The acquisition of OneSource in 2007 bolstered ABM as a leader in the janitorial market, while the Linc Group acquisition in 2010 established ABM as a “facility solutions” company with new service offerings, including lighting, mechanical, and electrical “technical solutions.” With demand increasing for industry-specific service providers, in 2012 we purchased Air Serv and established our first industry group, “aviation,” which was previously included in “other.“aviation.” In recent years, we have strategically acquired companies in the U.K.,United Kingdom, particularly with the GBM and Westway acquisitions, which expanded overseas both our janitorial and technical solutions businesses.businesses overseas. In 2017, we completed the acquisition ofacquired GCA Services Group (“GCA”), a provider of integrated facility services to educational institutions and commercial facilities, for approximately $1.3 billion, the largest acquisition in ABM history. As a result of this acquisition, we are now a leading facility solutions provider in the education market. In recent years, we also evaluated all of our service offerings and sold our Security and Government Services businesses, as theywhich did not align with ABM’sour long-term industry-group focus.focus on industry groups.

As a result of these strategic acquisitions,changes, we have strengthened our ability to offer janitorial, facilities engineering, parking,Janitorial, Parking, Facilities Services, Building & Energy Solutions, and specialized mechanical and electrical technical solutions,Airline Services, on a standalone basis or in combination, and positioned ourselves as a leading integrated facilities management company.

Unless otherwise indicated, all references to years are to our fiscal year, which ends on October 31.

We generate revenues under several types of contracts, as explained below. Generally, the type of contract is determined by the nature of the services. Although many of our service agreements are cancelable on short notice, we have historically had a high rate of client retention rate and expect to continue maintaining long-term relationships with our clients.

For management and financial reporting purposes, our businesses are currently separated into fiveOur current reportable segments:segments consist of Business & Industry (“B&I”), Aviation, Emerging Industries Group, Technical Solutions, and the newly acquired GCA Services. Among other changes, once we integrate GCA into our industry group model in 2018, we anticipate our Education industry group will become a reportable segment. We also expect to present a new Technology & Manufacturing reportable segment, that will combine our High Tech industry group(“T&M”), Education, Aviation, and the legacy GCA and ABM Industrial & Manufacturing (“I&M”) businesses. ABM’s legacy I&M business was included in the B&I segment. Our principal operations are in the United States, and in 2017 our U.S. operations generated approximately 94% of our revenues.Technical Solutions. For segment and geographicalgeographic financial information, see Note 18,17, “Segment and Geographic Information,” in the Notes to Consolidated Financial Statements.

We hold various service marks, trademarks, and trade names, such as “ABM,” “ABM Building Value,” “ABM Greencare,” “MPower,“EnhancedClean,” “EnhancedFacility,” “Linc Service,” “MPower,” and “TEGG,” which we deem important to our marketing activities, to our business, and, with respectin some cases, to certain of these, the franchising activities conducted by our Technical Solutions segment.

No client accounted for more than 10% of our consolidated revenues during 2017, 2016,2020, 2019, or 2015.

We believe that each aspect of our business is highly competitive and that such competition is based primarily on price, quality of service, efficiency enhancements, adapting to changing workplace conditions, and ability to anticipate and respond to industry changes. A majority of our revenue is derived from projects requiring competitive bids; however, an invitation to bid is often conditioned upon prior experience, industry expertise, and financial strength. The low cost of entry in the facility services business results in a very competitive market. We mainly compete with regional and local owner-operated companies that may have more acute vision into local markets and significantly lower labor and overhead costs, providing them with competitive advantages in those regards. We also compete indirectly with companies that can perform for themselves one or more of the services we provide.

Our sales and marketing activities include digital engagement and direct interactions with prospective and existing clients, pricing, proposal management, and customer relationship management by dedicated business development teams, operations personnel, and management. These activities are executed by branch and regional sales, marketing, and operations teams assigned to our industry groups and are supported by centralized sales support teams, inside sales teams, corporateand marketing personnel, and our Center of Excellence teams. Thesepersonnel. The sales and marketing teams perform lead acquisition, lead nurturing,acquire, nurture, and lead managementmanage leads through the sales buying process, as well as training intrain personnel on product offerings, sales tools, and proposal systems, all governed by standard operating procedures.

