UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
(Mark One)
þ☑QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 20182021
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to  
Commission File Number: 1-8929
abm-20210131_g1.jpg
ABM INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
abm-20210131_g2.jpg
94-1369354
(State or other jurisdiction of

incorporation or organization)
(I.R.S. Employer

Identification No.)
__________________________
One Liberty Plaza, 7th Floor
New York, New York 10006
(Address of principal executive offices)


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

None
(Former name, former address and former fiscal year, if changed since last report)
__________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueABMNew York Stock Exchange





Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ☑    No  o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ☑    No  o

☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþ☑Accelerated filer¨☐Non-accelerated filer¨☐Smaller reporting company¨☐Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   o☐  No þ☑
Number of shares of the registrant’s common stock outstanding as of March 1, 2018: 65,700,002
9, 2021: 67,089,696




ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
1
PART I. FINANCIAL INFORMATION
3
Item 1. Consolidated Financial Statements
3
FORWARD-LOOKING STATEMENTS
1
PART I. FINANCIAL INFORMATION
3
Item 1. Consolidated Financial Statements
3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
1921
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3234
Item 4. Controls and Procedures
3234
PART II. OTHER INFORMATION
3234
Item 1. Legal Proceedings
3234
Item 1A. Risk Factors
3234
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
3334
Item 3. Defaults Upon Senior Securities
3334
Item 4. Mine Safety Disclosures
3335
Item 5. Other Information
3335
Item 6. Exhibits
3436
SIGNATURES
3537



FORWARD-LOOKING STATEMENTS
This Form 10-Q contains both historical and forward-looking statements regarding ABM Industries Incorporated (“ABM”) and its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”). 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. Particular risks and uncertainties that could cause our actual results to be materially different from those expressed in our forward-looking statements include those listed below.
We•The novel coronavirus (“COVID-19”) pandemic (the “Pandemic”) has had and is expected to continue having a negative effect on the global economy and the United States economy; it has disrupted and is expected to continue disrupting our operations and our clients’ operations; and it has adversely affected and may not realize the growth opportunitiescontinue to adversely affect our business, results of operations, cash flows, and cost synergies that are anticipated from the acquisition of GCA Services Group (“GCA”).financial condition.
We have incurred a substantial amount of debt•Our success depends on our ability to complete the acquisition of GCA. To servicegain profitable business despite competitive market pressures.
•Our business success depends on our debt we will require a significant amount of cash. ability to attract and retain qualified personnel and senior management and to manage labor costs.
•Our ability to generate cash depends on many factors beyondpreserve long-term client relationships is essential to our control. We also depend on the profitability of our subsidiaries to satisfy our cash needs. If we cannot generate the required cash, we may not be able to make the necessary payments required to service our indebtedness or we may be required to suspend certain discretionary payments, including our dividend.continued success.
•Changes to our businesses, operating structure, financial reporting structure, or personnel relating to the implementation of our 2020Visionstrategic transformation initiative, including our move to our Enterprise Services Center,transformations, enhanced business processes, and technology initiatives may not have the desired effects on our financial condition and results of operations.
Our success depends on•Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ability to gain profitableongoing business, despite competitive pressures and to preserve long-term client relationships.adversely impact our results of operations.
Our business success depends on our ability to attract and retain qualified personnel and senior management.
Our use of subcontractors or joint venture partners to perform work under customer contracts exposes us to liability and financial risk.
•Our international business involves risks different from those we face in the United States that could have an effect on our results of operations and financial condition.
Unfavorable developments in our class and representative actions and other lawsuits alleging various claims could cause•Our use of subcontractors or joint venture partners to perform work under customer contracts exposes us to incur substantial liabilities.liability and financial risk.
•We insuremanage our insurable risks through a combination of insurancethird-party purchased policies and self-insurance, and we retain a substantial portion of the risk associated with expected losses under these programs, which exposes us to volatility associated with those risks, including the possibility that changes in estimates ofto our ultimate insurance lossesloss reserves could result in a material chargecharges against our earnings.
•Our risk management and safety programs may not have the intended effect of reducing our liability for personal injury or property loss.
Impairment•We may experience breaches of, goodwill and long-lived assetsor disruptions to, our information technology systems or those of our third-party providers or clients, or other compromises of our data that could have a material adverse effect on our financial condition and results of operations.
Changes in general economic conditions, including changes in energy prices, government regulations, or changing consumer preferences, could reduce the demand for facility services and, as a result, reduce our earnings and adversely affect our financial condition.business.
Our income tax provision•Unfavorable developments in our class and income tax liabilitiesrepresentative actions and other lawsuits alleging various claims could be adversely affected by the jurisdictional mix of earnings, changes in valuations of deferred tax assets and liabilities, and changes in tax treaties, laws, and regulations, including the U.S. Tax Cuts and Jobs Act of 2017, which effected significant changescause us to the U.S. corporate income tax system.incur substantial liabilities.
We could be subject to cyber-security risks, information technology interruptions, and business continuity risks.
•A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities in relationshiprelation to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities, and union-organizingunion organizing drives.
•Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences could adversely affect our results of operations.
•Changes in general economic conditions, such as changes in energy prices, government regulations, or consumer preferences, could reduce the demand for facility services and, as a result, reduce our earnings and adversely affect our financial condition.
•Future increases in the level of our borrowings or in interest rates could affect our results of operations.
•Impairment of goodwill and long-lived assets could have a material adverse effect on our financial condition and results of operations.
•If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be negatively impacted, which could harm our operating results and investors’investor perceptions of our companyCompany and as a result may have a material adverse effect on the value of our common stock.
1

