ABM Industries Incorporated
ABM INDUSTRIES INC /DE/ (Form: 8-K, Received: 12/14/2011 06:01:09)
 
 

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): December 13, 2011

ABM Industries Incorporated
(Exact name of registrant as specified in its charter)

         
Delaware   1-8929   94-1369354
(State or other Jurisdiction of Incorporation)   (Commission File Number)   (IRS Employer Identification No.)
     
551 Fifth Avenue, Suite 300
New York, New York
  10176
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (212) 297-0200

 
N/A
(Former name or former address if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 

1


 

Item 2.02. Results of Operations and Financial Condition.

On December 13, 2011, ABM Industries Incorporated (the “Company”) issued a press release announcing financial results related to fiscal year 2011 and the fourth quarter of fiscal year 2011. A copy of the press release is attached as Exhibit 99.1, which is incorporated into this item by reference.

Item 8.01. Other Events.

On December 13, 2011, the Company announced that the Board of Directors of the Company declared a quarterly dividend of $0.145 per share, payable on February 6, 2012 to stockholders of record on January 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 December 14, 2011 relating to the Company’s financial results for fiscal year 2011 and the fourth quarter of fiscal year 2011. A copy of the slides to be presented at the Company’s web cast and discussed in the conference call relating to such financial results is being furnished as Exhibit 99.2 to this Form 8-K.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

99.1   Press Release issued by ABM Industries Incorporated, dated December 13, 2011, announcing financial results related to fiscal year 2011 and the fourth quarter of fiscal year 2011, and the declaration of a dividend payable February 6, 2012 to stockholders of record on January 5, 2012.

99.2   Slides of ABM Industries Incorporated dated December 14, 2011.

 

2


 

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: December 13, 2011
  By:   /s/ Sarah H. McConnell
       
 
 
      Sarah H. McConnell
 
      Senior Vice President and General Counsel

 

3


 

EXHIBIT INDEX

99.1   Press Release issued by ABM Industries Incorporated, dated December 13, 2011, announcing financial results related to fiscal year 2011 and the fourth quarter of fiscal year 2011, and the declaration of a dividend payable February 6, 2012 to stockholders of record on January 5, 2012.

99.2   Slides of ABM Industries Incorporated dated December 14, 2011.

 

4

Exhibit 99.1

(AMB LOGO)
551 Fifth Avenue
Suite 300
New York, NY 10176
PRESS RELEASE
ABM INDUSTRIES ANNOUNCES 2011 FOURTH QUARTER AND FULL-
YEAR FINANCIAL RESULTS
Company Posts Record Revenues of $4.2 Billion; Meets EPS Guidance; Raises Dividend
                                                 
    Quarter Ended             Year Ended        
(in millions, except per share data)   October 31,     Increase     October 31,     Increase  
(unaudited)   2011     2010     (Decrease)     2011     2010     (Decrease)  
 
                                               
Revenues
  $ 1,081.3     $ 901.4       20.0 %   $ 4,246.8     $ 3,495.7       21.5 %
 
                                               
Net cash provided by continuing operating activities
  $ 74.2     $ 67.8       9.4 %   $ 156.8     $ 140.7       11.4 %
 
                                               
Income from continuing operations
  $ 18.2     $ 21.4       (15.0 )%   $ 68.7     $ 63.9       7.5 %
Income from continuing operations per diluted share
  $ 0.33     $ 0.41       (19.5 )%   $ 1.27     $ 1.21       5.0 %
 
                                               
Net income
  $ 18.0     $ 21.8       (17.4 )%   $ 68.5     $ 64.1       6.9 %
Net income per diluted share
  $ 0.33     $ 0.41       (19.5 )%   $ 1.27     $ 1.21       5.0 %
 
                                               
Adjusted income from continuing operations
  $ 20.4     $ 22.6       (9.7 )%   $ 75.0     $ 70.5       6.4 %
Adjusted income from continuing operations per diluted share
  $ 0.37     $ 0.43       (14.0 )%   $ 1.39     $ 1.34       3.7 %
 
                                               
Adjusted EBITDA
  $ 51.3     $ 47.9       7.1 %   $ 184.0     $ 155.9       18.0 %
(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 — December 13, 2011 — ABM Industries Incorporated (NYSE:ABM) today announced financial results for the fiscal 2011 fourth quarter and full year. Revenues for the fourth quarter of fiscal year 2011 reached a record $1.08 billion, a 20% increase compared to fourth quarter of fiscal year 2010 revenues of $901.4 million, driven primarily by acquisitions. Income from continuing operations for the quarter was $18.2 million compared to $21.4 million for the fourth quarter of fiscal year 2010, primarily reflecting the impact of increased labor expense from one additional workday as