Our operations are subject to various federal, state, and/or local laws, rules, and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, such as discharge into soil, water,well as laws and air,regulations relating to, among other things, labor, wages, and the generation, handling, storage, transportation,health and disposal of waste and hazardous substances. From time to time we are involved in environmental matters at certain of our locations or in connection with our operations.safety matters. Historically, the cost of complying with environmentalthese laws, or resolving environmental issues relating to locations or operations in the United States or abroadrules, and regulations has not had a material adverse effect on our financial position, results of operations, or cash flows.

Our employees are the driving force behind everything we do, and supporting our employees is a foundational value for the Company. Direct labor costs represented 68% of our total revenue for fiscal year 2020. As of October 31, 2017,2020, we employed approximately 140,000114,000 employees, of whichwhom approximately 44,000,36,000, or 32%, were subject to various local collective bargaining agreements. As of October 31, 2020, our front line employees represented 95% of our total workforce, while staff and management employees represented the other 5%.

We are requiredOur corporate website is www.abm.com. The content on any website referred to filein this filing does not constitute, and should not be viewed as, a part of this Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K,Report, and our website is not incorporated into this or any of our other informationfilings with the Securities and Exchange Commission (“SEC”). The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. Information on the operationWe make available free of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet site at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.

WeThe following risks, some of which have occurred and any of which may not realizeoccur in the growth opportunitiesfuture, could materially and cost synergiesadversely affect our business, financial condition, cash flows, results of operations, and/or the trading price of our common stock. The risks described below identify the material risks we face; however, our business could also be affected by factors that are anticipated fromnot presently known to us or that we currently consider to be immaterial. You should carefully consider the acquisitionrisks described below in addition to the other information set forth in this Annual Report on Form 10-K, including “Management’s Discussion and Analysis of GCA.Financial Condition and Results of Operations” (“MD&A”) and the consolidated financial statements and accompanying notes (the “Financial Statements”).

The extent of the impact of the Pandemic depends on future developments and remains highly uncertain due to the unknown duration and severity of the Pandemic. Given these uncertainties, we cannot estimate the full impacts the Pandemic will be incurred to achieve cost synergies, such expenses are difficult to estimate accurately and may exceed current estimates. Accordingly, the benefits from the acquisition may be offset by costs incurred to integrate thehave on our business, or delays in the integration process. In addition, the overall integration may result in unanticipated problems, expenses, liabilities, competitive responses, loss of client and other relationships, or loss of key employees, any of which may adversely affect our results of operations, and may cause our stock price to decline.

Our use of subcontractorsWe may periodically engage in various initiatives intended to drive long-term profitable growth and increase operational efficiency. Planned changes to our business systems and processes may not create the growth, operational efficiencies or joint venture partnerscost benefits that we expect and could result in unanticipated consequences, including substantial disruption to perform work under customer contracts exposes us to liabilityour back-office operations and financial risk.service delivery.

We depend on subcontractors or other parties, such as joint venture partners, to perform work in situations in which we aremay not be able to self-performfully execute on such initiatives to the work involved. Such arrangements may involve subcontracts or joint venture relationships where we do not have direct control overextent expected within the performing party. A failure, for whatever reason, by one or more of our subcontractors or joint venture partners to perform, or the alleged negligent performance of, the agreed-upon services may expose us to liability. Although we have in place controls and programs to monitor the work of our subcontractors and our joint venture partners, there can be no assurance that these controls or programs will have the desired effect, and we may incur significant liabilityanticipated timeframe as a result of the actionsnumerous factors, such as client resistance, inability to deliver requested end-to-end services, and difficulty penetrating certain markets. Moreover, these initiatives may not provide us with anticipated competitive advantage or inactionsrevenue growth.