•Our business may be negatively impacted by adverse weather conditions.

•Catastrophic events, disasters, and terrorist attacks could disrupt our services.
•Actions of activist investors could disrupt our business.
The list of factors above is illustrative and by no means exhaustive. Additional information regarding these and other risks and uncertainties we face is contained in our Annual Report on Form 10-K for the year ended October 31, 20172020, and in other reports (including all amendments to those reports) we file from time to time with the Securities and Exchange Commission (including all amendments to those reports)(“SEC”).
We urge readers to consider these risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

2

PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except share and per share amounts)January 31, 2018 October 31, 2017(in millions, except share and per share amounts)January 31, 2021October 31, 2020
ASSETS   ASSETS
Current assets   Current assets
Cash and cash equivalents$68.6
 $62.8
Cash and cash equivalents$378.3 $394.2 
Trade accounts receivable, net of allowances of $15.5
and $25.5 at January 31, 2018 and October 31, 2017, respectively
1,020.0
 1,038.1
Trade accounts receivable, net of allowances of $37.9 and $35.5
at January 31, 2021 and October 31, 2020, respectively
Trade accounts receivable, net of allowances of $37.9 and $35.5
at January 31, 2021 and October 31, 2020, respectively
917.2 854.2 
Costs incurred in excess of amounts billedCosts incurred in excess of amounts billed38.6 52.2 
Prepaid expenses97.4
 101.8
Prepaid expenses85.1 85.4 
Other current assets32.1
 32.8
Other current assets55.5 55.9 
Total current assets1,218.1
 1,235.5
Total current assets1,474.6 1,441.9 
Other investments18.8
 17.6
Other investments11.8 11.1 
Property, plant and equipment, net of accumulated depreciation of $147.6
and $136.4 at January 31, 2018 and October 31, 2017, respectively
141.6
 143.1
Other intangible assets, net of accumulated amortization of $206.1
and $189.1 at January 31, 2018 and October 31, 2017, respectively
404.3
 430.1
Property, plant and equipment, net of accumulated depreciation of $251.6 and $241.3
at January 31, 2021 and October 31, 2020, respectively
Property, plant and equipment, net of accumulated depreciation of $251.6 and $241.3
at January 31, 2021 and October 31, 2020, respectively
127.3 133.7 
Right-of-use assetsRight-of-use assets136.2 143.1 
Other intangible assets, net of accumulated amortization of $355.0 and $343.8
at January 31, 2021 and October 31, 2020, respectively
Other intangible assets, net of accumulated amortization of $355.0 and $343.8
at January 31, 2021 and October 31, 2020, respectively
229.0 239.7 
Goodwill1,871.2
 1,864.2
Goodwill1,674.6 1,671.4 
Other noncurrent assets143.1
 122.1
Other noncurrent assets128.7 136.1 
Total assets$3,797.0
 $3,812.6
Total assets$3,782.2 $3,776.9 
LIABILITIES AND STOCKHOLDERS’ EQUITY   LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities   Current liabilities
Current portion of long-term debt, net$7.0
 $16.9
Current portion of long-term debt, net$116.9 $116.7 
Trade accounts payable203.5
 230.8
Trade accounts payable217.5 273.3 
Accrued compensation143.1
 159.9
Accrued compensation145.9 187.6 
Accrued taxes—other than income62.5
 52.5
Accrued taxes—other than income107.4 45.5 
Insurance claims114.1
 112.5
Insurance claims156.7 155.2 
Income taxes payable5.0
 13.4
Income taxes payable38.6 6.2 
Current portion of lease liabilitiesCurrent portion of lease liabilities33.9 35.0 
Other accrued liabilities164.4
 171.8
Other accrued liabilities200.8 167.3 
Total current liabilities699.6
 757.8
Total current liabilities1,017.8 986.9 
Long-term debt, net1,173.4
 1,161.3
Long-term debt, net573.8 603.0 
Long-term lease liabilitiesLong-term lease liabilities125.3 131.4 
Deferred income tax liability, net32.8
 57.3
Deferred income tax liability, net3.7 10.8 
Noncurrent insurance claims387.3
 382.9
Noncurrent insurance claims360.2 366.3 
Other noncurrent liabilities63.5
 61.3
Other noncurrent liabilities122.2 168.1��
Noncurrent income taxes payable23.7
 16.3
Noncurrent income taxes payable10.2 10.1 
Total liabilities2,380.2
 2,436.9
Total liabilities2,213.1 2,276.6 
Commitments and contingencies