 

 


 

well as higher taxes from the reduced availability of employment-based tax credits compared to the year-ago quarter. Net cash flow from continuing operations for the fourth quarter of fiscal year 2011 increased 9.4% to $74.2 million. For the full year, the Company reported a 21.5% increase in revenues to $4.2 billion compared to $3.5 billion for fiscal year 2010, driven by acquisitions. Income from continuing operations increased to $68.7 million, or $1.27 per diluted share, compared to $63.9 million, or $1.21 per diluted share, for the 2010 fiscal year. Adjusted income from continuing operations increased to $75.0 million, or $1.39 per diluted share, compared to $70.5 million, or $1.34 per diluted share, in fiscal year 2010.
Fourth Quarter Results
“Even in the face of continuing economic headwinds, ABM continues to deliver strong results,” said Henrik Slipsager, president and chief executive officer, ABM Industries. “The businesses we acquired helped drive a record $1.08 billion in quarterly revenues, our fourth consecutive quarter with revenues in excess of $1 billion and a 20% increase compared to the year-ago quarter. All four Divisions produced higher revenues year-over-year as the successful integration of the companies we acquired continues to help drive overall top line growth and increased profitability for the Company. Income in the quarter was impacted by the increased labor expense from one additional workday and higher taxes compared to the year-ago quarter. We achieved net cash flow from continuing operations of $74.2 million, a 9.4% increase compared to the fourth quarter of 2010.”
For the quarter, Janitorial revenue increased by 1.4% year-over-year while operating profit declined 8.4%, driven by higher labor costs resulting from the additional workday. Engineering revenues grew by 149.0% over the 2010 fourth quarter and profits by 41.4%, primarily reflecting the contributions of Linc. Parking revenues were 19.3% higher than the year-before quarter and profits were up by 11.2%, driven by results from the L&R acquisition. Security increased revenues by 3.1% while profit fell by 6.8%, primarily the result of price compression.
Year in Review
Slipsager added: The successful integration of Linc was one of the year’s highlights and we are proud that, as promised, Linc was slightly accretive to ABM’s earnings in fiscal 2011, excluding acquisition costs. For the year, each Division generated higher year-over-year revenues and profitability. On operating profit, Engineering grew by more than 45%, reflecting the contribution of Linc. Janitorial grew revenues and operating profit over 2010, despite the additional workday, higher state unemployment insurance expense and increased fuel costs for the year. As a result of our continued focus on our long-term strategy, we achieved an 18% increase in adjusted EBITDA to $184 million for the year, which reflects a doubling of adjusted EBITDA in the past four years, despite one of the worst economic periods in history.”
“From a cash-flow perspective, we achieved one of our strongest fiscal years — including $156.8 million in cash flow from continuing operations,” said executive vice president and chief financial officer James Lusk. “Also, we reduced borrowings since the Linc acquisition by more than $150 million to $300 million at October 31, 2011, and lowered our adjusted EBITDA leverage ratio to approximately 1.6x from 2.5x.”
Slipsager concluded: “We ended the year well-positioned as we have leveraged our acquisitions to increase sales, expand our service capabilities and extend our market reach. We look forward to the 2012 fiscal year to continue executing on our long-term strategic plans and launching new initiatives to drive future growth in key vertical markets.”

 

- 2 -


 

