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): June 2, 2010
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 June 2, 2010, ABM Industries Incorporated (the “Company”) issued a press release announcing financial results related to the second quarter of fiscal year 2010. 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 June 2, 2010, the Company announced that the Board of Directors of the Company declared a quarterly dividend of $0.135 per share, payable on August 2, 2010 to stockholders of record on July 1, 2010. 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 June 3, 2010 relating to the Company’s financial results for the second quarter of fiscal year 2010. 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 June 2, 2010, announcing financial results related to the second quarter of fiscal year 2010 and the declaration of a dividend payable August 2, 2010 to stockholders of record on July 1, 2010. |
| 99.2 | Slides of ABM Industries Incorporated, dated June 3, 2010. |
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: June 2, 2010
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 June 2, 2010, announcing financial results related the second quarter of fiscal year 2010 and the declaration of a dividend. |
| 99.2 | Slides of ABM Industries Incorporated, dated June 3, 2010. |
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 SECOND QUARTER 2010 FINANCIAL RESULTS,
DECLARES QUARTERLY DIVIDEND AND REAFFIRMS GUIDANCE
DECLARES QUARTERLY DIVIDEND AND REAFFIRMS GUIDANCE
Strong Net Operating Cash Flow from Continuing Operations
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| (in millions, | April 30, | Increase | April 30, | Increase | ||||||||||||||||||||
| except per share data) | 2010 | 2009 | (Decrease) | 2010 | 2009 | (Decrease) | ||||||||||||||||||
Revenues |
$ | 855.5 | $ | 855.7 | NM | * | $ | 1,725.3 | $ | 1,743.2 | (1.0 | )% | ||||||||||||
Net cash provided by continuing
operating activities |
$ | 50.0 | $ | 30.9 | 61.8 | % | $ | 37.7 | $ | 44.3 | (14.9 | )% | ||||||||||||
Net Income |
$ | 8.6 | $ | 12.8 | (32.9 | )% | $ | 21.4 | $ | 27.0 | (20.9 | )% | ||||||||||||
Net income per diluted share |
$ | 0.16 | $ | 0.25 | (36.0 | )% | $ | 0.41 | $ | 0.52 | (21.2 | )% | ||||||||||||
Adjusted EBITDA |
$ | 29.4 | $ | 36.1 | (18.5 | )% | $ | 62.0 | $ | 66.4 | (6.6 | )% | ||||||||||||
Income from continuing operations |
$ | 8.6 | $ | 13.0 | (33.9 | )% | $ | 21.5 | $ | 27.8 | (22.8 | )% | ||||||||||||
Income from continuing
operations per diluted share |
$ | 0.16 | $ | 0.25 | (36.0 | )% | $ | 0.41 | $ | 0.54 | (24.1 | )% | ||||||||||||
Adjusted income from continuing
operations |
$ | 11.9 | $ | 16.4 | (27.3 | )% | $ | 26.0 | $ | 29.4 | (11.6 | )% | ||||||||||||
Adjusted income from continuing
operations per diluted share |
$ | 0.23 | $ | 0.32 | (28.1 | )% | $ | 0.49 | $ | 0.57 | (14.0 | )% | ||||||||||||
| * | 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 — June 2, 2010 — ABM Industries Incorporated (NYSE:ABM) today announced revenues for
the second quarter of fiscal year 2010 of $855.5 million compared to second quarter of fiscal year
2009 revenues of $855.7 million. Net income for the second quarter of fiscal year 2010 was $8.6
million, a 32.9% decrease from $12.8 million in the second quarter of fiscal year 2009. Net income
per diluted share for the second quarter of fiscal year 2010 decreased 36.0% to $0.16 compared to
second quarter of fiscal year 2009 net income per diluted share of $0.25. Net income for the
second quarter of fiscal year 2010 was impacted by a $2.7 million after-tax expense ($0.05 per
diluted share) for a specific legal contingency; a $2.2 million after-tax expense ($0.04 per
diluted share) resulting from one additional day of labor expense in the second quarter of fiscal
year 2010 compared to the year-ago quarter; and higher than anticipated state unemployment
insurance expense of approximately $0.03 per diluted share.
