ABM Industries Incorporated Q2 FY2025 earnings call

• Milestones: Returned to organic growth in B&I and M&D, improved cash flow, $1.1 billion new bookings in first half. • Market Insights: Prime commercial office vacancy improving, M&D benefiting from industrial activity, Aviation strong due to travel trends, Education stable. • Strategic Initiatives: ERP implementation progress, focus on premium office segment, evolving M&D service offerings, investments in talent and technology.

B&I: Revenue reached $1 billion, up 3% y-o-y. Driven by expansion with existing clients, improved U.S. prime commercial office market, and strength in U.K. Sports & Entertainment and Parking. Operating profit rose 7% to $83 million, margin 8.2%. Aviation: Revenue grew 9% to $260.1 million, supported by travel trends and new wins. Operating profit $16.5 million, up 26%, margin 6.3%. M&D: Generated $398.1 million in revenue, 2% increase. Return to organic growth from new contracts and client expansion. Operating profit $39.9 million, margin 10%. Education: Revenue rose 1% to $227.8 million. Operating profit increased 19% to $13.8 million, margin 6%. Technical Solutions: 19% revenue growth to $210.2 million. Driven by microgrid and mission-critical services. Operating profit $13.4 million, margin 6.4%.

• Reaffirmed full year adjusted EPS guidance $3.65 to $3.80 and adjusted EBITDA margin 6.3% to 6.5%. • Normalized free cash flow expected $250 million to $290 million, excluding ELEVATE and integration costs. • Interest expense forecast $80 million to $84 million, tax rate 29% to 30%.

• Macro-economic uncertainty affecting business. • Project delays impacting ATS profitability. • Potential impact of tariff discussions on Microgrid projects. • Repeal of energy project tax credits as a monitoring risk.

Q: Earn-out on RavenVolt and cash flow guidance A: Earn-out for year is ~$30 million, total including purchase ~$280 million. Normalized cash flow excludes ELEVATE and integration costs, targeting $250-290 million.

Q: Organic growth in B&I second half A: Confident in positive organic growth territory for B&I going forward.

Q: M&D service offerings and opportunity A: Expanding beyond core janitorial, more strategic and sticky, higher margin, with opportunity in semiconductor, automotive, etc.

Q: Project delays in ATS and margin normalization A: Delays due to approvals, expected to revert to back half of year, margins expected similar to past 9%-10%.

Q: Education segment and new business A: Steady, strong renewals, bundled offerings gaining traction, with tailwinds from facility investments.

Q: Organic revenue growth trend A: All industry groups back to organic growth, but specific revenue growth projection uncertain.

Q: Battery energy storage contract and backlog A: $700 million backlog, monitoring tariff and tax credit impacts, but Microgrid business doing well.

Q: APS margins and project timing A: Margin impact from project delays and mix, with execution phase having lower margin, expecting recovery in third quarter.

Q: B&I market share and differentiation A: Gaining share due to scale, relationships, execution, and technology investments.

Q: M&A pipeline and cash usage A: Strong M&A pipeline, prioritizing internal investments, seeing attractive opportunities.

Q: Regional differentiation in B&I A: Regional differences exist, e.g., prime office markets booming in NYC, Midwest strong, SF recovering, Carolinas growing with data centers.