Dividend
The Company also announced that the Board of Directors has declared a first quarter cash dividend of $0.145 per common share — which is a 4% increase — payable on February 6, 2012 to stockholders of record on January 5, 2012. This will be ABM’s 183 rd consecutive quarterly cash dividend.
Guidance
Given the continuing macro-economic conditions, the Company is estimating that full fiscal year 2012 income from continuing operations per diluted share will be in the range of $1.26 to $1.36 and adjusted income from continuing operations per diluted share, for the same period, will 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 2012 third quarter and is expected to 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 41%, from 35% in fiscal year 2011.
Earnings Webcast
On Wednesday, December 14, at 9:00 a.m. (EST), ABM will host a live webcast of remarks by president and chief executive officer Henrik Slipsager and executive vice president and chief financial officer James Lusk. 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=106581
Listeners are asked to be online at least 15 minutes early to register, as well as to download and install any complimentary audio software that might be required. Following the call, the webcast will be available at this URL for a period of 90 days.
In addition to the webcast, a limited number of toll-free telephone lines will also be available for listeners who are among the first to call 877-664-7395 within 15 minutes before the event. Telephonic replays will be accessible during the period from two hours to seven days after the call by dialing 855-859-2056 and then entering ID #34160866.
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 Industries Incorporated
ABM Industries Incorporated (NYSE:ABM), which operates through its subsidiaries (collectively “ABM”), is a leading provider of integrated facility services. 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 and security services for thousands of commercial, industrial, government and retail clients across the United States and various international locations. ABM’s business services include ABM Janitorial Services, ABM Facility Services, ABM Engineering Services, Ampco System Parking and ABM Security Services. For more information, visit www.abm.com.

 

- 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. 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) 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 the 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 out 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, 2010 and in other reports the Company files from time to time with the Securities and Exchange Commission.

 

- 4 -


 

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 fourth quarter and full year of fiscal years 2011 and 2010. 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 fourth quarter and full year of fiscal years 2011 and 2010. Adjusted EBITDA is among the indicators management uses as a basis for planning and forecasting future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute for financial statements prepared in accordance with generally accepted accounting principles in the United States. (See accompanying financial tables for supplemental financial data and corresponding reconciliations to certain GAAP financial measures.)
Contact:
             
Investors & Analysts:
  David Farwell   Media:   Tony Mitchell
 
  (212) 297-9792       (212) 297-9828
 
  dfarwell@abm.com       tony.mitchell@abm.com
###

 

- 5 -


 

Financial Schedules
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
                         
    Quarter Ended October 31,     Increase  
(In thousands, except per share data)   2011     2010     (Decrease)  
 
 
Revenues
  $ 1,081,343     $ 901,373       20.0 %
Expenses
                       
Operating
    959,592       803,719       19.4 %
Selling, general and administrative
    82,356       58,783       40.1 %
Amortization of intangible assets
    5,975       3,113       91.9 %
 
                 
Total expenses
    1,047,923       865,615       21.1 %
 
                 
Operating profit
    33,420       35,758       (6.5 )%
Income from unconsolidated affiliates, net
    1,130           NM *
Interest expense
    (3,328 )     (1,098 )     203.1 %
 
                 
Income from continuing operations before income taxes
    31,222       34,660       (9.9 )%
Provision for income taxes
    (13,040 )     (13,222 )     (1.4 )%
 
                 
Income from continuing operations
    18,182       21,438       (15.2 )%
(Loss) income from discontinued operations, net of taxes
    (134 )     368     NM *
 
                 
Net Income
  $ 18,048     $ 21,806       (17.2 )%
 
                 
Net Income Per Common Share — Basic
                       
Income from continuing operations
  $ 0.34     $ 0.42       (19.0 )%
(Loss) income from discontinued operations, net of taxes
              NM *
 
                 
Net Income
  $ 0.34     $ 0.42       (19.0 )%
 
                 
Net Income Per Common Share — Diluted
                       
Income from continuing operations
  $ 0.33     $ 0.41       (19.5 )%
(Loss) income from discontinued operations, net of taxes
              NM *
 
                 
Net Income
  $ 0.33     $ 0.41       (19.5 )%
 
                 
     
*  
Not Meaningful
                 
Average Common And Common Equivalent Shares
               
Basic
    53,331       52,490  
Diluted
    54,158       53,369  
 
               
Dividends Declared Per Common Share
  $ 0.145     $ 0.135  

 

- 6 -


 

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
                         
    Year Ended October 31,     Increase  
(In thousands, except per share data)   2011     2010     (Decrease)  
 
 
Revenues
  $ 4,246,842     $ 3,495,747       21.5 %
Expenses
                       
Operating
    3,781,264       3,134,018       20.7 %
Selling, general and administrative
    324,762       241,526       34.5 %
Amortization of intangible assets
    23,248       11,364       104.6 %
 
                 
Total expenses
    4,129,274       3,386,908       21.9 %
 
                 
Operating profit
    117,568       108,839       8.0 %
Other-than-temporary impairment losses on auction rate security:
                       
Impairments recognized in other comprehensive income
          (127 )   NM *
Income from unconsolidated affiliates, net
    3,915           NM *
Interest expense
    (15,805 )     (4,639 )     240.7 %
 