 

Commitments and contingencies00
Stockholders’ Equity   Stockholders’ Equity
Preferred stock, $0.01 par value; 500,000 shares authorized; none issued—
 —
Common stock, $0.01 par value; 100,000,000 shares authorized;
65,686,394 and 65,502,568 shares issued and outstanding at
January 31, 2018 and October 31, 2017, respectively
0.7
 0.7
Preferred stock, $0.01 par value; 500,000 shares authorized; NaN issuedPreferred stock, $0.01 par value; 500,000 shares authorized; NaN issued0 0 
Common stock, $0.01 par value; 100,000,000 shares authorized;
67,078,471 and 66,748,157 shares issued and outstanding at
January 31, 2021 and October 31, 2020, respectively
Common stock, $0.01 par value; 100,000,000 shares authorized;
67,078,471 and 66,748,157 shares issued and outstanding at
January 31, 2021 and October 31, 2020, respectively
0.7 0.7 
Additional paid-in capital677.1
 675.2
Additional paid-in capital726.9 724.1 
Accumulated other comprehensive income (loss), net of taxes2.7
 (20.3)
Accumulated other comprehensive loss, net of taxesAccumulated other comprehensive loss, net of taxes(25.9)(30.8)
Retained earnings736.2
 720.1
Retained earnings867.5 806.4 
Total stockholders’ equity1,416.8
 1,375.7
Total stockholders’ equity1,569.1 1,500.3 
Total liabilities and stockholders’ equity$3,797.0
 $3,812.6
Total liabilities and stockholders’ equity$3,782.2 $3,776.9 
See accompanying notes to unaudited consolidated financial statements.