“The Company’s adjusted earnings for the quarter are as anticipated and we continue to expect
year-over-year growth in the second half of the fiscal year,” said Henrik Slipsager, president and
chief executive officer, ABM Industries Incorporated. “Revenues were flat for the quarter and the
first six months of the fiscal year, pointing to signs of gradual improvement in the economic
climate compared to fiscal year 2009. Traditional seasonal reductions in labor expense in the
second half of the fiscal year combined with one less working day in the third quarter will
contribute to improved profitability. We also will mitigate the impact of higher unemployment
insurance expense during the second half of the year through a combination of government hiring
incentives, working with our clients and improved operating efficiencies. Further, we expect that
recent sales wins, our expanding sales pipeline and an increasing focus on client retention will
drive top-line growth going forward.”
“We also are continuing to have success with our strategies for effectively managing costs and
capital. We reduced our line of credit by $27 million, to $145 million, in the quarter. Our days
sales outstanding of 48 decreased by 3 days since January 31, 2010. Executing our cost and capital
strategies helped the Company achieve net operating cash flow from continuing operations of $50
million, a more than 60% increase over the year-ago quarter. We will continue our successful
operating strategies to deliver bottom line savings and generate cash.”
“Our divisions continue to secure new business as the economy improves while maintaining a sharp
focus on job profitability. Engineering had another strong quarter, with both revenues and
operating profit growing by more than 20% in the second quarter of fiscal year 2010. While Parking
revenues were essentially flat year-over-year, the Division increased operating profit by more than
6% in the second quarter, driven by strong performance with several airport clients and an ongoing
focus on management of indirect expenses. The Janitorial Division continues to aggressively manage
labor and other costs to offset pressures on revenues. The Division’s results were primarily
impacted by the one additional day of labor expense in the second quarter and higher state
unemployment insurance costs. Security revenues were slightly down for the quarter, and
profitability was also impacted by the higher than anticipated state unemployment insurance tax
rates.”
Income from continuing operations for the second quarter of fiscal year 2010 was $8.6 million
($0.16 per diluted share) compared to $13.0 million ($0.25 per diluted share) in the year-ago
quarter. As noted above, income was impacted by a $2.7 million after-tax expense ($0.05 per
diluted share) for a specific legal contingency; a $2.2 million after-tax expense ($0.04 per
diluted share) resulting from one additional day of labor expense in the second quarter of fiscal
year 2010 compared to the year-ago quarter; and higher than anticipated state unemployment
insurance expense of approximately $0.03 per diluted share. Excluding items impacting
comparability, adjusted income from continuing operations was $11.9 million, or $0.23 per diluted
share, for the second quarter of fiscal year 2010. This compares to adjusted income from
continuing operations of $16.4 million, or $0.32 per diluted share, in the second quarter of fiscal
year 2009.
The Company’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization and
excluding discontinued operations and items impacting comparability) for the second quarter of
fiscal year 2010 was $29.4 million compared to $36.1 million in the second quarter of fiscal year
2009.
-2-
The Company reported revenues for the six months ended April 30, 2010 of $1.7 billion, flat
compared to year-ago revenues of $1.7 billion. Net income for the first six months of fiscal year
2010 was $21.4 million, a decrease of 20.9% compared to $27.0 million for the first half of fiscal
year 2009. Net income per diluted share for the first six months of fiscal year 2010 decreased
21.2% to $0.41 per diluted share compared to $0.52 per diluted share in the first half of fiscal
year 2009. Income from continuing operations for the first six months of fiscal year 2010 was
$21.5 million, or $0.41 per diluted share, compared to $27.8 million, or $0.54 per diluted share,
for the first six months of fiscal year 2009. Adjusted income from continuing operations for the
first half of fiscal year 2010 was $26.0 million, or $0.49 per diluted share, compared to $29.4
million, or $0.57 per diluted share, for the first six months of fiscal year 2009. Adjusted EBITDA
for the first six months of fiscal year 2010 was $62.0 million compared to $66.4 million for the
first six months of fiscal year 2009.