                 
Income from continuing operations before income taxes
    105,678       104,073       1.5 %
Provision for income taxes
    (36,980 )     (40,203 )     (8.0 )%
 
                 
Income from continuing operations
    68,698       63,870       7.6 %
(Loss) income from discontinued operations, net of taxes
    (194 )     251     NM *
 
                 
Net Income
  $ 68,504     $ 64,121       6.8 %
 
                 
Net Income Per Common Share — Basic
                       
Income from continuing operations
  $ 1.29     $ 1.23       4.9 %
(Loss) income from discontinued operations, net of taxes
              NM *
 
                 
Net Income
  $ 1.29     $ 1.23       4.9 %
 
                 
Net Income Per Common Share — Diluted
                       
Income from continuing operations
  $ 1.27     $ 1.21       5.0 %
(Loss) income from discontinued operations, net of taxes
              NM *
 
                 
Net Income
  $ 1.27     $ 1.21       5.0 %
 
                 
     
*  
Not Meaningful
                 
Average Common And Common Equivalent Shares
               
Basic
    53,121       52,117  
Diluted
    54,103       52,908  
 
               
Dividends Declared Per Common Share
  $ 0.565     $ 0.540  

 

- 7 -


 

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
                 
    Quarter Ended October 31,  
(In thousands)   2011     2010  
Net cash provided by continuing operating activities
    74,248       67,787  
Net cash provided by discontinued operating activities
    905       1,787  
 
           
Net cash provided by operating activities
  $ 75,153     $ 69,574  
 
           
Net cash used in investing activities
  $ (4,847 )   $ (39,928 )
 
           
Proceeds from exercises of stock options (including income tax benefit)
    189       5,210  
Dividends paid
    (7,466 )     (7,101 )
Deferred financing costs paid
    (30 )      
Borrowings from line of credit
    145,000       149,500  
Repayment of borrowings from line of credit
    (210,000 )     (159,000 )
Changes in book cash overdrafts
    (11,146 )     (11,711 )
 
           
Net cash used in financing activities
  $ (83,453 )   $ (23,102 )
 
           
                 
    Year Ended October 31,  
(In thousands)   2011     2010  
Net cash provided by continuing operating activities
    156,800       140,746  
Net cash provided by discontinued operating activities
    3,190       9,118  
 
           
Net cash provided by operating activities
  $ 159,990     $ 149,864  
 
           
Acquisition of Linc (net of cash acquired)
    (290,253 )      
Other investing
    (17,159 )     (87,860 )
 
           
Net cash used in investing activities
  $ (307,412 )   $ (87,860 )
 
           
Proceeds from exercises of stock options (including income tax benefit)
    9,708       11,376  
Dividends paid
    (29,744 )     (28,152 )
Deferred financing costs paid
    (5,021 )      
Borrowings from line of credit
    885,500       448,000  
Repayment of borrowings from line of credit
    (726,000 )     (480,000 )
Changes in book cash overdrafts
          (7,935 )
 
           
Net cash provided by (used in) financing activities
    134,443     $ (56,711 )
 
           

 

- 8 -


 

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
                 
    October 31,     October 31,  
(In thousands)   2011     2010  
 
               
Assets
               
Cash and cash equivalents
  $ 26,467     $ 39,446  
Trade accounts receivable, net
    552,098       450,513  
Prepaid income taxes
    7,205       1,498  
Current assets of discontinued operations
    1,992       4,260  
Prepaid expenses
    41,823       41,306  
Notes receivable and other
    52,756       20,402  
Deferred income taxes, net
    40,565       46,193  
Insurance recoverables
    10,851       5,138  
 
           
Total current assets
    733,757       608,756  
 
               
Non-current assets of discontinued operations
    216       1,392  
Insurance deposits
    35,974       36,164  
Other investments and long-term receivables
    5,798       4,445  
Deferred income taxes, net
    30,948       51,068  
Insurance recoverables
    59,759       70,960  
Other assets
    43,178       37,869  
Investments in auction rate securities
    15,670       20,171  
Investments in unconsolidated affiliates, net
    14,423        
Property, plant and equipment, net
    60,009       58,088  
Other intangible assets, net
    128,994       65,774  
Goodwill
    750,872       593,983  
 