In furtherance of our subcontractorsbusiness strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions, divestitures, or joint venture partners.other strategic transactions. In the past, a significant portion of our growth has been generated by acquisitions, and we may continue to acquire businesses in the future as part of our growth strategy. However, we may encounter challenges identifying opportunities in a timely manner or on terms acceptable to us. Furthermore, there is no assurance that any such transaction will result in synergistic benefits. A potential acquisition, divestiture, or other strategic transaction may involve a number of risks including, but not limited to:

We have business operations in jurisdictions outside of the United States, most significantly in the United Kingdom.Kingdom (“U.K.”). Our international operations are subject to risks that are different from those we face in the United States such asand subject us to complex and frequently changing laws and regulations, including differing labor laws and regulations relating to the requirement to comply with nationalprotection of certain information that we collect and local regulatory requirements, including, but not limited to:maintain about our employees, clients, and other third parties. Among these laws is the U.K. Modern Slavery Act, the U.K. Bribery Act, and other anti-corruptionthe European Union General Data Protection Regulation (the “GDPR”), which took effect in May 2018. The failure to comply with these laws or regulations could subject us to significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions. More generally, the economic, political, monetary, and laws respecting privacy; potential difficulties in staffing and labor disputes; differing local labor laws; credit risk or financial conditionoperational impacts of local clients; and local political and social conditions. In addition, the operating results of our non-U.S. subsidiaries are translated into U.S. dollars, and those results are affected by movements in foreign currencies relativeBrexit, including unanticipated impacts to the U.S. dollar. There can be no assurance thatU.K. real estate market and general economic conditions in the foregoing factors will not have a material adverse effect onUnited Kingdom, could negatively impact our international operations or onU.K. business, including reducing our consolidated financial condition and results of operations.margins.

In addition, when we participate in joint ventures that operate outside of the United States where we are not a controlling party, we may have limited control over the joint venture. Any improper actions by our joint venture employees, partners, or agents, including but not limited to failure to comply with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and/or laws relating to human trafficking, could result in civil or criminal investigations, monetary and non-monetary penalties, or other consequences, any of which could have an adverse effect on our financial position as well as on our reputation and ability to conduct business.

We insuredepend on subcontractors or other parties, such as joint venture partners, to perform work in situations in which we are not able to self-perform the work involved. Such arrangements may involve subcontracts or joint venture relationships where we do not have direct control over the performing party. We may be exposed to liability whenever one or more of our subcontractors or joint venture partners, for whatever reason, fails to perform or allegedly negligently performs the agreed-upon services. Although we have in place controls and programs to monitor the work of our subcontractors and our joint venture partners, there can be no assurance that these controls or programs will have the desired effect, and we may incur significant liability as a result of the actions or inactions of one or more of our subcontractors or joint venture partners.

The determination of required insurance reserves is dependent upon significant actuarial judgments. We use the results of actuarial studies to estimate insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years. Actual experience related to our insurance reserves can cause us to change our estimates for reserves and any such changes may materially impact results, causing significant volatility in our operating results. We have experienced material negative trends in our actuarial estimates and may continue to experience these and other material negative trends in future periods.

Should we be unable to renew our excess, umbrella, or other commercial insurance policies, at competitive rates, it could have a material adverse impact on our business, as would the incurrence of catastrophic uninsured claims or the inability or refusal of our insurance carriers to pay otherwise insured claims. Further, to the extent that we self-insure our losses, deterioration in our loss control and/or our continuing claim management efforts could increase the overall cost of claims within our retained limits. A material change in our insurance costs due to changes in the frequency of claims, the severity of the claims, the costs of excess/umbrella premiums, or regulatory changes could have a material adverse effect on our financial position, results of operations, or cash flows.

We haveIn 2015, we formed a wholly-owned captive insurance company, IFM Assurance Company (“IFM”), which we believe will providehas provided us with increased flexibility in the end-to-end management of our insurance program. There can be no assurance that IFM will continue to bring about the intended benefits or that it will provide us with the desired flexibility in the management of our insurance programs, because we may experience unanticipated events that willcould reduce or eliminate expected benefits, including anticipated savings related to coverage provided by IFM to our subsidiaries.benefits.

We evaluate goodwill for impairment annually, in the fourth quarter, or more often if impairment indicators exist. We also review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the fair value of one of our reporting units is less than its carrying value, or if as a result of a recoverability test we conclude that the projected undiscounted cash flows are less than the carrying amount, we would record an impairment charge related to goodwill or long-lived assets, respectively. (For example, during the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we identified a triggering event that resulted in the impairment of goodwill and intangible assets.) The assumptions used to determine impairment require significant judgment, and the amount of the impairment could have a material adverse effect on our reported financial results for the period in which the charge is taken.

