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8-K - FORM 8-K - ABM INDUSTRIES INC /DE/c22129e8vk.htm
EX-99.2 - EXHIBIT 99.2 - ABM INDUSTRIES INC /DE/c22129exv99w2.htm
Exhibit 99.1
     
(ABM LOGO)
  551 Fifth Avenue
Suite 300
New York, NY 10176
PRESS RELEASE
             
Contact:
           
Investors & Analysts:
  David Farwell   Media:   Tony Mitchell
 
  (212) 297-9792       (212) 297-9828
 
  dfarwell@abm.com       tony.mitchell@abm.com
ABM INDUSTRIES ANNOUNCES THIRD QUARTER 2011 FINANCIAL RESULTS
AND DECLARES QUARTERLY DIVIDEND
Revenues Increase 24% Driven by Acquired Companies
Weaker Economy Impacts Outlook
                                                 
    Three Months Ended             Nine Months Ended        
(in millions,   July 31,     Increase     July 31,     Increase  
except per share data)   2011     2010     (Decrease)     2011     2010     (Decrease)  
 
                                               
Revenues
  $ 1,076.2     $ 869.0       23.8 %   $ 3,165.5     $ 2,594.4       22.0 %
 
                                               
Net cash provided by continuing operating activities
  $ 51.0     $ 35.2       44.9 %   $ 82.6     $ 73.0       13.1 %
 
                                               
Income from continuing operations
  $ 27.9     $ 21.0       33.1 %   $ 50.5     $ 42.4       19.1 %
 
                                               
Income from continuing operations per diluted share
  $ 0.51     $ 0.40       27.5 %   $ 0.93     $ 0.80       16.3 %
 
                                               
Net income
  $ 27.9     $ 21.0       33.0 %   $ 50.5     $ 42.3       19.2 %
 
                                               
Net income per diluted share
  $ 0.51     $ 0.40       27.5 %   $ 0.93     $ 0.80       16.3 %
 
                                               
Adjusted income from continuing operations
  $ 27.9     $ 22.0       27.0 %   $ 54.6     $ 47.9       13.9 %
 
                                               
Adjusted income from continuing operations per diluted share
  $ 0.51     $ 0.42       21.4 %   $ 1.01     $ 0.91       11.0 %
 
                                               
Adjusted EBITDA
  $ 54.9     $ 45.9       19.7 %   $ 132.7     $ 108.0       22.9 %
(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 — September 8, 2011 — ABM Industries Incorporated (NYSE:ABM) today announced revenues for the third quarter of fiscal year 2011 of $1.08 billion, a 23.8% increase compared to third quarter of fiscal year 2010 revenues of $869.0 million. Income from continuing operations for the third quarter of fiscal year 2011 was $27.9 million, a 33.1% increase from $21.0 million in the third quarter of fiscal year 2010. Income from continuing operations per diluted share for the third quarter of fiscal year 2011 increased 27.5% to $0.51 compared to income from continuing operations per diluted share of $0.40 in the third quarter of fiscal year 2010. Income from continuing operations increased primarily as a result of a $4.7 million after-tax increase in Divisional operating profit, driven by the companies acquired in calendar 2010, $4.7 million related to a re-measurement of certain unrecognized tax benefits and $1.5 million after-tax from settling a dispute related to an acquisition. This year-over-year increase in income from continuing operations was partially offset by higher share-based compensation expense of $2.2 million after-tax and a $1.9 million after-tax increase in interest expense compared to the year-ago quarter.
“Our Divisions once again generated quarterly revenues exceeding $1 billion, driven by the companies we acquired last year, and including slight organic growth,” said Henrik Slipsager, president and chief executive officer, ABM Industries. “All four Divisions produced higher revenues year-over-year, consistent with prior quarters in the 2011 fiscal year. The higher revenues helped the Divisions’ combined operating profit, excluding corporate, increase 15% to more than $60.0 million. Janitorial operating profit increased 4.6%, despite year-over-year increases in fuel costs and state unemployment insurance expenses. Our Engineering and Parking segments generated double digit growth. Engineering profits were up 61.5%, reflecting the contribution from the Linc operations we acquired in the first quarter of the current fiscal year. Parking achieved year-over-year growth of 23.1%, primarily related to operating profit associated with lots acquired in the L&R acquisition. Even as we produced higher revenues and profit in the quarter, we also saw clear signs that the current slow to no growth economy is causing clients to take additional cost containment measures, leading to further price reductions in an already compressed market. This erosion, combined with the shift in revenues from delayed federal appropriations, impacts our view of the fourth quarter.”
“In the third quarter, net income and adjusted income from continuing operations both increased to nearly $28 million and $0.51 per diluted share as items impacting comparability did not significantly influence the quarter’s results. As noted, our results included the $4.7 million related to a re-measurement of certain unrecognized tax benefits compared to the year-ago quarter, partially offset by the $2.2 million after-tax increase in share-based compensation expense. Adjusted EBIDTA increased to $54.9 million, up nearly 20%, and our adjusted EBITDA margin increased sequentially 114 basis points to 5.1%. We grew our cash from continuing operations, increasing nearly 45% to $51.0 million, compared to the third quarter of fiscal year 2010.”
Excluding items impacting comparability, adjusted income from continuing operations was $27.9 million, or $0.51 per diluted share, for the third quarter of fiscal year 2011. This compares to adjusted income from continuing operations of $22.0 million, or $0.42 per diluted share, in the third quarter of fiscal year 2010.
The Company’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and excluding discontinued operations and items impacting comparability) for the third quarter of fiscal year 2011 was $54.9 million, a 19.7% increase compared to $45.9 million in the third quarter of fiscal year 2010.
Net cash from continuing operations was $51.0 million in the third quarter of fiscal year 2011, a 44.9% increase compared to $35.2 million in the third quarter of fiscal year 2010.