The Company also announced that the Board of Directors has declared a third quarter cash dividend
of $0.135 per common share payable on August 2, 2010 to stockholders of record on July 1, 2010.
This will be ABM’s 177th consecutive quarterly cash dividend.
Guidance
The Company reiterates its estimates that full fiscal year 2010 income from continuing operations
per diluted share will be in the range of $1.25 to $1.35 and adjusted income from continuing
operations per diluted share, for the same period, will be in the range of $1.35 to $1.45.
Conference Call
On Thursday, June 3, 2010 at 9:00 a.m. (EDT), 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=82116
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 800-289-0726 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 888-203-1112 and then entering ID #8343808.
Conference Call Presentation
In connection with the conference call 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 the leading provider of facility services in the United States. With fiscal 2009
revenues of approximately $3.5 billion and more than 90,000 employees, ABM provides janitorial,
facility, engineering, parking and security services for thousands of commercial, industrial,
institutional and retail facilities across the United States, Puerto Rico and British Columbia,
Canada. 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.
-3-
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. In addition, the financial results
reported in this release continue to be subject to adjustment until filing of the Company’s
quarterly report on Form 10-Q for the quarter ended April 30, 2010. 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 strategy may adversely impact our results of operations; (2) intense competition
can constrain our ability to gain business, as well as our profitability; (3) we are subject to
volatility associated with high deductibles for certain insurable risks; (4) an increase in costs
that we cannot pass on to clients could affect our profitability; (5) we provide our services
pursuant to agreements which are cancelable by either party upon 30 to 60 days’ notice; (6) our
success depends on our ability to preserve our long-term relationships with clients; (7) our
transition to a shared services function could create disruption in functions affected; (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) our ability to operate and pay our debt obligations depends upon our access to cash;
(13) because ABM conducts business operations through operating subsidiaries, we depend on those
entities to generate the funds necessary to meet financial obligations; (14) 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; (15) 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; (16) any future increase in
the level of debt or in interest rates can affect our results of operations; (17) an impairment
charge could have a material adverse effect on our financial condition and results of operations;
(18) we are defendants in several class and representative actions or other lawsuits alleging
various claims that could cause us to incur substantial liabilities; (19) 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 and financial results and our
reputation; (20) labor disputes could lead to loss of revenues or expense variations; (21) federal
health care reform legislation may adversely affect our business and results of operations; (22) we
participate in multi-employer defined benefit plans which could result in substantial liabilities
being incurred; and (23) 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, 2009 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 for the second quarter and first six months of fiscal years 2010 and 2009 and
guidance for fiscal year 2010, as adjusted for items impacting comparability. 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 second quarter and first six months of fiscal years 2010 and 2009. 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)
