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 5, 2012
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 (see General Instruction A.2. below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | 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 5, 2012, ABM Industries Incorporated (the “Company”) issued a press release announcing financial results related to the first quarter of fiscal year 2012. A copy of the press release is attached as Exhibit 99.1, which is incorporated into this item by reference.
Item 8.01. Other Events.
On March 5, 2012, the Company announced that the Board of Directors of the Company declared a quarterly dividend of $0.145 per share, payable on May 7, 2012 to stockholders of record on April 5, 2012. 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.
As disclosed in the press release attached as Exhibit 99.1, the Company will hold a live web cast on March 6, 2012 relating to the Company’s financial results for the first quarter of fiscal year 2012. 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 9.01. Financial Statements and Exhibits.
(c) Exhibits.
| 99.1 | Press Release issued by ABM Industries Incorporated, dated March 5, 2012, announcing financial results related to the first quarter of fiscal year 2012 and the declaration of a dividend payable May 7, 2012 to stockholders of record on April 5, 2012. | |
| 99.2 | Slides of ABM Industries Incorporated dated March 6, 2012. | |
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 5, 2012 | 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 5, 2012 announcing financial results related to the first quarter of fiscal year 2012, and the declaration of a dividend payable May 7, 2012 to stockholders of record on April 5, 2012. | |
| 99.2 | Slides of ABM Industries Incorporated dated March 6, 2012. | |
Exhibit 99.1
ABM REPORTS FIRST QUARTER 2012 FINANCIAL RESULTS AND
DECLARES QUARTERLY DIVIDEND
Company Closes in Excess of $100 Million in New Contracts
Net Cash from Continuing Operations Increases by $11.5 Million
| Quarter Ended | ||||||||||||
| (in millions, except per share data) | January 31, | Increase | ||||||||||
| (unaudited) |
2012 | 2011 | (Decrease) | |||||||||
| Revenues |
$ | 1,073.8 | $ | 1,029.2 | 4.3 | % | ||||||
| Net cash provided by continuing operating activities |
$ | 11.8 | $ | 0.3 | NM | * | ||||||
| Income from continuing operations |
$ | 10.6 | $ | 8.4 | 26.6 | % | ||||||
| Income from continuing operations per diluted share |
$ | 0.20 | $ | 0.16 | 25.0 | % | ||||||
| Net income |
$ | 10.6 | $ | 8.4 | 26.7 | % | ||||||
| Net income per diluted share |
$ | 0.20 | $ | 0.16 | 25.0 | % | ||||||
| Adjusted income from continuing operations |
$ | 11.8 | $ | 11.7 | 0.9 | % | ||||||
| Adjusted income from continuing operations per diluted share |
$ | 0.22 | $ | 0.22 | 0.0 | % | ||||||
| Adjusted EBITDA |
$ | 35.9 | $ | 35.7 | 0.6 | % | ||||||
| * | 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" (or "Adjusted EPS"). Refer to the accompanying financial tables for supplemental financial data and corresponding reconciliation of these non-GAAP financial measures to certain GAAP financial measures.)
New York, NY – Mar. 5, 2012 – ABM (NYSE:ABM), a leading provider of integrated facility solutions, today announced financial results for the fiscal 2012 first quarter that ended January 31, 2012. The Company reported that revenues for the first quarter of fiscal year 2012 reached $1.07 billion, a 4.3% increase compared to first quarter of fiscal year 2011 revenues of $1.03 billion, driven primarily by revenues associated with the acquisition of the former Linc Group. Net income and income from continuing operations in the first quarter of 2012 increased 26.7% to $10.6 million, or $0.20 per diluted share, compared to $8.4 million, or $0.16 per diluted share, in the 2011 first quarter. Net income benefitted from a reduction in transaction costs and sustained improvement in historical credits on client receivables partially offset by higher payroll-related expenses. Net cash flow from continuing operations for the first quarter increased to $11.8 million compared to $0.3 million in the year-ago quarter. Adjusted income from continuing operations for the fiscal 2012 first quarter was essentially flat at $11.8 million, or $0.22 per diluted share, compared to $11.7 million, or $0.22 per diluted share, in the first quarter of fiscal 2011. Adjusted EBITDA in the 2012 first quarter was $35.9 million compared to $35.7 million one year ago.