 

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The Company reported revenues for the nine months ended July 31, 2011 of $3.17 billion, driven by the companies acquired in calendar 2010, a 22.0% increase compared to year-ago revenues of $2.59 billion. Income from continuing operations for the first nine months of fiscal year 2011 was $50.5 million, or $0.93 per diluted share, compared to $42.4 million, or $0.80 per diluted share, for the first nine months of fiscal year 2010. Adjusted income from continuing operations for the first nine months of fiscal year 2011 was $54.6 million, or $1.01 per diluted share, compared to $47.9 million, or $0.91 per diluted share, for the first nine months of fiscal year 2010. Adjusted EBITDA for the first nine months of fiscal year 2011 was $132.7 million, a 22.9% increase compared to $108.0 million for the first nine months of fiscal year 2010. Net cash from continuing operation increased to $82.6 million for the first nine months of fiscal year 2011, a 13.1% increase compared to $73.0 million for the first nine months of fiscal year 2010.
The Company also announced that the Board of Directors has declared a fourth quarter cash dividend of $0.14 per common share payable on November 7, 2011 to stockholders of record on October 6, 2011. This will be ABM’s 182nd consecutive quarterly cash dividend.
Guidance
Slipsager concluded: “Through the first two quarters, our performance was essentially in line with our expectations. During the third quarter, it became clear that the U.S. economy will be weaker than anticipated, impacting our clients and resulting in further price compression, particularly in our Janitorial business. Further, as we have previously discussed, the delay in passing federal appropriations had an adverse impact on the timing of awarding contracts to Linc Government Services, which we expect to shift the start of projects from fiscal year 2011 to fiscal year 2012. Taken together, along with higher unemployment insurance expense and fuel and related costs, we are lowering our expectations for the fourth quarter.”
The Company now estimates that income from continuing operations per diluted share for the full 2011 fiscal year will be in the lower end of the range of $1.23 to $1.33 and is revising the range for adjusted income from continuing operations per diluted share, for the same period, to $1.32 to $1.42.
Earnings Webcast
On Friday, September 9, 2011, 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=101716
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 #94700142.
Earnings Webcast Presentation
In connection with the webcast 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 a leading provider of integrated facility services. With fiscal 2010 revenues of approximately $3.5 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.

