Company announced that the Board of Directors of the Company declared a quarterly dividend of $0.14 per share, payable on May 2, 2011 to stockholders of record on April 7, 2011. A copy of the press release announcing the declaration of the dividend is attached as Exhibit 99.1, which is incorporated into this item by reference.
Item 9.01. Financial Statements and Exhibits.
| (c) | Exhibits. |
| 99.1 | Press Release issued by ABM Industries Incorporated, dated March 7, 2011, announcing financial results related to the first quarter of fiscal year 2011 and the declaration of a dividend payable May 2, 2011 to stockholders of record on April 7, 2011. |
| 99.2 | Slides of ABM Industries Incorporated, dated March 8, 2011. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| ABM INDUSTRIES INCORPORATED |
||||
| Dated: March 7, 2011 | By: | /s/ Sarah H. McConnell | ||
| Sarah H. McConnell | ||||
| Senior Vice President and General Counsel | ||||
EXHIBIT INDEX
| 99.1 | Press Release issued by ABM Industries Incorporated, dated March 7, 2011, announcing financial results related to the first quarter of fiscal year 2011 and the declaration of a dividend. |
| 99.2 | Slides of ABM Industries Incorporated, dated March 8, 2011. |
Exhibit 99.1
|
551 Fifth Avenue Suite 300 New York, NY 10176 |
PRESS RELEASE
| Contact: | ||||||
Investors & Analysts:
|
David Farwell (212) 297-9792 dfarwell@abm.com |
Media: | Tony Mitchell (212) 297-9828 tony.mitchell@abm.com |
ABM INDUSTRIES ANNOUNCES FIRST QUARTER 2011 FINANCIAL RESULTS,
DECLARES QUARTERLY DIVIDEND AND REAFFIRMS GUIDANCE
DECLARES QUARTERLY DIVIDEND AND REAFFIRMS GUIDANCE
Revenues Increase 18% as Acquired Businesses Drive Sales Growth
Company Achieves First Ever $1 Billion Quarter
| Quarter Ended | ||||||||||||
| (in millions, | January 31, | Increase | ||||||||||
| except per share data) | 2011 | 2010 | (Decrease) | |||||||||
Revenues |
$ | 1,029.2 | $ | 869.9 | 18.3 | % | ||||||
Net cash provided by (used in)
continuing operating activities |
$ | 0.3 | $ | (12.2 | ) | NM* | ||||||
Net income |
$ | 8.4 | $ | 12.8 | (34.3 | )% | ||||||
Net income per diluted share |
$ | 0.16 | $ | 0.24 | (33.7 | )% | ||||||
Adjusted EBITDA |
$ | 35.7 | $ | 32.7 | 9.3 | % | ||||||
Income from continuing operations |
$ | 8.4 | $ | 12.8 | (34.5 | )% | ||||||
Income from continuing operations
per diluted share |
$ | 0.16 | $ | 0.24 | (33.7 | )% | ||||||
Adjusted income from continuing
operations |
$ | 11.7 | $ | 14.0 | (16.8 | )% | ||||||
Adjusted income from continuing
operations per diluted share |
$ | 0.22 | $ | 0.27 | (18.5 | )% | ||||||
| * | Not Meaningful |
(This release refers to non-GAAP financial measures described as “Adjusted EBITDA”,
“Adjusted Income from Continuing Operations”, and “Adjusted Income from Continuing
Operations per Diluted Share”. Refer to the accompanying financial tables for supplemental
financial data and corresponding reconciliation of these non-GAAP financial measures to
certain GAAP financial measures.)
-1-
NEW YORK, NY — March 7, 2011 — ABM Industries Incorporated (NYSE:ABM) today announced
revenues for the first quarter of fiscal year 2011 of $1.03 billion compared to first quarter of
fiscal year 2010 revenues of $869.9 million. Net income for the first quarter of fiscal year 2011
was $8.4 million, a 34.3% decrease from $12.8 million in the first quarter of fiscal year 2010.
Net income per diluted share for the first quarter of fiscal year 2011 decreased 33.7% to $0.16
compared to net income per diluted share of $0.24 in the first quarter of fiscal year 2010. Net
income for the first quarter of fiscal year 2011 was impacted by $2.5 million after-tax of
transaction costs associated with The Linc Group acquisition in 2010, $2.3 million after-tax of
labor expense from one additional work day and $0.5 million after-tax in higher state unemployment
insurance tax compared to the year-ago quarter.