3

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three Months Ended January 31,Three Months Ended January 31,
(in millions, except per share amounts)2018 2017(in millions, except per share amounts)20212020
Revenues$1,588.3
 $1,326.7
Revenues$1,492.4 $1,612.9 
Operating expenses1,429.3
 1,195.1
Operating expenses1,249.4 1,433.7 
Selling, general and administrative expenses109.0
 97.3
Selling, general and administrative expenses122.6 117.6 
Restructuring and related expenses14.3
 5.0
Restructuring and related expenses0 3.1 
Amortization of intangible assets16.2
 5.5
Amortization of intangible assets10.8 12.6 
Operating profit19.5
 23.8
Operating profit109.7 45.8 
Income from unconsolidated affiliates, net0.5
 1.4
Income from unconsolidated affiliatesIncome from unconsolidated affiliates0.6 0.9 
Interest expense(14.3) (3.2)Interest expense(8.5)(10.2)
Income from continuing operations before income taxes5.8
 22.0
Income from continuing operations before income taxes101.9 36.5 
Income tax benefit (provision)22.2
 (5.9)
Income tax provisionIncome tax provision(27.2)(8.6)
Income from continuing operations28.0
 16.1
Income from continuing operations74.6 27.9 
Loss from discontinued operations, net of taxes(0.1) (72.9)
Net income (loss)27.8
 (56.8)
Income from discontinued operations, net of taxesIncome from discontinued operations, net of taxes0 0.1 
Net incomeNet income74.6 28.0 
Other comprehensive income (loss)   Other comprehensive income (loss)
Unrealized gains on interest rate swaps, net of taxes of $5.0 and $1.1, respectively13.6
 1.6
Foreign currency translation9.4
 3.3
Comprehensive income (loss)$50.9
 $(51.9)
Net income (loss) per common share — Basic   
Interest rate swapsInterest rate swaps1.2 (1.1)
Foreign currency translation and otherForeign currency translation and other4.0 0.4 
Income tax (provision) benefitIncome tax (provision) benefit(0.4)0.3 
Comprehensive incomeComprehensive income$79.5 $27.6 
Net income per common share — BasicNet income per common share — Basic
Income from continuing operations$0.42
 $0.29
Income from continuing operations$1.11 $0.42 
Loss from discontinued operations—
 (1.30)
Net income (loss)$0.42
 $(1.01)
Net income (loss) per common share — Diluted   
Income from discontinued operationsIncome from discontinued operations0 0 
Net incomeNet income$1.11 $0.42 
Net income per common share — DilutedNet income per common share — Diluted
Income from continuing operations$0.42
 $0.28
Income from continuing operations$1.10 $0.41 
Loss from discontinued operations—
 (1.28)
Net income (loss)$0.42
 $(1.00)
Income from discontinued operationsIncome from discontinued operations0 0 
Net incomeNet income$1.10 $0.42 
Weighted-average common and common equivalent shares outstanding   Weighted-average common and common equivalent shares outstanding
Basic65.9
 56.0
Basic67.2 66.9 
Diluted66.3
 56.6
Diluted67.6 67.2 
Dividends declared per common share$0.175
 $0.170
See accompanying notes to unaudited consolidated financial statements.



4

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three Months Ended January 31,
20212020
(in millions, except per share amounts)SharesAmountSharesAmount
Common Stock
Balance, beginning of period66.7 $0.7 66.6 $0.7 
Stock issued under employee stock purchase and share-based compensation plans0.3 0 0.2 0 
Balance, end of period67.1 0.7 66.8 0.7 
Additional Paid-in Capital
Balance, beginning of period724.1 708.9 
Taxes withheld under employee stock purchase and share-based compensation plans, net(5.6)(2.0)
Share-based compensation expense8.5 4.9 
Balance, end of period726.9 711.8 
Accumulated Other Comprehensive Loss, Net of Taxes
Balance, beginning of period(30.8)(23.9)
Other comprehensive income (loss)4.9 (0.4)
Balance, end of period(25.9)(24.3)
Retained Earnings
Balance, beginning of period806.4 856.3 
Net income74.6 28.0 
Dividends
Common stock ($0.190 and $0.185 per share)(12.7)(12.3)
Stock issued under share-based compensation plans(0.9)(0.4)
Balance, end of period867.5 871.6 
Total Stockholders’ Equity$1,569.1 $1,559.7 
See accompanying notes to unaudited consolidated financial statements.
5

