Third Quarter 2024 Earnings Presentation
September 6, 2024
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 third quarter and nine months 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 third quarter and nine months of fiscal years 2024 and 2023. Adjusted earnings per share and adjusted EBITDA are 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 parking management reimbursement revenue. We cannot provide a reconciliation of forward-lookingnon-GAAP adjusted earnings per share and 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.
3
Q3 2024 Review
FINANCIAL RESULTS
- Revenue of $2.1B
-
- 3% organic growth
- Net income of $4.7M
- Adjusted net income(1) of $59.5M
- Adjusted EBITDA(1) of $128.1M
- GAAP EPS of $0.07, and adjusted EPS(1) of $0.94
- Adj. EBITDA margin(1) of 6.4%
- Operating cash flow of $79.5M
- Free cash flow of $64.1M(1)
DEMAND ENVIRONMENT
- B & I's diversification and focus on Class A properties helping to mitigate lingering commercial real estate ("CRE") softness; Signs of stabilization in CRE
- Broad-baseddemand in M &D
- Aviation benefiting from healthy travel markets and new client wins
- Education remains stable
-
Strong demand for microgrids, and data center related services in Technical
Solutions
HIGHLIGHTS
- New wins across the portfolio:
-
- Auburn University (EDU)
- Multinational UK-based energy company (B&I)
- Landmark office building in NYC (B&I)
- Intuit Dome in LA (B&I)
- Major EV manufacturer (M&D)
- Acquired Quality Uptime Services, a leader in uninterrupted power supply system and battery maintenance
- Raised full-year outlook for adjusted EPS to $3.48 - $3.55 from $3.40 - $3.50
|
(1) Please refer to the appendix for a reconciliation of GAAP to non-GAAP measures |
4 |
Q3 2024 Revenue
SEGMENT GROWTH RATES
$ in millions
24.9%(1)
|
12.8% |
4.2% |
-1.2%
-1.1%
- Revenue increased $66M to $2.1B
- 3% organic growth
- Modest impact from acquisition
- Double-digitorganic growth in Aviation and Technical Solutions
- B&I remains resilient
|
(1) Comprised of 20.0% organic revenue growth and 4.9% revenue growth from acquisition |
5 |
Q3 2024 Profitability
$ in millions
|
$98.1 |
NET INCOME |
|
$52.8 |
$59.5 |
||||
|
$4.7 |
|||||
|
GAAP Net Income |
Adj. Net Income |
||||
|
Q3 2023 |
Q3 2024 |
||||
EARNINGS PER SHARE(1)
$1.47
|
$0.94 |
||||
|
$0.79 |
||||
|
$0.07 |
||||
|
GAAP EPS |
Adjusted EPS |
|||
|
Q3 2023 |
Q3 2024 |
|||
|
• Decreases in GAAP net income |
|
and GAAP EPS largely reflect a |
|
$73M YoY impact from |
|
adjustments to the fair value of |
|
contingent consideration, and the |
|
absence of an Employee |
|
Retention Credit of $22M |
|
recognized in the prior period |
|
• Adjustment reflects |
|
Ravenvolt's strong 2024 |
|
performance and |
|
outlook, and increased |
|
likelihood of a cash payout |
|
$ in millions |
ADJUSTED EBITDA(1) |
|
$125.3 |
$128.1 |
|
Q3 2023 |
Q3 2024 |
ADJ. EBITDA MARGIN(1)
6.4%6.4%
|
Q3 2023 |
Q3 2024 |
|
under earnout provision of |
|
acquisition agreement |
|
• Increases in adj. net income and |
|
adj. EBITDA driven by higher |
|
segment earnings, partially offset |
|
by higher corporate investments |
|
• GAAP EPS and adjusted EPS |
|
positively impacted by lower |
|
share count |
(1) Please refer to the appendix for a reconciliation of GAAP to non-GAAP measures.