“The Company’s financial results met our expectations for the first quarter and were consistent
with our guidance targets for the fiscal year,” said Henrik Slipsager, president and chief
executive officer, ABM Industries Incorporated. “Revenues increased 18% year-over-year, reaching a
quarterly record of $1.03 billion, and improved sequentially by 14%. The businesses we acquired
during 2010 — Diversco, L&R Parking companies and The Linc Group — drove sales growth in the
quarter. Sales generated by the newly-acquired businesses and a return to organic growth will
continue to produce year-over-year revenue gains for the 2011 fiscal year. Despite the top line
growth, net income in the first quarter also was impacted by increased year-over-year amortization
and interest costs related to the Linc acquisition. However, our focus on improving margins and
profitability produced 9% growth in adjusted EBITDA in the first quarter, including the impact of
one additional working day.”
“All four Divisions produced revenue increases as the acquired companies generated more than $156
million in sales during the first quarter, ahead of plan, and we saw small overall improvement in
organic growth as well. ABM Janitorial slightly increased organic revenues year-over-year for the
first time in eight quarters. Janitorial’s profitability was impacted by one additional working
day, higher state unemployment insurance expense and unanticipated costs associated with snow
removal which impacted certain clients. Engineering revenues nearly doubled compared to the
year-ago quarter on the strength of sales generated by The Linc Group, which contributed more than
$93 million in revenues. Engineering’s operating profit increased year-over-year, driven by the
Linc business, which was slightly accretive to earnings in the first quarter excluding transaction
costs, ahead of our expectations. Parking increased revenues more than 35%, bolstered by new sales
and contributions from the L&R companies, while profitability was essentially flat, partly
resulting from snow and other weather-related costs. Security revenues were up modestly,
including more than $3 million in sales from Diversco, while operating profit remained even with
the year-ago quarter.”
Slipsager concluded: “We are encouraged by the pace of integration and sales contributions of the
companies we acquired last year. The additional revenues will generate year-over-year sales growth
and help drive profitability. We will leverage our recent investments in an expanded footprint,
increased sales and additional talent to deliver on our financial plans and projections for the
year.”
Income from continuing operations for the first quarter of fiscal year 2011 was $8.4 million ($0.16
per diluted share) compared to $12.8 million ($0.24 per diluted share) in the year-ago quarter.
Excluding items impacting comparability, adjusted income from continuing operations was $11.7
million, or $0.22 per diluted share, for the first quarter of fiscal year 2011. This compares to
adjusted income from continuing operations of $14.0 million, or $0.27 per diluted share, in the
first quarter of fiscal year 2010, with the year-over difference primarily a result of the
additional work day in the first quarter of fiscal year 2011.
The Company’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and
excluding discontinued operations and items impacting comparability) for the first quarter of
fiscal year 2011 was $35.7 million compared to $32.7 million in the first quarter of fiscal year
2010.
-2-
The Company also announced that the Board of Directors has declared a second quarter cash dividend
of $0.14 per common share payable on May 2, 2011 to stockholders of record on April 7, 2011. This
will be ABM’s 180th consecutive quarterly cash dividend.
Guidance
The Company reaffirmed its guidance and continues to estimate that income from continuing operations per diluted share for the full 2011 fiscal year will be in the range of $1.23 to $1.33 and adjusted income from continuing operations per diluted share, for the same period, of $1.43 to $1.53.
The Company reaffirmed its guidance and continues to estimate that income from continuing operations per diluted share for the full 2011 fiscal year will be in the range of $1.23 to $1.33 and adjusted income from continuing operations per diluted share, for the same period, of $1.43 to $1.53.
Earnings Webcast
On Tuesday, March 8, 2011, at 9:00 a.m. (EST), ABM will host a live webcast of remarks by President and Chief Executive Officer Henrik Slipsager and Executive Vice President and Chief Financial Officer James Lusk.
On Tuesday, March 8, 2011, at 9:00 a.m. (EST), ABM will host a live webcast of remarks by President and Chief Executive Officer Henrik Slipsager and Executive Vice President and Chief Financial Officer James Lusk.
The webcast will be accessible at: http://investor.abm.com/eventdetail.cfm?eventid=93462
Listeners are asked to be online at least 15 minutes early to register, as well as to download
and install any complimentary audio software that might be required.
Following the call, the webcast will be available at this URL for a period of 90 days.
In addition to the webcast, a limited number of toll-free telephone lines will also be available
for listeners who are among the first to call (877) 664-7395 within 15 minutes before the event.