| Quarter Ended April 30, | Increase | |||||||||||
| (In thousands, except per share data) | 2010 | 2009 | (Decrease) | |||||||||
Revenues |
$ | 855,461 | $ | 855,711 | NM | * | ||||||
Expenses |
||||||||||||
Operating |
771,974 | 766,148 | 0.8 | % | ||||||||
Selling, general and administrative |
65,244 | 64,265 | 1.5 | % | ||||||||
Amortization of intangible assets |
2,694 | 2,680 | 0.5 | % | ||||||||
Total expenses |
839,912 | 833,093 | 0.8 | % | ||||||||
Operating profit |
15,549 | 22,618 | (31.3 | )% | ||||||||
Other-than-temporary impairment losses
on auction rate security: |
||||||||||||
Gross impairment losses |
101 | — | NM | * | ||||||||
Impairments recognized in
other comprehensive income |
26 | — | NM | * | ||||||||
Interest expense |
1,177 | 1,313 | (10.4 | )% | ||||||||
Income from continuing operations
before income taxes |
14,245 | 21,305 | (33.1 | )% | ||||||||
Provision for income taxes |
5,622 | 8,256 | (31.9 | )% | ||||||||
Income from continuing operations |
8,623 | 13,049 | (33.9 | )% | ||||||||
Loss from discontinued operations, net of taxes |
(46 | ) | (272 | ) | NM | * | ||||||
Net Income |
$ | 8,577 | $ | 12,777 | (32.9 | )% | ||||||
Net Income Per Common Share — Basic |
||||||||||||
Income from continuing operations |
$ | 0.16 | $ | 0.25 | (36.0 | )% | ||||||
Loss from discontinued operations |
— | — | NM | * | ||||||||
Net Income |
$ | 0.16 | $ | 0.25 | (36.0 | )% | ||||||
Net Income Per Common Share — Diluted |
||||||||||||
Income from continuing operations |
$ | 0.16 | $ | 0.25 | (36.0 | )% | ||||||
Loss from discontinued operations |
— | — | NM | * | ||||||||
Net Income |
$ | 0.16 | $ | 0.25 | (36.0 | )% | ||||||
| * | Not Meaningful |
Average Common And Common Equivalent Shares |
||||||||||||
Basic |
52,007 | 51,301 | ||||||||||
Diluted |
52,719 | 51,553 | ||||||||||
Dividends Declared Per Common Share |
$ | 0.135 | $ | 0.130 |
-5-
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
| Six Months Ended April 30, | Increase | |||||||||||
| (In thousands, except per share data) | 2010 | 2009 | (Decrease) | |||||||||
Revenues |
$ | 1,725,345 | $ | 1,743,183 | (1.0 | )% | ||||||
Expenses |
||||||||||||
Operating |
1,554,075 | 1,553,416 | NM | * | ||||||||
Selling, general and administrative |
128,046 | 135,652 | (5.6 | )% | ||||||||
Amortization of intangible assets |
5,469 | 5,503 | (0.6 | )% | ||||||||
Total expenses |
1,687,590 | 1,694,571 | (0.4 | )% | ||||||||
Operating profit |
37,755 | 48,612 | (22.3 | )% | ||||||||
Other-than-temporary impairment losses
on auction rate security: |
||||||||||||
Gross impairment losses |
36 | — | NM | * | ||||||||
Impairments recognized in
other comprehensive income |
91 | — | NM | * | ||||||||
Interest expense |
2,392 | 2,981 | (19.8 | )% | ||||||||
Income from continuing operations
before income taxes |
35,236 | 45,631 | (22.8 | )% | ||||||||
Provision for income taxes |
13,777 | 17,827 | (22.7 | )% | ||||||||
Income from continuing operations |
21,459 | 27,804 | (22.8 | )% | ||||||||
Loss from discontinued operations, net of taxes |
(107 | ) | (810 | ) | NM | * | ||||||
Net Income |
$ | 21,352 | $ | 26,994 | (20.9 | )% | ||||||
Net Income Per Common Share — Basic |
||||||||||||
Income from continuing operations |
$ | 0.41 | $ | 0.54 | (24.1 | )% | ||||||
Loss from discontinued operations |
— | (0.01 | ) | NM | * | |||||||
Net Income |
$ | 0.41 | $ | 0.53 | (22.6 | )% | ||||||
Net Income Per Common Share — Diluted |
||||||||||||
Income from continuing operations |
$ | 0.41 | $ | 0.54 | (24.1 | )% | ||||||
Loss from discontinued operations |
— | (0.02 | ) | NM | * | |||||||
Net Income |
$ | 0.41 | $ | 0.52 | (21.2 | )% | ||||||
| * | Not Meaningful |
Average Common And Common Equivalent Shares |
||||||||||||
Basic |
51,914 | 51,206 | ||||||||||
Diluted |
52,633 | 51,511 | ||||||||||
Dividends Declared Per Common Share |
$ | 0.270 | $ | 0.260 |