Pursuant to Section 404 of the Sarbanes Oxley Act of 2002 and related rules, our management is required to report on, and our independent registered public accounting firm is required to attest to, the effectiveness of our internal control over financial reporting. The rules governing the standards that must be met for management to assess our internal control over financial reporting are complex and require significant documentation, testing, and, possiblein some instances, remediation. We have acquired entities that did not have anyhad no publicly traded debt or equity and therefore were not previously required to conform to the rules and regulations of the SEC, especially as it relatesrelated to their internal control structure. AsWhen we acquire such upon acquisition by us, such entities, they may not have in place all the necessary controls as required by the Public Company Accounting Oversight Board. The integration ofIntegrating acquired entities into our internal control over financial reporting has required and will continue to require significant time and resources from our management and other personnel, and will increasewhich increases our compliance costs. We are required to include our assessment of the effectiveness of the internal controls over financial reporting of entities we acquire in our overall assessment. Weassessment, so we must plan to complete the evaluation and integration of internal controls over financial reporting and report our assessment within the required time frame.

In addition, with the increasing frequency of cyber-related frauds perpetrated to obtain inappropriate payments, we need to ensure our internal controls related to authorizing the transfer of funds and changing our vendor master files are adequate. Furthermore, the introduction of new, and changes to existing, enterprise resource planning (“ERP”) and financial reporting information systems create implementation and change management risks that require effective internal controls to mitigate. Failure to maintain an effective internal control environment could have a material adverse effect on our ability to accurately report our financial results, the market’s perception of our business, and our stock price.

CatastrophicWe may encounter disruptions involving power, communications, transportation or other utilities, or essential services depended upon by us or by third parties with whom we conduct business. This could include disruptions due to disasters, pandemics, weather-related or similar events disasters,(such as fires, hurricanes, blizzards, earthquakes, and floods), political instability, labor strikes, or war (including acts of terrorism or hostilities) that could impact our markets. If a disruption occurs in one location and persons in that location are unable to communicate with or travel to or work from other locations, our ability to service and interact with our clients and others may result in reduced revenues, property damage,suffer, and we may not be able to successfully implement contingency plans that depend on communications or economic dislocations throughout the country.travel. These events may increase the volatility of financial results due to unforeseen costs with partial or no corresponding compensation from clients. There also can be no assurance that the disaster recovery and crisis management procedures we employ will suffice in any particular situation to avoid a significant loss. In addition, to the extent centralized administrative locations are disabled for a long period of time, key business processes, such as accounts payable, information technology, payroll, and general management operations, could be interrupted.

Certain lawsuitsInformation with respect to which we are a party are discussed below. In determining whether to include any particular lawsuit or other proceeding, we consider both quantitativecertain legal proceedings is set forth in Note 13, “Commitments and qualitative factors. These factors include, but are not limited to: the amount of damages and the nature of any other relief soughtContingencies,” in the proceeding; if such damagesNotes to consolidated financial statements (included in Part II., Item 8 of this Form 10-K) and other relief are specified, our view of the merits of the claims; whether the action is or purports to be a class action, and our view of the likelihood that a class will be certifiedincorporated herein by the court; the jurisdiction in which the proceeding is pending; and the potential impact of the proceeding on our reputation.reference.

Not applicable.

Our common stock is listed on the New York Stock Exchange (NYSE: ABM). The following table sets forth the high and low sales prices of our common stock on the New York Stock Exchange and quarterly cash dividends declared on shares of common stock for the periods indicated.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)&A is intended to facilitate an understanding of the results of operations and financial condition of ABM Industries Incorporated and its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”).ABM. This MD&A is provided as a supplement to, and should be read in conjunction with, our consolidated financial statements and the accompanying notes (“Financial Statements”).Statements. This MD&A contains both historical and forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995, that involve risks and uncertainties. We make forward-looking statements related to future expectations, estimates, and projections that are uncertain and often contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “should,” “target,” or other similar words or phrases. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict. Factors that might cause such differences include, but are not limited to, those discussed in Part 1. of this Form 10-K under Item 1A., “Risk Factors,” which are incorporated herein by reference. Our future results and financial condition may be materially different from those we currently anticipate.