Telephonic replays will be accessible during the period from two hours to seven days after the call
by dialing (800) 642-1687 and then entering ID # 48477590.
Earnings Webcast Presentation
In connection with the webcast to discuss earnings (see above), a slide presentation related to earnings and operations will be available at the Company’s website at www.abm.com and can be accessed through the Investor Relations portion of ABM’s website by clicking on the “Presentations” tab.
In connection with the webcast to discuss earnings (see above), a slide presentation related to earnings and operations will be available at the Company’s website at www.abm.com and can be accessed through the Investor Relations portion of ABM’s website by clicking on the “Presentations” tab.
About ABM Industries Incorporated
ABM Industries Incorporated (NYSE:ABM), which operates through its subsidiaries (collectively “ABM”), is a leading provider of integrated facility services. With fiscal 2010 revenues of approximately $3.5 billion and nearly 100,000 employees, ABM provides janitorial, facility, engineering, parking and security services for thousands of commercial, industrial, government and retail clients across the United States and various international locations. ABM’s business services include ABM Janitorial Services, ABM Facility Services, ABM Engineering Services, Ampco System Parking and ABM Security Services. For more information, visit www.abm.com.
ABM Industries Incorporated (NYSE:ABM), which operates through its subsidiaries (collectively “ABM”), is a leading provider of integrated facility services. With fiscal 2010 revenues of approximately $3.5 billion and nearly 100,000 employees, ABM provides janitorial, facility, engineering, parking and security services for thousands of commercial, industrial, government and retail clients across the United States and various international locations. ABM’s business services include ABM Janitorial Services, ABM Facility Services, ABM Engineering Services, Ampco System Parking and ABM Security Services. For more information, visit www.abm.com.
Cautionary Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements that set forth management’s anticipated results based on management’s current plans and assumptions. Any number of factors could cause the Company’s actual results to differ materially from those anticipated. Factors that could cause actual results to differ include but are not limited to the following: (1) risks relating to our acquisition of The Linc Group LLC (“Linc”), including risks relating to reductions in government spending on outsourced services as well as payment delays may adversely affect a significant portion of revenues generated by government contracts, and political and compliance risks in non-U.S. areas in which it operates may adversely affect our operations; (2) our acquisition strategy may adversely impact our results of operations; (3) intense competition can constrain our ability to gain business, as well as our profitability; (4) we are subject to volatility associated with high deductibles
This press release contains forward-looking statements that set forth management’s anticipated results based on management’s current plans and assumptions. Any number of factors could cause the Company’s actual results to differ materially from those anticipated. Factors that could cause actual results to differ include but are not limited to the following: (1) risks relating to our acquisition of The Linc Group LLC (“Linc”), including risks relating to reductions in government spending on outsourced services as well as payment delays may adversely affect a significant portion of revenues generated by government contracts, and political and compliance risks in non-U.S. areas in which it operates may adversely affect our operations; (2) our acquisition strategy may adversely impact our results of operations; (3) intense competition can constrain our ability to gain business, as well as our profitability; (4) we are subject to volatility associated with high deductibles
-3-
for certain insurable risks; (5) an increase in costs that we cannot pass on
to clients could affect our profitability; (6) we provide our services pursuant to agreements which
are cancelable by either party upon 30 to 90 days’ notice; (7) our success depends on our ability
to preserve our long-term relationships with clients; (8) we incur
significant accounting and other control costs that reduce profitability; (9) a decline in
commercial office building occupancy and rental rates could affect our revenues and profitability;
(10) deterioration in economic conditions in general could further reduce the demand for facility
services and, as a result, reduce our earnings and adversely affect our financial condition; (11)
the financial difficulties or bankruptcy of one or more of our major clients could adversely affect
results; (12) we are subject to risks relating to foreign currency fluctuations and foreign
exchange exposure; (13) our ability to operate and pay our debt obligations depends upon our access
to cash; (14) because ABM conducts business operations through operating subsidiaries, we depend on
those entities to generate the funds necessary to meet financial obligations; (15) that portion of
our revenues which are generated from international operations are subject to political risks and
changes in socio-economic conditions, laws and regulations, including labor, monetary and fiscal
policies, which could negatively impact our ability to operate and grow our business in the
international arena; (16) certain future declines or fluctuations in the fair value of our
investments in auction rate securities that are deemed other-than-temporarily impaired could
negatively impact our earnings; (17) uncertainty in the credit markets and the financial services
industry may impact our ability to collect receivables on a timely basis and may negatively impact
our cash flow; (18) any future increase in the level of debt or in interest rates can affect our
results of operations; (19) an impairment charge could have a material adverse effect on our
financial condition and results of operations; (20) we are defendants in several class and
representative actions or other lawsuits alleging various claims that could cause us to incur
substantial liabilities; (21) since we are an attractive employer for recent émigrés to this
country and many of our jobs are filled by such, changes in immigration laws or enforcement actions
or investigations under such laws could significantly and adversely affect our labor force,
operations, financial results and reputation; (22) labor disputes could lead to loss of revenues or
expense variations; (23) federal health care reform legislation may adversely affect our business
and results of operations; (24) we participate in multi-employer defined benefit plans which could
result in substantial liabilities being incurred; and (25) natural disasters or acts of terrorism
could disrupt our services. Additional information regarding these and other risks and
uncertainties the Company faces is contained in the Company’s Annual Report on Form 10-K for the
year ended October 31, 2010 and in other reports we file from time to time with the Securities and
Exchange Commission. We undertake no obligation to publicly update forward-looking statements,
whether as a result of new information, future events or otherwise.