First Quarter Results and Impacts
“Our financial results for the quarter were in line with our expectations and consistent with last year,” ABM’s president and chief executive officer Henrik Slipsager said. “Facility Solutions (combined Linc and ABM Engineering operations) and Security generated year-over year increases in revenues, combined with essentially flat sales for Parking and Janitorial. Janitorial achieved slight growth from sustained improvement in billing processes and cost control measures partially offset by higher state unemployment insurance expense. Margins in Facility Solutions were lower than last year, primarily as a result of the comparative mix and timing of government projects. Total expenses as a percentage of revenues held steady as gross margins remained essentially flat year-over-year.”
James Lusk, executive vice president and chief financial officer, added: “The Company benefitted from investments we have made in improved infrastructure, operations and end-to-end processes as well as gains from prior tax-related investments. We were pleased with the strength of our net cash flow from continuing operations, which increased by $11.5 million compared to the year-ago quarter.”
Operations Review
Operating profit increased to $17.8 million pre-tax in the 2012 first quarter compared to $16.9 million pre-tax in the first quarter of fiscal year 2011. Operating profit in the first quarter of 2012 included a $2.9 million pre-tax increase in payroll-related expenses associated with higher federal and state unemployment insurance rates partially offset by a $2.7 million pre-tax benefit related to sustained improvement in historical credits on client receivables.
Slipsager said: “Our operations are achieving success with our vertical market strategies to grow business – as we closed more than $100 million in new contracts during the first quarter alone. We continue to benefit from the acquisition and integration of the former Linc business, particularly in the Energy sector, where we see increasing client demand, growth opportunity and new business. We enhanced our capabilities by focusing ABM Energy on implementing energy technologies designed to reduce clients’ energy consumption and operating costs while meeting the growing demand within the green and sustainable building market. Further, our industry-leading green cleaning capabilities played a part in helping us secure a global partnership with AEG, a world leader in sports and entertainment that is committed to environmentally safe products and services. The global partnership will expand the facility cleaning services we already provide to a number of marquee AEG venues. Underpinning these vertical market strategies, we also recently launched a new ABM brand that we will begin implementing globally. The new brand captures and conveys the breadth of services we now offer our clients. Many of these capabilities are on display on our rebranded website – where our clients, employees and others can connect to our new, interactive “Metropolis.” These strategies and initiatives will help us firmly establish our position as a leader in delivering integrated facilities solutions to our clients across multiple industries and geographies.”
Dividend
The Company also announced that the Board of Directors has declared a second quarter cash dividend of $0.145 per common share payable on May 7, 2012 to stockholders of record on April 5, 2012. This will be ABM’s 184th consecutive quarterly cash dividend.
Guidance
The Company reaffirms that full fiscal year 2012 income from continuing operations per diluted share is expected to be in the range of $1.26 to $1.36 and adjusted income from continuing operations per diluted share, for the same period, is expected to be in the range of $1.40 to $1.50. Fiscal year 2012 will have one extra day compared to fiscal 2011, which will occur in the third quarter, and is expected to negatively impact earnings per diluted share by $0.04 to $0.05. In addition, the effective tax rate for fiscal year 2012 is expected to be in the range of 39% to 42%, compared to 35% in fiscal year 2011.
Earnings Webcast
On Tuesday, March 6, at 8:30 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. A supplemental presentation will accompany the webcast and will be accessible through the Investor Relations portion of ABM’s website by clicking on the “Presentations” tab.
The webcast will be accessible at: http://investor.abm.com/eventdetail.cfm?eventid=110307
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) 647-2851 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 (855) 859-2056 and then entering ID #57229632.
Earnings Webcast Presentation
In connection with the webcast to discuss earnings (see above), a slide presentation related to earnings and operations will be available on the Company’s website at www.abm.com and can be accessed through the Investor Relations section of ABM’s website by clicking on the “Presentations” tab.