           
Total assets
  $ 1,879,598     $ 1,548,670  
 
           
Liabilities
               
Trade accounts payable
  $ 130,464     $ 78,928  
Accrued liabilities
               
Compensation
    112,233       89,063  
Taxes — other than income
    19,144       17,663  
Insurance claims
    78,828       77,101  
Other
    102,220       70,119  
Income taxes payable
    307       977  
 
           
Total current liabilities
    443,196       333,851  
Income taxes payable
    38,236       29,455  
Line of credit
    300,000       140,500  
Retirement plans and other
    39,707       34,626  
Insurance claims
    262,573       271,213  
 
           
Total liabilities
    1,083,712       809,645  
 
           
Stockholders’ Equity
    795,886       739,025  
 
           
Total liabilities and stockholders’ equity
  $ 1,879,598     $ 1,548,670  
 
           

 

- 9 -


 

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
                         
    Quarter Ended October 31,     Increase  
(In thousands)   2011     2010     (Decrease)  
Revenues
                       
Janitorial
  $ 596,638     $ 588,561       1.4 %
Engineering
    241,323       96,913       149.0 %
Parking
    153,363       128,585       19.3 %
Security
    89,747       87,040       3.1 %
Corporate
    272       274       (0.7 )%
 
                 
 
  $ 1,081,343     $ 901,373       20.0 %
 
                 
Operating Profit
                       
Janitorial
  $ 35,679     $ 38,967       (8.4 )%
Engineering
    9,214       6,516       41.4 %
Parking
    7,458       6,705       11.2 %
Security
    2,957       3,174       (6.8 )%
Corporate
    (21,888 )     (19,604 )     (11.7 )%
 
                 
Operating profit
    33,420       35,758       (6.5 )%
Income from unconsolidated affiliates, net
    1,130           NM *
Interest expense
    (3,328 )     (1,098 )     203.1 %
 
                 
Income from continuing operations before income taxes
  $ 31,222     $ 34,660       (9.9 )%
 
                 
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
                         
    Year Ended October 31,     Increase  
(In thousands)   2011     2010     (Decrease)  
Revenues
                       
Janitorial
  $ 2,380,195     $ 2,306,098       3.2 %
Engineering
    899,381       382,629       135.1 %
Parking
    615,679       469,398       31.2 %
Security
    350,377       336,249       4.2 %
Corporate
    1,210       1,373       (11.9 )%
 
                 
 
  $ 4,246,842     $ 3,495,747       21.5 %
 
                 
Operating Profit
                       
Janitorial
  $ 140,621     $ 140,007       0.4 %
Engineering
    33,384       22,931       45.6 %
Parking
    24,257       22,738       6.7 %
Security
    7,968       7,487       6.4 %
Corporate
    (88,662 )     (84,324 )     (5.1 )%
 
                 
Operating profit
    117,568       108,839       8.0 %
Other-than-temporary impairment losses on auction rate security:
                       
Impairments recognized in other comprehensive income
          (127 )   NM *
Income from unconsolidated affiliates, net
    3,915           NM *
Interest expense
    (15,805 )     (4,639 )     240.7 %
 
                 
Income from continuing operations before income taxes
  $ 105,678     $ 104,073       1.5 %
 
                 
*  
Not Meaningful

 

- 10 -


 

ABM Industries Incorporated and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(Unaudited)

(in thousands, except per share data)
                                 
    Quarter Ended October 31,     Year Ended October 31,  
    2011     2010     2011     2010  
 
                               
Reconciliation of Adjusted Income from Continuing Operations to Net Income
                               
 
                               
Adjusted income from continuing operations
  $ 20,377     $ 22,624     $ 74,962     $ 70,541  
Items impacting comparability, net of taxes
    (2,195 )     (1,186 )     (6,264 )     (6,671 )
 
                       
Income from continuing operations
    18,182       21,438       68,698       63,870  
 
                               
(Loss) income from discontinued operations
    (134 )     368       (194 )     251  
 
                       
 
                               
Net income
  $ 18,048     $ 21,806     $ 68,504     $ 64,121  
 
                       
 
                               
Reconciliation of Adjusted Income from Continuing Operations to Income from Continuing Operations
                               
 
                               
Adjusted income from continuing operations
  $ 20,377     $ 22,624     $ 74,962     $ 70,541  
 
                               
Items impacting comparability:
                               
 
                               