Use
of Non-GAAP Financial Information
To supplement ABM’s consolidated financial information, the Company has presented income from continuing operations, as adjusted for items impacting comparability, for the first quarter of fiscal years 2011 and 2010. The Company also presents guidance for fiscal year 2011, as adjusted. 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 and ABM’s marketplace performance. In addition, the Company has presented earnings before interest, taxes, depreciation and amortization and excluding discontinued operations and items impacting comparability (adjusted EBITDA) for the first quarter of fiscal years 2011 and 2010. Adjusted EBITDA is among the indicators management uses as a basis for planning and forecasting future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial statements prepared in accordance with generally accepted accounting principles in the United States. (See accompanying financial tables for supplemental financial data and corresponding reconciliations to certain GAAP financial measures.)
To supplement ABM’s consolidated financial information, the Company has presented income from continuing operations, as adjusted for items impacting comparability, for the first quarter of fiscal years 2011 and 2010. The Company also presents guidance for fiscal year 2011, as adjusted. 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 and ABM’s marketplace performance. In addition, the Company has presented earnings before interest, taxes, depreciation and amortization and excluding discontinued operations and items impacting comparability (adjusted EBITDA) for the first quarter of fiscal years 2011 and 2010. Adjusted EBITDA is among the indicators management uses as a basis for planning and forecasting future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial statements prepared in accordance with generally accepted accounting principles in the United States. (See accompanying financial tables for supplemental financial data and corresponding reconciliations to certain GAAP financial measures.)
###
-4-
Financial Schedules
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
| Quarter Ended January 31, | Increase | |||||||||||
| (In thousands, except per share data) | 2011 | 2010 | (Decrease) | |||||||||
Revenues |
$ | 1,029,169 | $ | 869,884 | 18.3 | % | ||||||
Expenses |
||||||||||||
Operating |
927,760 | 782,101 | 18.6 | % | ||||||||
Selling, general and administrative |
79,200 | 62,802 | 26.1 | % | ||||||||
Amortization of intangible assets |
5,293 | 2,775 | 90.7 | % | ||||||||
Total expenses |
1,012,253 | 847,678 | 19.4 | % | ||||||||
Operating profit |
16,916 | 22,206 | (23.8 | )% | ||||||||
Income from unconsolidated affiliates |
787 | — | NM* | |||||||||
Interest expense |
(4,046 | ) | (1,215 | ) | 233.0 | % | ||||||
Income from
continuing operations before income taxes |
13,657 | 20,991 | (34.9 | )% | ||||||||
Provision for income taxes |
(5,252 | ) | (8,155 | ) | (35.6 | )% | ||||||
Income from continuing operations |
8,405 | 12,836 | (34.5 | )% | ||||||||
Loss from discontinued operations, net of taxes |
(15 | ) | (61 | ) | NM* | |||||||
Net Income |
$ | 8,390 | $ | 12,775 | (34.3 | )% | ||||||
Net Income Per Common Share — Basic |
||||||||||||
Income from continuing operations |
$ | 0.16 | $ | 0.25 | (36.4 | )% | ||||||
Loss from discontinued operations |
— | — | NM* | |||||||||
Net Income |
$ | 0.16 | $ | 0.25 | (36.4 | )% | ||||||
Net Income Per Common Share — Diluted |
||||||||||||
Income from continuing operations |
$ | 0.16 | $ | 0.24 | (33.7 | )% | ||||||
Loss from discontinued operations |
— | — | NM* | |||||||||
Net Income |
$ | 0.16 | $ | 0.24 | (33.7 | )% | ||||||
| * | Not Meaningful |
Average Common And Common Equivalent Shares |
||||||||
Basic |
52,839 | 51,821 | ||||||
Diluted |
53,893 | 52,548 | ||||||
Dividends Declared Per Common Share |
$ | 0.140 | $ | 0.135 |
- 5 -
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
| Quarter Ended January 31, | ||||||||
| (In thousands) | 2011 | 2010 | ||||||
Net cash provided by (used in) continuing operating activities |
258 | (12,220 | ) | |||||
Net cash provided by discontinued operating activities |
1,039 | 3,307 | ||||||