About ABM
ABM Industries Incorporated (NYSE:ABM), which operates through its subsidiaries (collectively “ABM”), is a leading provider of integrated facility solutions. With fiscal 2011 revenues of approximately $4.2 billion and nearly 100,000 employees, ABM provides commercial cleaning and maintenance, facility engineering, energy efficiency, parking, security and landscaping 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 Solutions, ABM Parking 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. These factors include but are not limited to the following: (1) we may not be able to achieve anticipated global growth due to various factors, including, but not limited to, an inability to make strategic acquisitions or compete internationally; our acquisition strategy may adversely impact our results of operations as we may not be able to achieve anticipated results from any given acquisition; and activities relating to integrating an acquired business may divert management’s focus on operational matters; (2) we are subject to intense competition that can constrain our ability to gain business, as well as our profitability; (3) any increases in costs that we cannot pass on to clients could affect our profitability; (4) we have high deductibles for certain insurable risks and, therefore, are subject to volatility associated with those risks; (5) we primarily provide our services pursuant to agreements which are cancelable by either party upon 30 to 90 days’ notice; (6) our success depends on our ability to preserve our long-term relationships with clients; (7) our international business exposes us to additional risks, including risks related to compliance with both U.S. and foreign laws; (8) we conduct some of our operations through joint ventures and our ability to do business may be affected by the failure of our joint venture partners to perform their obligations or the improper
conduct of employees, joint venture partners or agents; (9) significant delays or reductions in appropriations for our government contracts may negatively affect our business, and could have a material adverse effect on our financial position, results of operations or cash flows; (10) we incur significant accounting and other control costs that reduce profitability; (11) a decline in commercial office building occupancy and rental rates could affect our revenues and profitability; (12) deterioration in economic conditions in general could further reduce the demand for facility services and, as a result, could reduce our earnings and adversely affect our financial condition; (13) financial difficulties or bankruptcy of one or more of our major clients could adversely affect our results; (14) our ability to operate and pay our debt obligations depends upon our access to cash; (15) future declines in the fair value of our investments in auction rate securities could negatively impact our earnings; (16) uncertainty in the credit markets may negatively impact our costs of borrowing, our ability to collect receivables on a timely basis and our cash flow; (17) any future increase in the level of debt or in interest rates can affect our results of operations; (18) an impairment charge could have a material adverse effect on our financial condition and results of operations; (19) we are defendants in a number of class and representative actions or other lawsuits alleging various claims that could cause us to incur substantial liabilities; (20) federal health care reform legislation may adversely affect our business and results of operations; (21) changes in immigration laws or enforcement actions or investigations under such laws could significantly adversely affect our labor force, operations and financial results; (22) labor disputes could lead to loss of revenues or expense variations; (23) we participate in multi-employer defined benefit plans which could result in substantial liabilities being incurred; and (24) natural disasters or acts of terrorism could disrupt 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, 2011 and in other reports the Company files from time to time with the Securities and Exchange Commission.
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 2012 and 2011. The Company also presents guidance for fiscal year 2012, 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 as well as 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 2012 and 2011. 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.)
###
Contact:
| Investors & Analysts: |
David Farwell | Media: | Tony Mitchell | |||
| (212) 297-9792 | (212) 297-9828 | |||||
| dfarwell@abm.com | tony.mitchell@abm.com |
Financial Schedules
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
| Quarter Ended January 31, | Increase | |||||||||||
| (In thousands, except per share data) |
2012 | 2011 | (Decrease) | |||||||||
| Revenues |