-6-
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
| Quarter Ended April 30, | ||||||||
| (In thousands) | 2010 | 2009 | ||||||
Net cash provided by continuing operating activities |
49,960 | 30,881 | ||||||
Net cash provided by discontinued operating activities |
3,276 | 10,242 | ||||||
Net cash provided by operating activities |
$ | 53,236 | $ | 41,123 | ||||
Net cash used in investing activities |
$ | (4,815 | ) | $ | (2,465 | ) | ||
Common stock purchases |
1,794 | 1,053 | ||||||
Dividends paid |
(7,022 | ) | (6,673 | ) | ||||
Borrowings from line of credit |
98,000 | 170,000 | ||||||
Repayment of borrowings from line of credit |
(125,000 | ) | (215,000 | ) | ||||
Changes in book cash overdrafts (a) |
(16,427 | ) | 7,885 | |||||
Net cash used in financing activities |
$ | (48,655 | ) | $ | (42,735 | ) | ||
| Six Months Ended April 30, | ||||||||
| (In thousands) | 2010 | 2009 | ||||||
Net cash provided by continuing operating activities |
37,740 | 44,341 | ||||||
Net cash provided by discontinued operating activities |
6,583 | 22,861 | ||||||
Net cash provided by operating activities |
$ | 44,323 | $ | 67,202 | ||||
Net cash used in investing activities |
$ | (11,739 | ) | $ | (8,114 | ) | ||
Proceeds from exercises of stock options
(including income tax benefit) |
3,045 | 1,516 | ||||||
Dividends paid |
(14,014 | ) | (13,314 | ) | ||||
Borrowings from line of credit |
229,000 | 343,000 | ||||||
Repayment of borrowings from line of credit |
(256,500 | ) | (391,000 | ) | ||||
Changes in book cash overdrafts (a) |
(7,325 | ) | (5,966 | ) | ||||
Net cash used in financing activities |
$ | (45,794 | ) | $ | (65,764 | ) | ||
| (a) | Amount shown for the quarter and six months ended April 30, 2009 reflects an immaterial
correction of certain net book credit cash balances; resulting in an decrease in net cash used
in financing activities for the quarter ended April 30, 2009 in the amount of $7.9 million and
an increase in net cash used in financing activities for the six months ended April 30, 2009
in the amount of $6.0 million. |
-7-
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
| April 30, | October 31, | |||||||
| (In thousands) | 2010 | 2009 | ||||||
Assets |
||||||||
Cash and cash equivalents |
$ | 20,943 | $ | 34,153 | ||||
Trade accounts receivable, net |
442,709 | 445,241 | ||||||
Prepaid income taxes |
12,913 | 13,473 | ||||||
Current assets of discontinued operations |
6,009 | 10,787 | ||||||
Prepaid expenses |
39,271 | 38,781 | ||||||
Notes receivable and other |
18,155 | 21,374 | ||||||
Deferred income taxes, net |
52,347 | 52,171 | ||||||
Insurance recoverables |
4,898 | 5,017 | ||||||
Total current assets |
597,245 | 620,997 | ||||||
Non-current assets of discontinued operations |
2,792 | 4,567 | ||||||
Insurance deposits |
42,179 | 42,500 | ||||||
Other investments and long-term receivables |
5,668 | 6,240 | ||||||
Deferred income taxes, net |
57,815 | 63,444 | ||||||
Insurance recoverables |
65,819 | 67,100 | ||||||
Other assets |
31,749 | 32,446 | ||||||
Investments in auction rate securities |
19,634 | 19,531 | ||||||
Property, plant and equipment, net |
56,397 | 56,892 | ||||||
Other intangible assets, net |
54,731 | 60,199 | ||||||
Goodwill |
547,880 | 547,237 | ||||||
Total assets |
$ | 1,481,909 | $ | 1,521,153 | ||||
Liabilities |
||||||||
Trade accounts payable |
$ | 57,011 | $ | 84,701 | ||||
Accrued liabilities |
||||||||
Compensation |
85,282 | 93,095 | ||||||
Taxes — other than income |
14,134 | 17,539 | ||||||
Insurance claims |
78,803 | 78,144 | ||||||
Other |
73,400 | 66,279 | ||||||
Income taxes payable |
1,832 | 1,871 | ||||||
Current liabilities of discontinued operations |
1,270 | 1,065 | ||||||
Total current liabilities |
311,732 | 342,694 | ||||||
Income taxes payable |
25,327 | 17,763 | ||||||
Line of credit |
145,000 | 172,500 | ||||||
Retirement plans and other |
31,644 | 32,963 | ||||||
Insurance claims |