Net cash provided by (used in) operating activities |
$ | 1,297 | $ | (8,913 | ) | |||
Net cash used in investing activities |
$ | (297,987 | ) | $ | (6,924 | ) | ||
Proceeds from exercises of stock options
(including income tax benefit) |
5,731 | 1,251 | ||||||
Dividends paid |
(7,398 | ) | (6,992 | ) | ||||
Deferred financing costs paid |
(4,991 | ) | — | |||||
Borrowings from line of credit |
430,500 | 131,000 | ||||||
Repayment of borrowings from line of credit |
(141,000 | ) | (131,500 | ) | ||||
Changes in book cash overdrafts |
5,767 | 9,102 | ||||||
Net cash provided by financing activities |
$ | 288,609 | $ | 2,861 | ||||
-6-
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
| January 31, | October 31, | |||||||
| (In thousands) | 2011 | 2010 | ||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 31,365 | $ | 39,446 | ||||
Trade accounts receivable, net |
574,532 | 450,513 | ||||||
Prepaid income taxes |
1,516 | 1,498 | ||||||
Current assets of discontinued operations |
3,705 | 4,260 | ||||||
Prepaid expenses |
49,151 | 41,306 | ||||||
Notes receivable and other |
26,525 | 20,402 | ||||||
Deferred income taxes, net |
44,820 | 46,193 | ||||||
Insurance recoverables |
5,138 | 5,138 | ||||||
Total current assets |
736,752 | 608,756 | ||||||
Non-current assets of discontinued operations |
830 | 1,392 | ||||||
Insurance deposits |
36,177 | 36,164 | ||||||
Other investments and long-term receivables |
3,845 | 4,445 | ||||||
Deferred income taxes, net |
51,578 | 51,068 | ||||||
Insurance recoverables |
70,960 | 70,960 | ||||||
Other assets |
67,679 | 37,869 | ||||||
Investments in auction rate securities |
20,910 | 20,171 | ||||||
Investments in unconsolidated affiliates |
12,016 | — | ||||||
Property, plant and equipment, net |
66,176 | 58,088 | ||||||
Other intangible assets, net |
162,398 | 65,774 | ||||||
Goodwill |
726,518 | 593,983 | ||||||
Total assets |
$ | 1,955,839 | $ | 1,548,670 | ||||
Liabilities |
||||||||
Trade accounts payable |
$ | 134,447 | $ | 78,928 | ||||
Accrued liabilities |
||||||||
Compensation |
98,019 | 89,063 | ||||||
Taxes — other than income |
27,320 | 17,663 | ||||||
Insurance claims |
76,500 | 77,101 | ||||||
Other |
82,960 | 70,119 | ||||||
Income taxes payable |
1,334 | 977 | ||||||
Total current liabilities |
420,580 | 333,851 | ||||||
Income taxes payable |
30,653 | 29,455 | ||||||
Line of credit |
430,000 | 140,500 | ||||||
Retirement plans and other |
55,445 | 34,626 | ||||||
Insurance claims |
270,272 | 271,213 | ||||||
Total liabilities |
1,206,950 | 809,645 | ||||||
Stockholders’ Equity |
748,889 | 739,025 | ||||||
Total liabilities and
stockholders’ equity |
$ | 1,955,839 | $ | 1,548,670 | ||||
-7-
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
| Quarter Ended January 31, | Increase | |||||||||||
| (In thousands) | 2011 | 2010 | (Decrease) | |||||||||
Revenues |
||||||||||||
Janitorial |
$ | 594,606 | $ | 576,058 | 3.2 | % | ||||||
Engineering |
192,648 | 97,372 | 97.8 | % | ||||||||
Parking |
152,866 | 112,588 | 35.8 | % | ||||||||
Security |
88,756 | 83,597 | 6.2 | % | ||||||||
Corporate |
293 | 269 | 8.9 | % | ||||||||
| $ | 1,029,169 | $ | 869,884 | 18.3 | % | |||||||
Operating Profit |
||||||||||||
Janitorial |
$ | 29,864 | $ | 33,801 | (11.6 | )% | ||||||
Engineering |
7,450 | 5,275 | 41.2 | % | ||||||||
Parking |
4,734 | 5,026 | (5.8 | )% | ||||||||
Security |
1,301 | 1,346 | (3.3 | )% | ||||||||
Corporate |
(26,433 | ) | (23,242 | ) | (13.7 | )% | ||||||
Operating profit |
16,916 | 22,206 | (23.8 | )% | ||||||||
Income from unconsolidated affiliates |
787 | — | NM* | |||||||||
Interest expense |
(4,046 | ) | (1,215 | ) | 233.0 | % | ||||||
Income from
continuing operations before income taxes |
$ | 13,657 | $ | 20,991 | (34.9 | )% | ||||||
| * | Not Meaningful |
-8-
ABM Industries Incorporated and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands, except per share data)
| Quarter Ended January 31, | ||||||||
| 2011 | 2010 | |||||||
Reconciliation of Adjusted Income from Continuing
Operations to Net Income |
||||||||
Adjusted Income from Continuing Operations |
$ | 11,682 | $ | 14,040 | ||||
Items Impacting Comparability, net of taxes |
(3,277 | ) | (1,204 | ) | ||||
Income from Continuing Operations |