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended January 31,Three Months Ended January 31,
(in millions)2018 2017(in millions)20212020
Cash flows from operating activities   Cash flows from operating activities
Net income (loss)$27.8
 $(56.8)
Loss from discontinued operations, net of taxes0.1
 72.9
Net incomeNet income$74.6 $28.0 
Income from discontinued operations, net of taxesIncome from discontinued operations, net of taxes0 (0.1)
Income from continuing operations28.0
 16.1
Income from continuing operations74.6 27.9 
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities of continuing operations   Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities of continuing operations
Depreciation and amortization29.0
 14.0
Depreciation and amortization22.3 24.4 
Deferred income taxes(30.3) 9.9
Deferred income taxes(7.4)(1.0)
Share-based compensation expense3.8
 3.6
Share-based compensation expense8.5 4.9 
Provision for bad debt2.6
 0.4
Provision for bad debt3.0 2.4 
Discount accretion on insurance claims0.2
 0.1
Gain on sale of assets(0.1) (0.1)
Income from unconsolidated affiliates, net(0.5) (1.4)
Distributions from unconsolidated affiliates—
 0.8
Changes in operating assets and liabilities, net of effects of acquisitions   
Trade accounts receivable15.7
 (65.4)
Amortization of accumulated other comprehensive gain on interest rate swapsAmortization of accumulated other comprehensive gain on interest rate swaps(1.6)(1.7)
Loss on sale of assetsLoss on sale of assets1.0 0.3 
Income from unconsolidated affiliatesIncome from unconsolidated affiliates(0.6)(0.9)
Changes in operating assets and liabilitiesChanges in operating assets and liabilities
Trade accounts receivable and costs incurred in excess of amounts billedTrade accounts receivable and costs incurred in excess of amounts billed(52.3)3.0 
Prepaid expenses and other current assets1.4
 (2.4)Prepaid expenses and other current assets0.8 (8.5)
Right-of-use assetsRight-of-use assets6.9 4.1 
Other noncurrent assets(1.7) (7.5)Other noncurrent assets5.9 (1.6)
Trade accounts payable and other accrued liabilities(33.2) 18.1
Trade accounts payable and other accrued liabilities(3.0)(88.9)
Long-term lease liabilitiesLong-term lease liabilities(6.1)(4.2)
Insurance claims5.8
 8.3
Insurance claims(4.6)(1.0)
Income taxes payable10.9
 (11.0)Income taxes payable32.5 7.6 
Other noncurrent liabilities2.2
 6.8
Other noncurrent liabilities(34.5)(1.1)
Total adjustments5.8
 (25.8)Total adjustments(29.3)(62.3)
Net cash provided by (used in) operating activities of continuing operations33.8
 (9.7)Net cash provided by (used in) operating activities of continuing operations45.3 (34.5)
Net cash used in operating activities of discontinued operations(0.1) (1.4)
Net cash provided by operating activities of discontinued operationsNet cash provided by operating activities of discontinued operations0 0.2 
Net cash provided by (used in) operating activities33.7
 (11.1)Net cash provided by (used in) operating activities45.3 (34.3)
Cash flows from investing activities   Cash flows from investing activities
Additions to property, plant and equipment(10.6) (11.0)Additions to property, plant and equipment(6.6)(11.5)
Proceeds from sale of assets0.3
 0.5
Proceeds from sale of assets1.4 4.2 
Adjustments to sale of business(1.9) —
Purchase of businesses, net of cash acquired(2.4) (18.6)
Investments in unconsolidated affiliates(0.6) —
Proceeds from redemption of auction rate securityProceeds from redemption of auction rate security0 5.0 
Net cash used in investing activities(15.3) (29.1)Net cash used in investing activities(5.2)(2.3)
Cash flows from financing activities   Cash flows from financing activities
Taxes withheld from issuance of share-based compensation awards, net(2.0) (1.0)Taxes withheld from issuance of share-based compensation awards, net(6.5)(2.4)
Repurchases of common stock—
 (7.9)
Dividends paid(11.5) (9.4)Dividends paid(12.7)(12.3)
Deferred financing costs paid(0.1) —
Borrowings from credit facility304.3
 207.4
Borrowings from credit facility2.6 425.0 
Repayment of borrowings from credit facility(303.0) (169.7)Repayment of borrowings from credit facility(32.6)(368.6)
Changes in book cash overdrafts(1.2) 5.1
Changes in book cash overdrafts(12.0)6.4 
Financing of energy savings performance contracts—
 2.6
Financing of energy savings performance contracts4.0 1.1 
Repayment of capital lease obligations(0.8) (0.1)
Repayment of finance lease obligationsRepayment of finance lease obligations(0.7)(0.8)
Net cash (used in) provided by financing activities(14.3) 27.0
Net cash (used in) provided by financing activities(57.8)48.4 
Effect of exchange rate changes on cash and cash equivalents1.7
 0.5
Effect of exchange rate changes on cash and cash equivalents1.9 (0.4)
Net increase (decrease) in cash and cash equivalents5.8
 (12.7)
Change in cash related to assets held for sale—
 (0.7)
Net (decrease) increase in cash and cash equivalentsNet (decrease) increase in cash and cash equivalents(15.9)11.4 
Cash and cash equivalents at beginning of year62.8
 56.0
Cash and cash equivalents at beginning of year394.2 58.5 
Cash and cash equivalents at end of period$68.6
 $42.6
Cash and cash equivalents at end of period$378.3 $69.8 
See accompanying notes to unaudited consolidated financial statements.