 

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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) risks relating to our acquisition of Linc, including risks relating to reductions in government spending on outsourced services as well as payment delays, may adversely affect a significant portion of revenues generated by government contracts, and political and compliance risks, both domestically and abroad, may adversely impact our operations; (2) our acquisition strategy may adversely impact our results of operations; (3) intense competition can constrain our ability to gain business, as well as our profitability; (4) we are subject to volatility associated with high deductibles for certain insurable risks; (5) an increase in costs that we cannot pass on to clients could affect our profitability; (6) we provide our services pursuant to agreements which are generally cancelable by either party upon 30 to 90 days’ notice; (7) our success depends on our ability to preserve our long-term relationships with clients; (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) financial difficulties or bankruptcy of one or more of our major clients could adversely affect results; (12) we are subject to risks relating to foreign currency fluctuations and foreign exchange exposure; (13) our ability to operate and pay our debt obligations depends upon our access to cash; (14) because we conduct our business through operating subsidiaries, we depend on those entities to generate the funds necessary to meet financial obligations; (15) that portion of our revenues which are generated from international operations are subject to political risks and changes in socio-economic conditions, laws and regulations, including labor, monetary and fiscal policies, which could negatively impact our ability to operate and grow our business in the international arena; (16) 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; (17) uncertainty in the credit markets may negatively impact our costs of borrowings, our ability to collect receivables on a timely basis, and our cash flow; (18) any future increase in the level of debt or in interest rates can affect our results of operations; (19) an impairment charge could have a material adverse effect on our financial condition and results of operations; (20) we are defendants in several class and representative actions or other lawsuits alleging various claims that could cause us to incur substantial liabilities; (21) 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 adversely affect our labor force, operations and financial results as well as our reputation; (22) labor disputes could lead to loss of revenues or expense variations; (23) federal health care reform legislation may adversely affect our business and results of operations; (24) we participate in multi-employer defined benefit plans that could result in substantial liabilities being incurred; and (25) 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, 2010 and in other reports the Company files from time to time with the Securities and Exchange Commission.

 

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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 third quarter of fiscal years 2011 and 2010. The Company also presents guidance for fiscal year 2011, 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 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 third quarter 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.)
###

 

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Financial Schedules
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
                         
    Three Months Ended July 31,     Increase  
(In thousands, except per share data)   2011     2010     (Decrease)  
 
                       
Revenues
  $ 1,076,247     $ 869,029       23.8 %
Expenses
                       
Operating
    952,844       776,224       22.8 %
Selling, general and administrative
    76,356       54,697       39.6 %
Amortization of intangible assets
    6,314       2,782       127.0 %
 
                 
Total expenses
    1,035,514       833,703       24.2 %
 
                 
Operating profit
    40,733       35,326       15.3 %
Income from unconsolidated affiliates, net
    1,166           NM *
 
                 
Interest expense
    (4,114 )     (1,149 )     258.1 %
 
                 
Income from continuing operations before income taxes
    37,785       34,177       10.6 %
Provision for income taxes
    (9,874 )     (13,204 )     (25.2 )%
 
                 
Income from continuing operations
    27,911       20,973       33.1 %
Loss from discontinued operations, net of taxes
    (36 )     (10 )   NM *
 
                 
Net Income
  $ 27,875     $ 20,963       33.0 %
 
                 
Net Income Per Common Share — Basic
                       
Income from continuing operations
  $ 0.52     $ 0.40       30.0 %
Loss from discontinued operations
              NM *
 
                 
Net Income
  $ 0.52     $ 0.40       30.0 %
 
                 
Net Income Per Common Share — Diluted
                       
Income from continuing operations
  $ 0.51     $ 0.40       27.5 %
Loss from discontinued operations
              NM *
 
                 
Net Income
  $ 0.51     $ 0.40       27.5 %
 
                 
*    Not Meaningful
                       
 
                       
Average Common And Common Equivalent Shares
                       
Basic
    53,207       52,149          
Diluted
    54,201       52,996          
 
                       
Dividends Declared Per Common Share
  $ 0.140     $ 0.135          

 

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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED INCOME STATEMENT INFORMATION (UNAUDITED)
                         