8,405 | 12,836 | ||||||
Loss from Discontinued Operations |
(15 | ) | (61 | ) | ||||
Net Income |
$ | 8,390 | $ | 12,775 | ||||
Reconciliation of Adjusted Income from Continuing
Operations to Income from Continuing Operations |
||||||||
Adjusted Income from Continuing Operations |
$ | 11,682 | $ | 14,040 | ||||
Items Impacting Comparability: |
||||||||
Corporate Initiatives (a) |
— | (864 | ) | |||||
Acquistion Costs |
(4,124 | ) | (1,106 | ) | ||||
Linc Purchase Accounting Adjustment |
(280 | ) | — | |||||
Litigation Contingency |
(920 | ) | — | |||||
Total Items Impacting Comparability |
(5,324 | ) | (1,970 | ) | ||||
Income Taxes Benefit |
2,047 | 766 | ||||||
Items Impacting Comparability, net of taxes |
(3,277 | ) | (1,204 | ) | ||||
Income from Continuing Operations |
$ | 8,405 | $ | 12,836 | ||||
Reconciliation of Adjusted EBITDA to Net Income |
||||||||
Adjusted EBITDA |
$ | 35,701 | $ | 32,669 | ||||
Items Impacting Comparability |
(5,324 | ) | (1,970 | ) | ||||
Discontinued Operations |
(15 | ) | (61 | ) | ||||
Income Tax |
(5,252 | ) | (8,155 | ) | ||||
Interest Expense |
(4,046 | ) | (1,215 | ) | ||||
Depreciation and Amortization |
(12,674 | ) | (8,493 | ) | ||||
Net Income |
$ | 8,390 | $ | 12,775 | ||||
| (a) | Corporate initiatives includes: (i) costs associated with the implementation of a new payroll and human
resources information system, (ii) the upgrade of the Company’s accounting system, (iii) the completion of the
corporate move from San Francisco, and (iv) the integration costs associated with OneSource. |
-9-
(Continued)
Reconciliation of Adjusted Income from Continuing Operations per Diluted
Share to Income from Continuing Operations per Diluted Share
Share to Income from Continuing Operations per Diluted Share
| Quarter Ended January 31, | ||||||||
| 2011 | 2010 | |||||||
Adjusted Income from Continuing
Operations per Diluted Share |
$ | 0.22 | $ | 0.27 | ||||
Items Impacting Comparability, net of
taxes |
(0.06 | ) | (0.03 | ) | ||||
Income from Continuing Operations
per Diluted Share |
$ | 0.16 | $ | 0.24 | ||||
Diluted Shares |
53,893 | 52,548 | ||||||
-10-
ABM Industries Incorporated and Subsidiaries
Reconciliation of Estimated Adjusted Income from Continuing Operations per Diluted Share to Income from Continuing Operations per Diluted Share for the Year Ending October 31, 2011
Reconciliation of Estimated Adjusted Income from Continuing Operations per Diluted Share to Income from Continuing Operations per Diluted Share for the Year Ending October 31, 2011
| Year Ending October 31, 2011 | ||||||||
| Low Estimate | High Estimate | |||||||
| (per diluted share) | ||||||||
Adjusted Income from Continuing Operations per
Diluted Share |
$ | 1.43 | $ | 1.53 | ||||
Adjustments to Income from Continuing Operations (a) |
(0.20 | ) | (0.20 | ) | ||||
Income from Continuing Operations per Diluted Share |
$ | 1.23 | $ | 1.33 | ||||
| (a) | Adjustments to income from continuing operations are expected to include transaction and integration costs associated
with the acquisition of The Linc Group (TLG) and other unique items impacting comparability. |
-11-
Exhibit 99.2
| First Quarter 2011 Investor Conference Call March 8, 2011 |
| Agenda 1 Introduction of Participants | Cautionary Legal Statements 2 First Quarter 2011 Highlights 3 Review of Key Financial Metrics 4 First Quarter 2011 Operating Results 5 Fiscal 2011 Guidance Update |
| Forward Looking Statement This presentation contains forward-looking statements that set forth management's anticipated results based on management's current plans and assumptions. Any number of factors could cause the Company's actual results to differ materially from those anticipated. Factors that could cause actual results to differ include but are not limited to the following: (1) risks relating to our acquisition of The Linc Group LLC ("Linc"), including risks relating to reductions in government spending on outsourced services as well as payment delays may adversely affect a significant portion of revenues generated by government contracts, and political and compliance risks in non-U.S. areas in which it operates may adversely affect our operations; (2) our acquisition strategy may adversely impact our results of