$ | 1,073,785 | $ | 1,029,169 | 4.3 | % | ||||||
| Expenses |
||||||||||||
| Operating |
966,420 | 924,305 | 4.6 | % | ||||||||
| Selling, general and administrative |
84,020 | 82,655 | 1.7 | % | ||||||||
| Amortization of intangible assets |
5,549 | 5,293 | 4.8 | % | ||||||||
|
|
|
|
|
|
|
|||||||
| Total expenses |
1,055,989 | 1,012,253 | 4.3 | % | ||||||||
|
|
|
|
|
|
|
|||||||
| Operating profit |
17,796 | 16,916 | 5.2 | % | ||||||||
| Income from unconsolidated affiliates, net |
3,132 | 787 | 298.0 | % | ||||||||
| Interest expense |
(2,834 | ) | (4,046 | ) | (30.0 | )% | ||||||
|
|
|
|
|
|
|
|||||||
| Income from continuing operations before income taxes |
18,094 | 13,657 | 32.5 | % | ||||||||
| Provision for income taxes |
(7,454 | ) | (5,252 | ) | 41.9 | % | ||||||
|
|
|
|
|
|
|
|||||||
| Income from continuing operations |
10,640 | 8,405 | 26.6 | % | ||||||||
| Loss from discontinued operations, net of taxes |
(10 | ) | (15 | ) | NM | * | ||||||
|
|
|
|
|
|
|
|||||||
| Net Income |
$ | 10,630 | $ | 8,390 | 26.7 | % | ||||||
|
|
|
|
|
|
|
|||||||
| Net Income Per Common Share—Basic |
||||||||||||
| Income from continuing operations |
$ | 0.20 | $ | 0.16 | 25.0 | % | ||||||
| Loss from discontinued operations, net of taxes |
— | — | NM | * | ||||||||
|
|
|
|
|
|
|
|||||||
| Net Income |
$ | 0.20 | $ | 0.16 | 25.0 | % | ||||||
|
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|
|
|
|
|
|||||||
| Net Income Per Common Share—Diluted |
||||||||||||
| Income from continuing operations |
$ | 0.20 | $ | 0.16 | 25.0 | % | ||||||
| Loss from discontinued operations, net of taxes |
— | — | NM | * | ||||||||
|
|
|
|
|
|
|
|||||||
| Net Income |
$ | 0.20 | $ | 0.16 | 25.0 | % | ||||||
|
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|
|
|
|
|
|||||||
| * Not Meaningful |
||||||||||||
| Weighted-average common and common equivalent shares outstanding |
||||||||||||
| Basic |
53,499 | 52,839 | ||||||||||
| Diluted |
54,493 | 53,893 | ||||||||||
| Dividends Declared Per Common Share |
$ | 0.145 | $ | 0.140 | ||||||||
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
| Quarter Ended January 31, | ||||||||
| (In thousands) |
2012 | 2011 | ||||||
| Net cash provided by continuing operating activities |
11,789 | 258 | ||||||
| Net cash provided by discontinued operating activities |
202 | 1,039 | ||||||
|
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|
|
|
|||||
| Net cash provided by operating activities |
$ | 11,991 | $ | 1,297 | ||||
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|
|
|
|
|||||
| Acquisition of Linc (net of cash acquired) |
— | (292,178 | ) | |||||
| Other investing |
(11,244 | ) | (5,809 | ) | ||||
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|
|
|||||
| Net cash used in investing activities |
$ | (11,244 | ) | $ | (297,987 | ) | ||
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|
|||||
| Proceeds from exercises of stock options (including income tax benefit) |
2,241 | 5,731 | ||||||
| Dividends paid |
(7,746 | ) | (7,398 | ) | ||||
| Deferred financing costs paid |
(14 | ) | (4,991 | ) | ||||
| Borrowings from line of credit |
212,000 | 430,500 | ||||||
| Repayment of borrowings from line of credit |
(219,000 | ) | (141,000 | ) | ||||
| Changes in book cash overdrafts |
2,955 | 5,767 | ||||||
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|
|||||
| Net cash (used in) provided by financing activities |
$ | (9,564 | ) | $ | 288,609 | |||
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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
| January 31, | October 31, | |||||||
| (In thousands) |
2012 | 2011 | ||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 17,650 | $ | 26,467 | ||||
| Trade accounts receivable, net |
573,767 | 552,098 | ||||||
| Prepaid income taxes |
3,471 | 7,205 | ||||||
| Current assets of discontinued operations |
1,821 | 1,992 | ||||||
| Prepaid expenses |
50,764 | 41,823 | ||||||
| Notes receivable and other |
51,464 | 52,756 | ||||||
| Deferred income taxes, net |
35,083 | 40,565 | ||||||
| Insurance recoverables |
10,851 | 10,851 | ||||||
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|
|
|||||
| Total current assets |
744,871 | 733,757 | ||||||
| Insurance deposits |
31,720 | 35,974 | ||||||
| Other investments and long-term receivables |
5,989 | 5,798 | ||||||
| Deferred income taxes, net |
32,476 | 30,948 | ||||||
| Insurance recoverables |
59,802 | 59,759 | ||||||
| Other assets |
40,783 | 43,394 | ||||||
| Investments in auction rate securities |
18,147 | 15,670 | ||||||
| Investments in unconsolidated affiliates, net |
14,555 | 14,423 | ||||||
| Property, plant and equipment, net |
64,282 | 60,009 | ||||||
| Other intangible assets, net |
123,307 | 128,994 | ||||||
| Goodwill |
750,868 | 750,872 | ||||||
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|
|
|||||
| Total assets |
$ | 1,886,800 | $ | 1,879,598 | ||||