    Nine Months Ended July 31,     Increase  
(In thousands, except per share data)   2011     2010     (Decrease)  
 
Revenues
  $ 3,165,499     $ 2,594,374       22.0 %
Expenses
                       
Operating
    2,821,672       2,330,299       21.1 %
Selling, general and administrative
    242,406       182,743       32.6 %
Amortization of intangible assets
    17,273       8,251       109.3 %
 
                 
Total expenses
    3,081,351       2,521,293       22.2 %
 
                 
Operating profit
    84,148       73,081       15.1 %
Other-than-temporary impairment losses on auction rate security:
                       
Gross impairment losses
          (114 )   NM *
Impairments recognized in other comprehensive income
          (13 )   NM *
Income from unconsolidated affiliates, net
    2,785           NM *
Interest expense
    (12,477 )     (3,541 )     252.4 %
 
                 
Income from continuing operations before income taxes
    74,456       69,413       7.3 %
Provision for income taxes
    (23,940 )     (26,981 )     (11.3 )%
 
                 
Income from continuing operations
    50,516       42,432       19.1 %
Loss from discontinued operations, net of taxes
    (60 )     (117 )   NM *
 
                 
Net Income
  $ 50,456     $ 42,315       19.2 %
 
                 
Net Income Per Common Share — Basic
                       
Income from continuing operations
  $ 0.95     $ 0.81       17.3 %
Loss from discontinued operations
              NM *
 
                 
Net Income
  $ 0.95     $ 0.81       17.3 %
 
                 
Net Income Per Common Share — Diluted
                       
Income from continuing operations
  $ 0.93     $ 0.80       16.3 %
Loss from discontinued operations
              NM *
 
                 
Net Income
  $ 0.93     $ 0.80       16.3 %
 
                 
*    Not Meaningful
                       
 
                       
Average Common And Common Equivalent Shares
                       
Basic
    53,051       51,992          
Diluted
    54,084       52,754          
 
                       
Dividends Declared Per Common Share
  $ 0.420     $ 0.405          

 

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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW INFORMATION (UNAUDITED)
                 
    Three Months Ended July 31,  
(In thousands)   2011     2010  
Net cash provided by continuing operating activities
    51,028       35,219  
Net cash provided by discontinued operating activities
    631       748  
 
           
Net cash provided by operating activities
  $ 51,659     $ 35,967  
 
           
Net cash (used in) investing activities
  $ (4,840 )   $ (36,193 )
 
           
Proceeds from exercises of stock options (including income tax benefit)
    1,788       3,121  
Dividends paid
    (7,444 )     (7,037 )
Borrowings from line of credit
    179,000       69,500  
Repayment of borrowings from line of credit
    (210,000 )     (64,500 )
Changes in book cash overdrafts
    6,160       11,101  
 
           
Net cash (used in) provided by financing activities
  $ (30,496 )   $ 12,185  
 
           
 
    Nine Months Ended July 31,  
(In thousands)   2011     2010  
Net cash provided by continuing operating activities
    82,552       72,959  
Net cash provided by discontinued operating activities
    2,285       7,331  
 
           
Net cash provided by operating activities
  $ 84,837     $ 80,290  
 
           
Acquisition of Linc (net of cash acquired)
    (290,253 )      
Other investing
    (12,312 )     (47,932 )
 
           
Net cash used in investing activities
  $ (302,565 )   $ (47,932 )
 
           
Proceeds from exercises of stock options (including income tax benefit)
    9,519       6,166  
Dividends paid
    (22,278 )     (21,051 )
Deferred financing costs paid
    (4,991 )      
Borrowings from line of credit
    740,500       298,500  
Repayment of borrowings from line of credit
    (516,000 )     (321,000 )
Changes in book cash overdrafts
    11,146       3,776  
 
           
Net cash provided by (used in) financing activities
    217,896     $ (33,609 )
 
           

 

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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET INFORMATION (UNAUDITED)
                 