Linc purchase accounting
                (838 )      
Corporate initiatives and other (a)
    (2,924 )           (3,252 )     (1,869 )
Insurance adjustments
    223       (1,216 )     (856 )     (1,216 )
Litigation and other settlements
    355             1,402       (5,406 )
Acquisition costs
    (780 )     (716 )     (6,092 )     (2,374 )
 
                       
Total items impacting comparability
    (3,126 )     (1,932 )     (9,636 )     (10,865 )
Income taxes benefit
    931       746       3,372       4,194  
 
                       
Items impacting comparability, net of taxes
    (2,195 )     (1,186 )     (6,264 )     (6,671 )
 
                       
 
                               
Income from continuing operations
  $ 18,182     $ 21,438     $ 68,698     $ 63,870  
 
                       
 
                               
Reconciliation of Adjusted EBITDA to Net Income
                               
 
                               
Adjusted EBITDA
  $ 51,339     $ 47,933     $ 184,023     $ 155,892  
 
                               
Items impacting comparability
    (3,126 )     (1,932 )     (9,636 )     (10,865 )
Discontinued operations
    (134 )     368       (194 )     251  
Income tax
    (13,040 )     (13,222 )     (36,980 )     (40,203 )
Interest expense
    (3,328 )     (1,098 )     (15,805 )     (4,639 )
Depreciation and amortization
    (13,663 )     (10,243 )     (52,904 )     (36,315 )
 
                       
 
                               
Net income
  $ 18,048     $ 21,806     $ 68,504     $ 64,121  
 
                       
(a)  
Corporate initiatives for the three months and year ended October 2011 includes the integration costs associated with The Linc Group (TLG). Corporate initiatives for the year ended October 2010 includes: (i) costs associated with the implementation of a new payroll and human resources information system, (ii) the upgrade of the Company’s accounting system, (iii) the completion of the corporate move from San Francisco, and (iv) the integration costs associated with OneSource.

 

- 11 -


 

(Continued)
Reconciliation of Adjusted Income from Continuing Operations per Diluted
     Share to Income from Continuing Operations per Diluted Share (Unaudited)
                                 
    Quarter Ended October 31,     Year Ended October 31,  
    2011     2010     2011     2010  
 
                               
Adjusted income from continuing operations per diluted share
  $ 0.37     $ 0.43     $ 1.39     $ 1.34  
 
                               
Items impacting comparability, net of taxes
    (0.04 )     (0.02 )     (0.12 )     (0.13 )
 
                       
Income from continuing operations per diluted share
  $ 0.33     $ 0.41     $ 1.27     $ 1.21  
 
                       
 
                               
Diluted shares
    54,158       53,369       54,103       52,908  

 

- 12 -


 

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CALCULATION OF ADJUSTED EBITDA LEVERAGE RATIO (UNAUDITED) (in thousands)
         
LEVERAGE RATIO — Post Linc Acquisition
       
 
       
(1) Outstanding borrowings *
  $ 452,461  
 
     
 
       
(2) Adjusted EBITDA **
  $ 184,023  
 
     
 
       
Ratio of (1) to (2)
    2.46  
 
       
LEVERAGE RATIO — October 31, 2011
       
 
       
(1) Outstanding borrowings *
  $ 300,000  
 
     
 
       
(2) Adjusted EBITDA **
  $ 184,023  
 
     
 
       
Ratio of (1) to (2)
    1.63  
*  
Outstanding borrowings immediately following the acquisition of Linc on December 1, 2010.
 
**  
Adjusted EBITDA for trailing twelve months as of October 31, 2011 (for comparison purposes).

 

- 13 -


 

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 )
 
           
 
               
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 unqiue items impacting comparability.

 

- 14 -

Exhibit 99.2

Fourth Quarter 2011 Investor Conference Call December 14, 2011


 

Agenda 1 Introduction & Overview | Henrik Slipsager, Chief Executive Officer 2 Fourth Quarter 2011 Financial Review | Jim Lusk, Chief Financial Officer 3 Fourth Quarter and Fiscal 2011 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 2010 Annual Report on Form 10-K and in our 2011 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


 

Fourth Quarter 2011 Financial Highlights Revenue up 20%, primarily driven by companies acquired in 2010Janitorial tag revenue up 12% year-over-year 7.1% increase in Adjusted EBITDA, despite $3.7 million labor expense from additional workdayAcquisitions slightly accretive, excluding transaction costsCash flow from continuing operations of $74.2 millionReduced outstanding debt by $65 millionPaid 182nd consecutive dividend