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|
|||||
| Liabilities |
||||||||
| Trade accounts payable |
$ | 130,156 | $ | 130,464 | ||||
| Accrued liabilities |
||||||||
| Compensation |
105,023 | 112,233 | ||||||
| Taxes - other than income |
27,753 | 19,144 | ||||||
| Insurance claims |
83,528 | 78,828 | ||||||
| Other |
102,836 | 102,220 | ||||||
| Income taxes payable |
367 | 307 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
449,663 | 443,196 | ||||||
| Income taxes payable |
37,805 | 38,236 | ||||||
| Line of credit |
293,000 | 300,000 | ||||||
| Retirement plans and other |
39,794 | 39,707 | ||||||
| Insurance claims |
261,379 | 262,573 | ||||||
|
|
|
|
|
|||||
| Total liabilities |
1,081,641 | 1,083,712 | ||||||
|
|
|
|
|
|||||
| Stockholders’ Equity |
805,159 | 795,886 | ||||||
|
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|
|
|
|||||
| Total liabilities and stockholders’ equity |
$ | 1,886,800 | $ | 1,879,598 | ||||
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|
|||||
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
| Quarter Ended January 31, | Increase | |||||||||||
| (In thousands) |
2012 | 2011 | (Decrease) | |||||||||
| Revenues |
||||||||||||
| Janitorial |
$ | 594,340 | $ | 594,606 | (0.0 | )% | ||||||
| Facility Solutions |
233,773 | 192,648 | 21.3 | % | ||||||||
| Parking |
153,450 | 152,866 | 0.4 | % | ||||||||
| Security |
91,982 | 88,756 | 3.6 | % | ||||||||
| Corporate |
240 | 293 | (18.1 | )% | ||||||||
|
|
|
|
|
|
|
|||||||
| $ | 1,073,785 | $ | 1,029,169 | 4.3 | % | |||||||
|
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|
|||||||
| Operating Profit |
||||||||||||
| Janitorial |
$ | 30,508 | $ | 29,864 | 2.2 | % | ||||||
| Facility Solutions |
6,365 | 7,450 | (14.6 | )% | ||||||||
| Parking |
4,750 | 4,734 | 0.3 | % | ||||||||
| Security |
845 | 1,301 | (35.0 | )% | ||||||||
| Corporate |
(24,672 | ) | (26,433 | ) | 6.7 | % | ||||||
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|
|
|
|
|
|||||||
| Operating profit |
17,796 | 16,916 | 5.2 | % | ||||||||
| Income from unconsolidated affiliates, net |
3,132 | 787 | 298.0 | % | ||||||||
| Interest expense |
(2,834 | ) | (4,046 | ) | (30.0 | )% | ||||||
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|||||||
| Income from continuing operations before income taxes |
$ | 18,094 | $ | 13,657 | 32.5 | % | ||||||
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|||||||
ABM Industries Incorporated and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands, except per share data)
| Quarter Ended January 31, | ||||||||
| 2012 | 2011 | |||||||
| Reconciliation of Adjusted Income from Continuing Operations to Net Income |
||||||||
| Adjusted income from continuing operations |
$ | 11,786 | $ | 11,682 | ||||
| Items impacting comparability, net of taxes |
(1,146 | ) | (3,277 | ) | ||||
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|
|||||
| Income from continuing operations |
10,640 | 8,405 | ||||||
| Loss from discontinued operations |
(10 | ) | (15 | ) | ||||
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|
|||||
| Net income |
$ | 10,630 | $ | 8,390 | ||||
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| Reconciliation of Adjusted Income from Continuing Operations to Income from Continuing Operations |
||||||||
| Adjusted income from continuing operations |
$ | 11,786 | $ | 11,682 | ||||
| Items impacting comparability: |
||||||||
| Corporate initiatives and other (a) |
(1,426 | ) | — | |||||
| Rebranding (b) |
(731 | ) | — | |||||
| U.S. Foreign Corrupt Practices Act investigation (c ) |
(1,873 | ) | — | |||||
| Gain from equity investment (d) |
2,081 | — | ||||||
| Linc purchase accounting |
— | (280 | ) | |||||
| Acquisition costs |
— | (4,124 | ) | |||||
| Litigation and other settlements |
— | (920 | ) | |||||
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|||||
| Total items impacting comparability |
(1,949 | ) | (5,324 | ) | ||||
| Income taxes benefit |
803 | 2,047 | ||||||
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|
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| Items impacting comparability, net of taxes |
(1,146 | ) | (3,277 | ) | ||||
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| Income from continuing operations |
$ | 10,640 | $ | 8,405 | ||||
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| Reconciliation of Adjusted EBITDA to Net Income |
||||||||
| Adjusted EBITDA |
$ | 35,913 | $ | 35,701 | ||||
| Items impacting comparability |
(1,949 | ) | (5,324 | ) | ||||
| Discontinued operations |
(10 | ) | (15 | ) | ||||
| Income taxes |
(7,454 | ) | (5,252 | ) | ||||
| Interest expense |
(2,834 | ) | (4,046 | ) | ||||
| Depreciation and amortization |
(13,036 | ) | (12,674 | ) | ||||
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| Net income |
$ | 10,630 | $ | 8,390 | ||||