Throughout the MD&A, amounts and percentages may not recalculate due to rounding. In addition, we have revised our prior period segment information to reflect ABM’s reorganization and a related reclassification of certain Corporate expenses. Concurrent with the reorganization, we recategorized certain expenses that were historically included in operating expenses to selling, general and administrative expenses. Unless otherwise indicated, all information in the MD&A and references to years are based on our fiscal year, which ends on October 31.

We use a strategic buyercombination of insured and self-insurance programs to purchase this business for approximately $35.0 million, which was higher thancover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. Insurance claim liabilities represent our previous estimate of fair value less costsretained risks without regard to sell. Asinsurance coverage. We retain a result, we recorded a $17.4 million impairment recovery to adjust the fair value of certain previously impaired assets to the valuationsubstantial portion of the assetsrisk related to certain workers’ compensation and medical claims. Liabilities associated with these losses include estimates of both filed claims and incurred but not reported claims (“IBNR Claims”).

With the assistance of third-party actuaries, we periodically review our estimate of ultimate losses for IBNR Claims and adjust our required self-insurance reserves as impliedappropriate. As part of this evaluation, we review the status of existing and new claim reserves as established by third-party claims administrators. The third-party claims administrators establish the agreed-upon sales price, less estimated costs to sell. On May 31, 2017, we sold this business for $35.5 million.

The actuarial reviews demonstrate that the changes we have made to our risk management program continue to positively impact the frequency and severity of our casualty insuranceclaims. The claims management strategies and programs that considered changeswe have implemented have resulted in claim developments and claim payment activity for the period commencing May 1, 2016 and ending April 30, 2017 for all policy years in which open claims existed.improvements. Furthermore, we continue to adjust our reserves consistent with known fact patterns. Based on the results of these studies, which included analyzing recent loss development patterns, comparing the loss development patterns against benchmarks, and applying actuarial projection methods to estimate the ultimate losses,reviews performed, we increaseddecreased our total reserves for known claims as well as our estimate of the loss amounts associated with claims incurred but not reported (“IBNR Claims”) forClaims by $36.6 million, $30.2 million of which relates to prior years, prior to 2017 by $22.0 million during 2017. This adjustment was $10.9 million lower than the2020. In 2019, we decreased our total adjustmentreserves related to prior year claims of $32.9 million in 2016.

Interest expense increaseddecreased by $8.8$6.5 million, or 84.3%12.8%, during 2017,2020, as compared to 2016,2019, primarily relateddue to increased borrowings and higherlower relative interest rates and lower outstanding borrowing under our new credit facility to fund the GCA acquisition.facility.

During 2017,2020 and 2019, we had an incomeeffective tax rates of 99.6% and 20.4%, respectively, resulting in a provision for tax of $8.8$53.1 million compared with an incomeand a provision for tax of $32.7 million, respectively. The effective tax rate for the year ended October 31, 2020, excluding a nondeductible impairment loss of $163.8 million, was 24.4%. Our effective tax rate for 2020 was also impacted by the following discrete items: a $5.7 million benefit of $10.4from true-ups; a $2.3 million in the prior year. In 2017 we benefited from $17.8 millionprovision related to the Work Opportunity Tax Credit (“WOTC”); a $2.1 million benefit from energy efficiency incentives; and a $1.1 million benefit from change of tax reserves. Our effective tax rate for 2019 was impacted by the following discrete items: a $1.8 million benefit from the transition tax (including foreign tax credits); a $1.7 million benefit from state true-ups; a $1.6 million benefit from federal true-ups; a $1.3 million provision related to WOTC; a $1.3 million benefit from expiring statutes of limitations for an uncertain tax position, compared with $20.8limitations; a $1.1 million in 2016. The 2017 period also benefitedbenefit from $3.6 million of excess tax benefits related to the vesting of share-based compensation awardsawards; and $1.9a $0.9 million benefit from research and development credits.

The unrealized loss on interest rate swaps decreased by $14.8 million, or 66.1%, during the year ended October 31, 2020, as compared to the year ended October 31, 2019, primarily due to underlying changes in the fair value of tax credits for energy efficient government buildings, compared with $2.2 million and $1.2 million in 2016, respectively. Additionally, in 2016 we benefited from Work Opportunity Tax Credits (“WOTC”) of $5.1 million from the retroactive reinstatement of the WOTC for calendar year 2015. Both periods benefited from in-year WOTC.