    July 31,     October 31,  
(In thousands)   2011     2010  
 
               
Assets
               
Cash and cash equivalents
  $ 39,614     $ 39,446  
Trade accounts receivable, net
    565,267       450,513  
Prepaid income taxes
    4,187       1,498  
Current assets of discontinued operations
    2,954       4,260  
Prepaid expenses
    46,615       41,306  
Notes receivable and other
    56,923       20,402  
Deferred income taxes, net
    40,256       46,193  
Insurance recoverables
    9,240       5,138  
 
           
Total current assets
    765,056       608,756  
 
               
Non-current assets of discontinued operations
    322       1,392  
Insurance deposits
    35,860       36,164  
Other investments and long-term receivables
    3,273       4,445  
Deferred income taxes, net
    42,479       51,068  
Insurance recoverables
    61,557       70,960  
Other assets
    43,223       37,869  
Investments in auction rate securities
    15,148       20,171  
Investments in unconsolidated affiliates, net
    15,911        
Property, plant and equipment, net
    62,055       58,088  
Other intangible assets, net
    135,119       65,774  
Goodwill
    746,832       593,983  
 
           
Total assets
  $ 1,926,835     $ 1,548,670  
 
           
Liabilities
               
Trade accounts payable
  $ 129,076     $ 78,928  
Accrued liabilities
               
Compensation
    98,499       89,063  
Taxes — other than income
    20,141       17,663  
Insurance claims
    79,316       77,101  
Other
    114,549       70,119  
Income taxes payable
    728       977  
 
           
Total current liabilities
    442,309       333,851  
 
               
Income taxes payable
    33,791       29,455  
Line of credit
    365,000       140,500  
Retirement plans and other
    39,134       34,626  
Insurance claims
    262,463       271,213  
 
           
Total liabilities
    1,142,697       809,645  
 
           
Stockholders’ Equity
    784,138       739,025  
 
           
Total liabilities and stockholders’ equity
  $ 1,926,835     $ 1,548,670  
 
           

 

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ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
                         
    Three Months Ended July 31,     Increase  
(In thousands)   2011     2010     (Decrease)  
Revenues
                       
Janitorial
  $ 598,697     $ 575,204       4.1 %
Engineering
    236,213       94,383       150.3 %
Parking
    153,323       114,222       34.2 %
Security
    87,736       84,900       3.3 %
Corporate
    278       320       (13.1 )%
 
                 
 
  $ 1,076,247     $ 869,029       23.8 %
 
                 
Operating Profit
                       
Janitorial
  $ 40,144     $ 38,380       4.6 %
Engineering
    9,878       6,118       61.5 %
Parking
    7,171       5,823       23.1 %
Security
    2,813       2,026       38.8 %
Corporate
    (19,273 )     (17,021 )     (13.2 )%
 
                 
Operating profit
    40,733       35,326       15.3 %
Income from unconsolidated affiliates, net
    1,166           NM *
Interest expense
    (4,114 )     (1,149 )     258.1 %
 
                 
Income from continuing operations before income taxes
  $ 37,785     $ 34,177       10.6 %
 
                 
REVENUES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
                         
    Nine Months Ended July 31,     Increase  
(In thousands)   2011     2010     (Decrease)  
Revenues
                       
Janitorial
  $ 1,783,557     $ 1,717,537       3.8 %
Engineering
    658,058       285,716       130.3 %
Parking
    462,316       340,813       35.7 %
Security
    260,630       249,209       4.6 %
Corporate
    938       1,099       (14.6 )%
 
                 
 
  $ 3,165,499     $ 2,594,374       22.0 %
 
                 
Operating Profit
                       
Janitorial
  $ 104,942     $ 101,040       3.9 %
Engineering
    24,170       16,415       47.2 %
Parking
    16,799       16,033       4.8 %
Security
    5,011       4,313       16.2 %
Corporate
    (66,774 )     (64,720 )     (3.2 )%
Operating profit
    84,148       73,081       15.1 %
Other-than-temporary impairment losses on auction rate security:
                       
Gross impairment losses
          (114 )   NM *
Impairments recognized in other comprehensive income
          (13 )   NM *
Income from unconsolidated affiliates, net
    2,785           NM *
Interest expense
    (12,477 )     (3,541 )     252.4 %
 
                 
Income from continuing operations before income taxes
  $ 74,456     $ 69,413       7.3 %
 