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Reconciliation of Adjusted Income from Continuing Operations per Diluted
Share to Income from Continuing Operations per Diluted Share (Unaudited)
| Quarter Ended January 31, | ||||||||
| 2012 | 2011 | |||||||
| Adjusted income from continuing operations per diluted share |
$ | 0.22 | $ | 0.22 | ||||
| Items impacting comparability, net of taxes |
(0.02 | ) | (0.06 | ) | ||||
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| Income from continuing operations per diluted share |
$ | 0.20 | $ | 0.16 | ||||
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| Diluted shares |
54,493 | 53,893 | ||||||
| (a) | Corporate initiatives and other includes the integration costs associated with The Linc Group acquisition on December 1, 2010 and data center consolidation costs. |
| (b) | Represents costs related to the Company's branding initiative. |
| (c) | Includes legal and other costs incurred in connection with an internal investigation into a foreign entity affiliated with a joint venture. |
| (d) | The Company's share of a gain associated with property sales completed by one of its investments in a low income housing partnership. |
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, 2012
| Year Ending October 31, 2012 | ||||||||
| Low Estimate | High Estimate | |||||||
| (per diluted share) | ||||||||
| Adjusted income from continuing operations per diluted share |
$ | 1.40 | $ | 1.50 | ||||
| Adjustments to income from continuing operations (a) |
$ | (0.14 | ) | $ | (0.14 | ) | ||
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| Income from continuing operations per diluted share |
$ | 1.26 | $ | 1.36 | ||||
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| (a) | Adjustments to income from continuing operations are expected to include rebranding costs and other unique items impacting comparability. |
| First Quarter 2012 Investor Call NYSE: ABM March 6, 2012 |
| Agenda 2 1 Introduction & Overview | Henrik Slipsager, Chief Executive Officer 2 First Quarter 2012 Financial Review | Jim Lusk, Chief Financial Officer 3 First Quarter 2012 Operational Review | Henrik Slipsager, Chief Executive Officer 4 Fiscal 2012 Outlook | Jim Lusk, Chief Financial Officer Forward-Looking Statements and Non-GAAP Financial Information: Our discussions during this conference call will include forward-looking statements. Actual results could differ materially from those projected in the forward-looking statements. The factors that could cause actual results to differ are discussed in the Company's 2011 Annual Report on Form 10-K and in our 2012 reports on Form 10-Q and Form 8-K. These reports are available on our website at http://investor.abm.com/ under "SEC Filings". A description of factors that could cause actual results to differ is also set forth at the end of this presentation. Also, the discussion during this conference call will include certain financial measures that were not prepared in accordance with U.S. generally accepted accounting principles ("U.S. GAAP"). Reconciliations of those non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures can be found on the Investor Relations portion of our website at http://investor.abm.com and at the end of this presentation. 5 Questions and Answers |
| 2012 First Quarter Financial Highlights 3 Revenues up 4% year-over-year to $1.07 billion, a record for a first quarter Cash flow from continuing operations of $11.8 million, up $11.5 million year-over-year Net Income per diluted share of $0.20 up $0.04 or 25% Adjusted Income from Continuing Operations flat at $0.22 Achieved adjusted EBITDA of nearly $36 million Announced our 184th consecutive dividend |
| First Quarter Results Synthesis - Key Financial Metrics 4 Net Income Net Income of $10.6 million, up 27% or $2.2 million. First quarter of 2011 included $2.5 million of transaction costs associated with the Linc acquisition. In addition, the first quarter of 2012 benefited from a $1.6 million increase from sustained improvements in historical credits on client receivables. Offsetting these items was a $1.7 million increase in payroll related expenses associated with higher federal and state unemployment insurance rates Adjusted EBITDA1 Adjusted EBITDA of $35.9 million was $0.2 million higher. Operating profits were essentially flat year-over-year as new business and the benefit from improvements in historical credits on client receivables were offset by residual price compression from the third quarter of 2011, higher payroll related expenses, and lower contribution from Facility Solutions because of mix & timing on Government projects Cash Flow $11.8 million compared to $0.3 million. The increase of $11.5 million was driven primarily by timing of collections received from clients (CHART) 1 Reconciliation of Adjusted Income from Continuing Operations and Adjusted EBITDA in the appendix of this presentation |