 

Results Synthesis - Key Financial Metrics Net Income Net Income of $18.0 million, down 17.4% or $3.8 million. $2.3 million of additional janitorial labor expense due to an extra workday and higher income taxes of $1.1 million contributed to the year-over decrease in fourth quarter net incomeAdjusted EBITDA1Adjusted EBITDA of $51.3 million was $3.4 million, or 7.1% higher. The year-over-year growth in Adjusted EBITDA for the fourth quarter of 2011 is primarily the result of $4.7 million increase in pre-tax divisional operating profit from Linc & L&R, income from unconsolidated affiliates, partially offset by $3.7 million additional labor expense from one more workdayCash Flow$74.2 million compared to $67.8 million. The increase of $6.4 million was driven primarily by timing of vendor payments 1 Reconciliation of Adjusted Income from Continuing Operations and Adjusted EBITDA in the appendix of this presentation2 Reconciliation of Consolidated Adjusted EBIT and Adjusted EBITDA in the appendix of this presentation Adjusted EBITDA up 200% from FY2007


 

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 fourth quarter were 48 days DSO up 1 day year-over-year and down 2 days sequentially


 

Engineering Services & Energy Solutions Q4 2011 Results Synthesis - Revenue1 Revenue up 1.4% Tag revenue up 12% year-over-year Revenue up 20%. Fourth consecutive quarter of revenue surpassing $1 billion Janitorial Services Parking & Shuttle Services Security Services Revenue up 149.0%.Linc acquisition contributed $142.6 million Revenue up 19.3%L&R acquisition contributed $26.8 million Revenue up 3.1%. 1Excludes Corporate


 

Q4 2011 Results Synthesis - Operating Profits1 Janitorial operating profit of $35.7 million decreased $3.3 million or 8.4%, due to one additional workday, which generated $3.7 million more of labor expense, and an increase in SUI and fuel costs of $1.0 million. Partially offsetting these higher costs was lower bonus expense of $0.9 millionEngineering operating profit increased $2.7 million to $9.2 million or 41.4% resulting from $2.9 million of operating profits associated with the Linc acquisitionThe 11.2% increase or $0.8 million in Parking's operating profit to $7.5 million was primarily the result of $1.7 million of profit associated with L&RSecurity operating profit was lower by $0.2 million 1Excludes Corporate


 

Fiscal Year 2011 Highlights Surpassed $4 billion in revenueSuccessfully integrated key 2010 acquisitions: The Linc Group, L&R, and DiverscoGenerated cash flow from operations of approximately $160 millionReduced outstanding debt by over $150 million since the acquisition of LincAchieved adjusted EBITDA of $184 million; year-over-year increase of 18%Paid approximately $30 million in dividends


 

Fiscal 2012 Outlook Summary Anticipate Income from Continuing Operations of $1.26 to $1.36 per diluted share Guidance for Adjusted Income from Continuing Operations of $1.40 to $1.50 for fiscal 2012, which reflects higher expenses associated with SUI and key initiatives to drive long-term growthPre-tax $3.0 million to $4.0 million anticipated investments for strategic growth initiatives: Unified Workforce; ABM Energy; and Public SourcingAdditional key assumptions affecting Fiscal 2012 guidanceOne additional work day for FY2012; impact of approximately $4.0 million pre- tax. The one additional workday will occur in the third quarterDepreciation and Amortization expense of $52 million to $56 millionInterest expense of $10 million to $12 millionExpect seasonality trends to continue with the second half of the fiscal year much stronger than the first half similar to fiscal 2011Operating cash flow anticipated to remain strong but lower year-over-yearOneSource NOL's diminishing. Cash taxes estimated to be approximately $24 million to $26 millionEffective tax rate of 39% to 41%


 

Forward-Looking Statements 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: 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 the 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, 2010 and in other reports the Company files from time to time with the Securities and Exchange Commission.


 

Appendix Unaudited Reconciliation of non-GAAP Financial Measures


 

Unaudited Reconciliation of non-GAAP Financial Measures (in thousands)


 

Unaudited Reconciliation of non-GAAP Financial Measures (in thousands, except per share data)


 

Unaudited Reconciliation of non-GAAP Financial Measures (in thousands)


 

Unaudited Calculation of Adjusted EBITDA Leverage Ratio


 

Unaudited Reconciliation of non-GAAP Financial Measures