266,572 | 268,183 | ||||||
Total liabilities |
780,275 | 834,103 | ||||||
Stockholders’ Equity |
701,634 | 687,050 | ||||||
Total liabilities and stockholders’ equity |
$ | 1,481,909 | $ | 1,521,153 | ||||
-8-
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
| Quarter Ended April 30, | Increase | |||||||||||
| (In thousands) | 2010 | 2009 | (Decrease) | |||||||||
Revenues |
||||||||||||
Janitorial |
$ | 574,046 | $ | 589,344 | (2.6 | )% | ||||||
Parking |
114,003 | 113,347 | 0.6 | % | ||||||||
Security |
80,712 | 82,403 | (2.1 | )% | ||||||||
Engineering |
86,190 | 70,194 | 22.8 | % | ||||||||
Corporate |
510 | 423 | 20.6 | % | ||||||||
| $ | 855,461 | $ | 855,711 | NM* | ||||||||
Operating Profit |
||||||||||||
Janitorial |
$ | 29,025 | $ | 34,894 | (16.8 | )% | ||||||
Parking |
5,184 | 4,859 | 6.7 | % | ||||||||
Security |
941 | 1,397 | (32.6 | )% | ||||||||
Engineering |
4,856 | 4,038 | 20.3 | % | ||||||||
Corporate |
(24,457 | ) | (22,570 | ) | (8.4 | )% | ||||||
Operating profit |
15,549 | 22,618 | (31.3 | )% | ||||||||
Other-than-temporary impairment losses on auction rate security: |
||||||||||||
Gross impairment losses |
101 | — | NM* | |||||||||
Impairments recognized in other comprehensive income |
26 | — | NM* | |||||||||
Interest expense |
1,177 | 1,313 | (10.4 | )% | ||||||||
Income from continuing operations before income taxes |
$ | 14,245 | $ | 21,305 | (33.1 | )% | ||||||
| Six Months Ended April 30, | Increase | |||||||||||
| (In thousands) | 2010 | 2009 | (Decrease) | |||||||||
Revenues |
||||||||||||
Janitorial |
$ | 1,158,125 | $ | 1,197,764 | (3.3 | )% | ||||||
Parking |
226,591 | 229,016 | (1.1 | )% | ||||||||
Security |
164,309 | 167,986 | (2.2 | )% | ||||||||
Engineering |
175,541 | 147,410 | 19.1 | % | ||||||||
Corporate |
779 | 1,007 | (22.6 | )% | ||||||||
| $ | 1,725,345 | $ | 1,743,183 | (1.0 | )% | |||||||
Operating Profit |
||||||||||||
Janitorial |
$ | 63,109 | $ | 67,205 | (6.1 | )% | ||||||
Parking |
10,210 | 9,001 | 13.4 | % | ||||||||
Security |
2,287 | 3,191 | (28.3 | )% | ||||||||
Engineering |
9,848 | 8,704 | 13.1 | % | ||||||||
Corporate |
(47,699 | ) | (39,489 | ) | 20.8 | % | ||||||
Operating profit |
37,755 | 48,612 | (22.3 | )% | ||||||||
Other-than-temporary impairment losses on auction rate security: |
||||||||||||
Gross impairment losses |
36 | — | NM* | |||||||||
Impairments recognized in other comprehensive income |
91 | — | NM* | |||||||||
Interest expense |
2,392 | 2,981 | (19.8 | )% | ||||||||
Income from continuing operations before income taxes |
$ | 35,236 | $ | 45,631 | (22.8 | )% | ||||||
| * | Not Meaningful |
-9-
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 April 30, | Six Months Ended April 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Reconciliation of Adjusted Income from Continuing
Operations to Net Income |
||||||||||||||||
Adjusted Income from Continuing Operations |
$ | 11,925 | $ | 16,397 | $ | 25,965 | $ | 29,359 | ||||||||
Items Impacting Comparability, net of taxes |
(3,302 | ) | (3,348 | ) | (4,506 | ) | (1,555 | ) | ||||||||
Income from Continuing Operations |
8,623 | 13,049 | 21,459 | 27,804 | ||||||||||||
Loss from Discontinued Operations |
(46 | ) | (272 | ) | (107 | ) | (810 | ) | ||||||||
Net Income |
$ | 8,577 | $ | 12,777 | $ | 21,352 | $ | 26,994 | ||||||||
Reconciliation of Adjusted Income from Continuing
Operations to Income from Continuing Operations |
||||||||||||||||
Adjusted Income from Continuing Operations |
$ | 11,925 | $ | 16,397 | $ | 25,965 | $ | 29,359 | ||||||||
Items Impacting Comparability: |
||||||||||||||||
Corporate Initiatives and Other (a) |
(1,005 | ) | (5,515 | ) | (2,975 | ) | (12,163 | ) | ||||||||
Third-Party Administrator Legal Settlement |
— | — | — | 9,601 | ||||||||||||
Litigation Contingency |
(4,400 | ) | — | (4,400 | ) | — | ||||||||||
Total Items Impacting Comparability |
(5,405 | ) | (5,515 | ) | (7,375 | ) | (2,562 | ) | ||||||||
Income Taxes Benefit |