| Cash Flow & Select Balance Sheet Information Insurance comparison Comparison of working capital and net trade receivables (In thousands) (In thousands) (In thousands) Cash Flow from Operating Activities (in millions) Days sales outstanding (DSO) for the first quarter were 50 days DSO down 1 day year-over- year and up 2 days sequentially (CHART) 5 |
| Facility Solutions Q1 2012 Results Synthesis - Revenues Revenues of $594 million, flat compared to 2011 Warm weather adversely impacted discretionary tag business, which was flat year-over-year Revenues up over 4% to $1.1 billion driven primarily by contribution from Linc acquisition Janitorial Services Parking & Shuttle Services Security Services Revenues up 21% to $234 million Linc acquisition contributed $36 million $5 million of revenues expected from US Government projects moved to Q2 Revenue of $153 million, flat compared to 2011 Canceled business combined with dispositions impacted revenues by $2 million Revenues of $92 million, up 4% due to new business 6 |
| Q1 2012 Results Synthesis - Operating Profits1 Janitorial's operating profit of $30.5 million, increased $0.6 million or 2.2%. There were a number of items impacting the operating performance in the quarter: sustained improvements in historical credits on client receivables were offset by higher payroll related taxes, residual price compression, and lower profit from tag related snow clean-up Operating profit for Facility Solutions, including joint ventures, decreased $0.8 million or 10% to $7.4 million, resulting from the comparative mix and timing of certain completed projects related primarily to Government Services Parking's operating profit of $4.8 million was flat year-over-year Operating profit for Security was lower by $0.5 million, as higher payroll related expenses offset gains from new business 1Excludes Corporate 2Includes $1.0 million and $0.8 million of Income from Unconsolidated Affiliates for fiscal 2012 and 2011, respectively. 7 |
| Q1 2012 Sales & Marketing Highlights Closed in excess of $100 million in new contracts Signed AEG contract, expanding existing relationship with sports and entertainment powerhouse Renamed Engineering to Facility Solutions, reflecting capability for providing integrated facility services Successfully introduced new Company logo and brand Upgraded website and launched Metropolis tool Chartered new unit - ABM Energy - to reduce client's energy consumption and operating costs 8 |
| Fiscal 2012 Outlook Summary Reaffirming guidance for fiscal year 2012 Anticipate Income from Continuing Operations of $1.26 to $1.36 per diluted share; and Adjusted Income from Continuing Operations of $1.40 to $1.50, which reflects higher expenses associated with payroll taxes (SUI & FUTA) and key initiatives to drive long-term growth Pre-tax $3.0 million to $4.0 million anticipated investments for strategic growth initiatives: Unified Workforce; ABM Energy; and Public Sourcing Additional key assumptions affecting Fiscal 2012 guidance One additional work day for FY2012; impact of approximately $4.0 million pre-tax. The one additional workday will occur in the third quarter Depreciation and Amortization expense of $52 million to $56 million Interest expense of $10 million to $12 million Expect seasonality trends to continue with the second half of the fiscal year much stronger than the first half, similar to fiscal 2011 Operating cash flow anticipated to remain strong but lower year-over-year OneSource NOL's diminishing. Cash taxes estimated to be approximately $24 million to $26 million Effective tax rate of 39% to 42%, reflecting the expiration of the Work Opportunity Tax Credits (WOTC), which were not extended by Congress 9 |
| 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. These factors include but are not limited to the following: we may not be able to achieve anticipated global growth due to various factors, including, but not limited to, an inability to make strategic acquisitions or compete internationally; our acquisition strategy may adversely impact our results of operations as we may not be able to achieve anticipated results from any given acquisition; and activities relating to integrating an acquired business may divert management's focus on operational matters; we are subject to intense competition that can constrain our ability to gain business, as well as our profitability; any increases in costs that we cannot pass on to clients could affect our profitability; we have high deductibles for certain insurable risks, and, therefore are subject to volatility associated with those risks; we primarily provide our services pursuant to agreements which are cancelable by either party upon 30 to 90 days' notice; our success depends on our ability to preserve our long-term relationships with clients; our international business exposes us to