operations; (3) intense competition can constrain our ability to gain business, as well as our profitability; (4) we are subject to volatility associated with high deductibles for certain insurable risks; (5) an increase in costs that we cannot pass on to clients could affect our profitability; (6) we provide our services pursuant to agreements which are cancelable by either party upon 30 to 90 days' notice; (7) our success depends on our ability to preserve our long-term relationships with clients; (8) we incur significant accounting and other control costs that reduce profitability; (9) a decline in commercial office building occupancy and rental rates could affect our revenues and profitability; (10) deterioration in economic conditions in general could further reduce the demand for facility services and, as a result, reduce our earnings and adversely affect our financial condition; (11) the financial difficulties or bankruptcy of one or more of our major clients could adversely affect results; (12) we are subject to risks relating to foreign currency fluctuations and foreign exchange exposure; (13) our ability to operate and pay our debt obligations depends upon our access to cash; (14) because ABM conducts business operations through operating subsidiaries, we depend on those entities to generate the funds necessary to meet financial obligations; (15) that portion of our revenues which are generated from international operations are subject to political risks and changes in socio-economic conditions, laws and regulations, including labor, monetary and fiscal policies, which could negatively impact our ability to operate and grow our business in the international arena; (16) certain future declines or fluctuations in the fair value of our investments in auction rate securities that are deemed other-than-temporarily impaired could negatively impact our earnings; (17) uncertainty in the credit markets and the financial services industry may impact our ability to collect receivables on a timely basis and may negatively impact our cash flow; (18) any future increase in the level of debt or in interest rates can affect our results of operations; (19) an impairment charge could have a material adverse effect on our financial condition and results of operations; (20) we are defendants in several class and representative actions or other lawsuits alleging various claims that could cause us to incur substantial liabilities; (21) since we are an attractive employer for recent emigres to this country and many of our jobs are filled by such, changes in immigration laws or enforcement actions or investigations under such laws could significantly and adversely affect our labor force, operations, financial results and our reputation; (22) labor disputes could lead to loss of revenues or expense variations; (23) federal health care reform legislation may adversely affect our business and results of operations; (24) we participate in multi-employer defined benefit plans which could result in substantial liabilities being incurred; and (25) natural disasters or acts of terrorism could disrupt our services. Additional information regarding these and other risks and uncertainties the Company faces is contained in the Company's Annual Report on Form 10-K for the year ended October 31, 2010 and in other reports we file from time to time with the Securities and Exchange Commission. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise. |
| Statements Relating to Non-GAAP Financial Measures During the course of these presentations, certain non- GAAP financial measures described as "Adjusted EBITDA," "Adjusted Income from Continuing Operations," and "Adjusted Income from Continuing Operations per Diluted Share" that were not prepared in accordance with U.S. GAAP will be presented. A reconciliation of these non-GAAP financial measures to GAAP financial measures is available on the Company's website, www.abm.com, under the "Investor Relations" tab. |