6
Q3 2024 Segment Performance
BUSINESS & INDUSTRY
AVIATION
$ in millions
|
Revenue |
|
|
$1,021.4 |
$1,010.6 |
|
-1.1% |
|
|
Q3 2023 |
Q3 2024 |
Operating Profit &
|
Margin |
|
|
$78.9 |
$77.8 |
|
7.7% |
7.7% |
|
Q3 2023 |
Q3 2024 |
|
Revenue |
|
|
$268.4 |
|
|
$238.0 |
12.8% |
|
Q3 2023 |
Q3 2024 |
$ in millions
Operating Profit &
Margin
|
$17.8 |
|
|
6.6% |
|
|
$11.7 |
|
|
4.9% |
|
|
Q3 2023 |
Q3 2024 |
|
• Revenue performance aided by client & geographic |
• Revenue growth driven by healthy travel markets and new |
|
clients coming on board |
|
|
diversification, and focus on Class A properties |
|
|
• Profit decline largely due to lower volume |
• Increases in profit and margin driven by operating leverage |
|
on higher volume and a positive business mix |
|
|
• Margin performance aided by strong cost controls |
|
7
Q3 2024 Segment Performance
MANUFACTURING & DISTRIBUTION
|
$ in millions |
EDUCATION
|
$ in millions |
TECHNICAL SOLUTIONS
$ in millions
|
Revenue |
Operating Profit |
||||||||||||
|
$381.9 |
$377.1 |
& Margin |
|||||||||||
|
$38.1 |
$40.9 |
||||||||||||
|
-1.2% |
|||||||||||||
|
10.9% |
|||||||||||||
|
10.0% |
|||||||||||||
|
Q3 2023 |
Q3 2024 |
Q3 2023 |
Q3 2024 |
||||||||||
|
Revenue |
Operating Profit |
||||||||||||
|
& Margin |
|||||||||||||
|
$219.1 |
$228.3 |
$18.0 |
|||||||||||
|
$15.9 |
|||||||||||||
|
4.2% |
|||||||||||||
|
7.9% |
|||||||||||||
|
7.3% |
|||||||||||||
|
Q3 2023 |
Q3 2024 |
Q3 2023 |
Q3 2024 |
||||||||||
|
Revenue |
||
|
$209.7 |
||
|
4.9% |
||
|
20.0% |
||
|
= Acq. |
$167.9 |
|
|
= Org. |
||
|
Q3 2023 |
Q3 2024 |
Operating Profit
& Margin
|
$17.9 |
|
|
8.5% |
|
|
$11.4 |
|
|
6.8% |
|
|
Q3 2023 |
Q3 2024 |
- Revenue decline driven by expected customer rebalancing, largely offset by expansions and new wins
- Profit and margin increases largely reflect favorable client mix
- Revenue growth driven by increased activity with certain cost-plus customers
- Profit and margin growth primarily due to increased volume and improved labor efficiency
- Revenue growth driven by microgrid, mission critical & power projects, and recent acquisition of Quality Uptime
- Profit and margin growth driven by volume increases, and lower acquisition-related amortization expense
8
Q3 2024 Leverage & Shareholder Returns
|
$ in millions |
LEVERAGE |
|
|
$1,600 |
4.0x |
|
|
$1,200 |
3.0x |
|
|
$800 |
2.0x |
|
|
$400 |
1.0x |
|
|
$0 |
0.0x |
|
|
Total Indebtedness (Incl. LCs) |
Leverage Ratio |
- Total indebtedness of $1.4B in Q3, up $65M from Q2 2024, driven by recent acquisition
- Leverage at 2.5X
- Year-to-datefree cash flow(1) of $152M, up $82M over the prior year period
|
$ in millions |
SHAREHOLDER RETURNS |
|||||
|
$150 |
||||||
|
$120 |
||||||
|
$110.0 |
||||||
|
$90 |
||||||
|
$60 |
||||||
|
$30 |
$27.1 |
$23.8 |
||||
|
$14.4 |
$14.5 |
$14.5 |
$14.0 |
$14.1 |
$14.1 |
$14.1 |
|
$0 |
||||||
|
Shares Repurchased |
Dividends Paid |
- $186M remaining capacity under share repurchase authorization
9
(1) Please refer to the appendix for a reconciliation of GAAP to non-GAAP measures.
Fiscal 2024 - Updated Outlook
|
Metric |
Updated |
Previous |
|||
|
Outlook |
Outlook |
||||
|
Adjusted net income per diluted share (1) |
$3.48 - $3.55 |
$3.40 |
- $3.50 |
||
|
Adjusted EBITDA Margin(1) |
No change |
6.2% - 6.5% |
|||
|
Tax rate (excl. discrete tax items and impact of non-taxable items) |
No change |
29% |
- 30% |
||
|
Interest expense |
No change |
$82M |
- $86M |
||
|
2024 Working Days |
|||||
|
Quarter |
Q1 |
Q2 |
Q3 |
Q4 |
|
|
Days |
66 |
64 |
66 |
66 |
|
|
Δ y-o-y |
0 |
+1 |
0 |
0 |
|
- When the company provides expectations for adjusted EPS and adjusted EBITDA margin on a forward-looking basis, a reconciliation of the differences between these non-GAAP expectations and the corresponding GAAP measures generally is not available without unreasonable effort. See "Use of Non-GAAP Financial Information" for additional information.
10
| Attention: This is an excerpt of the original content. To continue reading it, access the original document here. |
Attachments
Disclaimer
ABM Industries Incorporated published this content on 06 September 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on September 06, 2024 at 11:19:26 UTC.