additional risks, including risks related to compliance with both U.S. and foreign laws; we conduct some of our operations through joint ventures and our ability to do business may be affected by the failure of our joint venture partners to perform their obligations or the improper conduct of employees, joint venture partners or agents; significant delays or reductions in appropriations for our government contracts may negatively affect our business, and could have a material adverse effect on our financial position, results of operations or cash flows; we incur significant accounting and other control costs that reduce profitability; a decline in commercial office building occupancy and rental rates could affect our revenues and profitability; deterioration in economic conditions in general could further reduce the demand for facility services and, as a result, could reduce our earnings and adversely affect our financial condition; financial difficulties or bankruptcy of one or more of our major clients could adversely affect our results; our ability to operate and pay our debt obligations depends upon our access to cash; future declines in the fair value of our investments in auction rate securities could negatively impact our earnings; uncertainty in the credit markets may negatively impact our costs of borrowing, our ability to collect receivables on a timely basis and our cash flow; any future increase in the level of debt or in interest rates can affect out results of operations; an impairment charge could have a material adverse effect on our financial condition and results of operations; we are defendants in a number of class and representative actions or other lawsuits alleging various claims that could cause us to incur substantial liabilities; federal health care reform legislation may adversely affect our business and results of operations; changes in immigration laws or enforcement actions or investigations under such laws could significantly adversely affect our labor force, operations and financial results; labor disputes could lead to loss of revenues or expense variations; we participate in multi-employer defined benefit plans which could result in substantial liabilities being incurred; and natural disasters or acts of terrorism could disrupt 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, 2011 and in other reports the Company files from time to time with the Securities and Exchange Commission. 10 |
| Appendix - Unaudited Reconciliation of non-GAAP Financial Measures |
| Unaudited Reconciliation of non-GAAP Financial Measures (in thousands) 12 ABM Industries Incorporated and Subsidiaries |
| Unaudited Reconciliation of non-GAAP Financial Measures (in thousands, except per share data) 13 ABM Industries Incorporated and Subsidiaries |
| Unaudited Reconciliation of non-GAAP Financial Measures 14 ABM Industries Incorporated and Subsidiaries Reconciliation of Estimated Adjusted Income from Continuing Operations per Diluted Share to Reconciliation of Estimated Adjusted Income from Continuing Operations per Diluted Share to Reconciliation of Estimated Adjusted Income from Continuing Operations per Diluted Share to Reconciliation of Estimated Adjusted Income from Continuing Operations per Diluted Share to 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, 2012 Income from Continuing Operations per Diluted Share for the Year Ending October 31, 2012 Income from Continuing Operations per Diluted Share for the Year Ending October 31, 2012 Income from Continuing Operations per Diluted Share for the Year Ending October 31, 2012 Income from Continuing Operations per Diluted Share for the Year Ending October 31, 2012 Year Ending October 31, 2012 Year Ending October 31, 2012 Year Ending October 31, 2012 Low Estimate High Estimate (per diluted share) (per diluted share) (per diluted share) Adjusted income from continuing operations per diluted share Adjusted income from continuing operations per diluted share $ 1.40 $ 1.50 Adjustments to income from continuing operations (a) $ (0.14) $ (0.14) Income from continuing operations per diluted share $ 1.26 $ 1.36 (a) Adjustments to income from continuing operations are expected to include rebranding costs and other unique items impacting comparability. (a) Adjustments to income from continuing operations are expected to include rebranding costs and other unique items impacting comparability. (a) Adjustments to income from continuing operations are expected to include rebranding costs and other unique items impacting comparability. (a) Adjustments to income from continuing operations are expected to include rebranding costs and other unique items impacting comparability. (a) Adjustments to income from continuing operations are expected to include rebranding costs and other unique items impacting comparability. |
Minimum 15 minutes delayed. Source: LSEG