                 
*  
Not Meaningful

 

- 10 -


 

ABM Industries Incorporated and Subsidiaries
Reconciliations of Non-GAAP Financial Measures
(Unaudited)
(in thousands, except per share data)
                                 
    Three Months Ended July 31,     Nine Months Ended July 31,  
    2011     2010     2011     2010  
 
Reconciliation of Adjusted Income from Continuing Operations to Net Income                        
 
Adjusted income from continuing operations
  $ 27,882     $ 21,952     $ 54,585     $ 47,917  
Items impacting comparability, net of taxes
    29       (979 )     (4,069 )     (5,485 )
 
                       
Income from continuing operations
    27,911       20,973       50,516       42,432  
 
                               
Loss from discontinued operations
    (36 )     (10 )     (60 )     (117 )
 
                       
 
                               
Net income
  $ 27,875     $ 20,963     $ 50,456     $ 42,315  
 
                       
 
                               
Reconciliation of Adjusted Income from Continuing Operations to Income from Continuing Operations                        
 
                               
Adjusted income from continuing operations
  $ 27,882     $ 21,952     $ 54,585     $ 47,917  
 
                               
Items impacting comparability:
                               
 
                               
Linc purchase accounting
    (140 )           (838 )      
Corporate initiatives and other (a)
    (328 )           (328 )     (1,869 )
Insurance adjustment
    (1,079 )           (1,079 )      
Litigation and other settlements
    1,967       (1,006 )     1,047       (5,406 )
Acquisition costs
    (385 )     (552 )     (5,312 )     (1,658 )
 
                       
Total items impacting comparability
    35       (1,558 )     (6,510 )     (8,933 )
Income taxes (expense) benefit
    (6 )     579       2,441       3,448  
 
                       
Items impacting comparability, net of taxes
    29       (979 )     (4,069 )     (5,485 )
 
                       
 
                               
Income from continuing operations
  $ 27,911     $ 20,973     $ 50,516     $ 42,432  
 
                       
 
                               
Reconciliation of Adjusted EBITDA to Net Income                        
 
                               
Adjusted EBITDA
  $ 54,937     $ 45,912     $ 132,684     $ 107,959  
 
                               
Items impacting comparability
    35       (1,558 )     (6,510 )     (8,933 )
Discontinued operations
    (36 )     (10 )     (60 )     (117 )
Income tax
    (9,874 )     (13,204 )     (23,940 )     (26,981 )
Interest expense
    (4,114 )     (1,149 )     (12,477 )     (3,541 )
Depreciation and amortization
    (13,073 )     (9,028 )     (39,241 )     (26,072 )
 
                       
 
                               
Net income
  $ 27,875     $ 20,963     $ 50,456     $ 42,315  
 
                       
 
(a)  
Corporate initiatives for the three and nine months ended July 2011 includes the integration costs associated with The Linc Group (TLG). Corporate initiatives for the nine months ended July 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
                                 
    Three Months Ended July 31,     Nine Months Ended July 31,  
    2011     2010     2011     2010  
 
                               
Adjusted income from continuing operations per diluted share
  $ 0.51     $ 0.42     $ 1.01     $ 0.91  
 
                               
Items impacting comparability, net of taxes
          (0.02 )     (0.08 )     (0.11 )
 
                       
Income from continuing operations per diluted share
  $ 0.51     $ 0.40     $ 0.93     $ 0.80  
 
                       
 
                               
Diluted shares
    54,201       52,996       54,084       52,754  

 

-12-


 

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, 2011
                 
    Year Ending October 31, 2011  
    Low Estimate     High Estimate  
    (per diluted share)  
 
               
Adjusted income from continuing operations per diluted share
  $ 1.32     $ 1.42  
 
               
Adjustments to income from continuing operations (a)
    (0.09 )     (0.09 )
 
               
 
           
Income from continuing operations per diluted share
  $ 1.23     $ 1.33  
 
           
 
(a)  
Adjustments to income from continuing operations are expected to include transaction and integration costs associated with the acquisition of The Linc Group (TLG) and other unique items impacting comparability.

 

-13-