| First Quarter 2011 Highlights Financial results slightly exceeded Company's budget for first quarter Revenue from recent acquisitions contributed to 18% year-over-year top-line growth and first ever fiscal quarter surpassing $1 billion in revenue Linc Group accretive, excluding transaction costs, synergies on schedule and integration moving forward as planned Sales activity remains strong, with new business starting in the Northeast and slight overall improvement in organic growth Paid 179th consecutive dividend |
| Results Synthesis - Key Financial Metrics Net Income Net Income of $8.4 million , down 34% as a result of transaction costs associated with the acquisition of The Linc Group, one additional day of labor expense, and higher interest and amortization expenses resulting from acquisitions completed in 2010. These costs were partially offset by operating profits from the additional revenue generated from these acquisitions Adjusted EBITDA Adjusted EBITDA of $35.7 million was $3.0 million, or 9.3%, higher than Q1 2010 despite the one additional day of labor expense related to fixed price contracts , higher state unemployment taxes and unanticipated costs associated with snow removal Cash Flow Cash flows provided by operating activities, including discontinued operations, increased $10.2 million to $1.3 million NM = Not Meaningful Cash Flow from Operations (in millions) |
| Select Balance Sheet Information Days sales outstanding for first quarter were 50 days. Down 1 day on a year- over-year basis and up three days sequentially. Insurance comparison Comparison of working capital and net trade receivables (In thousands) (In thousands) (In thousands) |
| Q1 2011 Results Synthesis - Division Revenue1 Revenues of $1,028.9M were $127.8M and $159.3M better than Q4 2010 and Q1 2010, respectively. First time in Company's history quarterly revenue exceeds $1 billion Includes $156.1M contributed from Linc, L&R and Diversco acquisitions Janitorial revenues up organically on year-over-year basis for first time in eight quarters Sales activity levels remain strong 1Excludes Corporate |
| Q1 2011 Results Synthesis - Operating Profits1 Operating profit, excluding corporate, of $43.3 million was $2.1 million, or 4.6%, lower than Q1 2010. Operations impacted by one additional work day, higher SUI costs and snow removal costs, partly offset by profits from acquisitions Janitorial operating profit impacted by $3.7 million from one additional work day, higher SUI costs of $0.3 million, and snow removal costs primarily in the Northeast totaling $0.7 million Engineering profit up $2.2 million resulting from increase in revenues from Linc acquisition Snow removal costs and higher SUI costs, adversely impacted Parking's profit by approximately $0.6 million compared to the prior year first quarter Security impacted by higher SUI costs of $0.2 million compared to first quarter 2010 1Excludes Corporate |
| Fiscal 2011 Outlook Summary - Q1 Update Reaffirming Guidance for Fiscal Year 2011 Net Income of $1.23 to $1.33 per diluted share Adjusted Income from Continuing Operations of $1.43 to $1.53 per diluted share Continue to anticipate gradual improvement in organic revenue Higher leverage ratio and borrowing rates will continue to generate significant year-over- year increase in interest expense. Continue to expect increase of $10 million to $12 million for the fiscal year Acquisition of The Linc Group slightly accretive, excluding transaction and integration expenses Higher amortization expense and interest expense offsetting majority of operating profit Transaction and integration expense of $8 million to $10 million to be included in one-time items One additional work day for FY2011; impact of $3.5 million to $4.5 million pre-tax One more day in Q1; One less day in Q2; and one more day in Q4 Expect operating cash flow to remain strong but lower year-over-year OneSource NOL's diminishing. Cash taxes estimated to be from $20 million to $25 million Continue to anticipate year-over-year increase in SUI pre-tax expense of $6 million to $7 million Effective tax rate of 39% to 40% |
| Appendix Unaudited Reconciliation of non-GAAP Financial Measures |
| Unaudited Reconciliation of non-GAAP Financial Measures (in thousands) |
| Unaudited Reconciliation of non-GAAP Financial Measures (in thousands, except per share data) |
| Unaudited Reconciliation of non-GAAP Financial Measures |
Minimum 15 minutes delayed. Source: LSEG