2,103 | 2,167 | 2,869 | 1,007 | ||||||||||||
Items Impacting Comparability, net of taxes |
(3,302 | ) | (3,348 | ) | (4,506 | ) | (1,555 | ) | ||||||||
Income from Continuing Operations |
$ | 8,623 | $ | 13,049 | $ | 21,459 | $ | 27,804 | ||||||||
Reconciliation of Adjusted EBITDA to Net Income |
||||||||||||||||
Adjusted EBITDA |
$ | 29,378 | $ | 36,064 | $ | 62,047 | $ | 66,411 | ||||||||
Items Impacting Comparability |
(5,405 | ) | (5,515 | ) | (7,375 | ) | (2,562 | ) | ||||||||
Discontinued Operations |
(46 | ) | (272 | ) | (107 | ) | (810 | ) | ||||||||
Income Tax |
(5,622 | ) | (8,256 | ) | (13,777 | ) | (17,827 | ) | ||||||||
Interest Expense |
(1,177 | ) | (1,313 | ) | (2,392 | ) | (2,981 | ) | ||||||||
Depreciation and Amortization |
(8,551 | ) | (7,931 | ) | (17,044 | ) | (15,237 | ) | ||||||||
Net Income |
$ | 8,577 | $ | 12,777 | $ | 21,352 | $ | 26,994 | ||||||||
-10-
(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 April 30, | Six Months Ended April 30, | |||||||||||||||
| 2010 | 2009 | 2010 | 2009 | |||||||||||||
Adjusted Income from Continuing
Operations per Diluted Share |
$ | 0.23 | $ | 0.32 | $ | 0.49 | $ | 0.57 | ||||||||
Items Impacting Comparability, net of taxes |
(0.07 | ) | (0.07 | ) | (0.08 | ) | (0.03 | ) | ||||||||
Income from Continuing Operations
per Diluted Share |
$ | 0.16 | $ | 0.25 | $ | 0.41 | $ | 0.54 | ||||||||
Diluted Shares |
52,719 | 51,553 | 52,633 | 51,511 | ||||||||||||
| (a) | Corporate initiatives and other include: (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, (iv) the integration costs
associated with OneSource, and (v) the write-off of deferred acquisition costs due to the adoption
of an accounting pronouncement. |
-11-
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, 2010
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, 2010
| Year Ending October 31, 2010 | ||||||||
| Low Estimate | High Estimate | |||||||
| (per diluted share) | ||||||||
Adjusted Income from Continuing Operations per
Diluted Share |
$ | 1.35 | $ | 1.45 | ||||
Adjustments to Income from Continuing Operations (a) |
(0.10 | ) | (0.10 | ) | ||||
Income from Continuing Operations per Diluted Share |
$ | 1.25 | $ | 1.35 | ||||
| (a) | Adjustments to income from continuing operations are expected to include additional costs
associated with the implementation of new information technology systems and other unique items
impacting comparability. |
-12-
Exhibit 99.2
| Second Quarter Earnings Conference Call June 3, 2010 |
| Agenda 1 Introduction of Call Participants 2 Second Quarter 2010 Highlights 3 Financial Review 4 Operating Results 5 Fiscal 2010 Annual Guidance |
| Forward Looking Statement This presentation contains forward-looking statements that set forth management's anticipated results based on management's current plans and assumptions. In addition, the financial results reported in this presentation continue to be subject to adjustment until filing of the Company's quarterly report on Form 10-Q for the quarter ended April 30, 2010. 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 strategy may adversely impact our results of operations; (2) intense competition can constrain our ability to gain business, as well as our profitability; (3) we are subject to volatility associated with high deductibles for certain insurable risks; (4) an increase in costs that we cannot pass on to clients could affect our profitability; (5) we provide our services pursuant to agreements which are cancelable by either party upon 30 to 60 days' notice; (6) our success depends on our ability to preserve our long-term relationships with clients; (7) our transition to a shared services function could create disruption in functions affected; (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) our ability to operate and pay our debt obligations depends upon our access to cash; (13) because ABM conducts business operations through operating subsidiaries, we depend on those entities to generate the funds necessary to meet financial obligations; (14) 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; (15) 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; (16) any future increase in the level of debt or in interest rates can affect our results of operations; (17) an impairment charge could have a material adverse effect on our financial condition and results of operations; (18) we are defendants in several class and representative actions or other lawsuits alleging various claims that could cause us to incur substantial liabilities; (19) 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 adversely affect our labor force, operations and financial results and our reputation; (20) labor disputes could lead to loss of revenues or expense variations; (21) federal health care reform legislation may adversely affect our business and results of operations; (22) we participate in multi-employer defined benefit plans which could result in substantial liabilities being incurred; and (23) 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, 2009 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 this presentation, certain non- GAAP financial measures described as "Adjusted EBITDA," "Adjusted Income from Continuing Operations," "Adjusted Income from Continuing Operations per Diluted Share" and "Free Cash Flow from continuing operations" 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 under "Investor Relations" and at the end of this presentation. |
| Second Quarter 2010 Financial Highlights |
| Second Quarter 2010 Fiscal Highlights Essentially met our expectations for the second quarter Revenue flat year-over-year as economic pressures continue to abate Year-over-year Adjusted Income from Continuing Operations per diluted share down 28% to $0.23 One additional day of labor expense accounted for $0.04 Higher State Unemployment Insurance expense added $0.03 Incremental depreciation for IT upgrades added $0.01 Cash Flow from continuing operations of $50 million, up $19.1 million Free Cash Flow from continuing operations of $45.1 million Announced our 177th consecutive dividend |
| Q2 Financial Results (unaudited) |
| Q2 Financial Results (unaudited) |
| Cash Flow Highlights (unaudited) |
| Condensed Balance Sheet (unaudited) |
| Division Revenues1 Summary Revenue flat year-over-year with lower than anticipated contribution from janitorial segment All segments reporting improved sales pipeline and activity Engineering revenue up 22.8% year-over-year as division secures new clients and continues to build on momentum Parking experienced modest pickup from airport clients Recently secured new landscaping and stadium business 1 Excludes Corporate |
| Division Profits1 Summary Second quarter profit impacted from one additional day of labor expense and higher state unemployment expenses. Combined, the impact was approximately $6 million dollars Engineering achieves another quarter of double-digit growth Parking benefits from higher profit at airports Security profitability down from lower revenues 1 Excludes Corporate |
| Fiscal 2010 Outlook Continue to anticipate revenue improvement in second half of fiscal year Cost controls and operational efficiencies implemented in second quarter will benefit remainder of fiscal year Expect operating cash flow to remain strong On track to leverage investments in infrastructure for 2011 savings Guidance Reiterating previously issued range for full year income from continuing operations of $1.25 to $1.35 per diluted share Adjusted income from continuing operations of $1.35 to $1.45 per diluted share The third quarter has one fewer work day compared to the third quarter of 2009 |
| Appendix |
| 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 (in thousands) |
| Unaudited Reconciliation of non-GAAP Financial Measures |
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