6

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY AND NATURE OF OPERATIONS
ABM Industries Incorporated, which operates through its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”), is a leading provider of integrated facility services with a mission to make a difference, every person, every day. We are organized into five4 industry groups and one1 Technical Solutions segment:
fy2018industrygroups.jpgabm-20210131_g3.jpg
Through these groups, we offer janitorial, facilities engineering, parking, and specialized mechanical and electrical technical solutions, on a standalone basis or in combination with other services.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with (i) United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and (ii) the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of our management, our unaudited consolidated financial statements and accompanying notes (the “Financial Statements”) include all normal recurring adjustments that are necessary for the fair statement of the interim periods presented. Interim results of operations are not necessarily indicative of results for the full year. The Financial Statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.2020. Unless otherwise indicated, all references to years are to our fiscal year,years, which endsend on October 31.
AcquisitionImpact of GCA Services Groupthe Pandemic
On September 1, 2017 (the “Acquisition Date”),COVID-19 has resulted in a worldwide health Pandemic. To date, the Pandemic has surfaced in regions all around the world and resulted in business slowdowns and shutdowns, as well as global travel restrictions. In these Financial Statements we completedhave assessed the acquisitioncurrent impact of GCA Services Group (“GCA”). Accordingly,the Pandemic on our consolidated statements of comprehensive income (loss) and statements of cash flows include GCA’sfinancial condition, results of operations, inand cash flows as well as on our estimates, forecasts, and accounting policies. We have made additional disclosures of these assessments, as necessary. Given the three months ended January 31, 2018, but exclude GCA’sunprecedented nature of this situation, we cannot reasonably estimate the full impact the Pandemic will have on our financial condition, results of operations, or cash flows in the three months ended January 31, 2017, as that was prior to the Acquisition Date. See Note 3, “Acquisitions,” for further information on the acquisition of GCA.
Government Services
On May 31, 2017, we sold our Government Services business for $35.5 million and recorded a pre-tax gain of $1.2 million during the third quarter of 2017.foreseeable future. The reported results for this business are through the date of sale. Future results could include run-off costs associated with this former business.
Discontinued Operations
Following the sale of our Security business in 2015, we record all costs associated with this former business in discontinued operations. Such costs generally relate to litigation we retained and insurance reserves.
Prior Year Reclassifications
Effective November 1, 2017, we made changes to our operating structure as a resultultimate impact of the GCA acquisition. To reflect these changes, certain prior year amounts, including operating segment data, have been reclassified to conform with our fiscal 2018 presentation. These changes had no impactPandemic on our previously reported consolidated balance sheets, statementscompany is highly uncertain and will depend on future developments, and such impacts could exist for an extended period of comprehensive income (loss),time, even after the Pandemic subsides.
The Pandemic continues to create a dynamic client environment, and we are working diligently to ensure our clients’ changing staffing and service needs are met while actively managing direct labor and related personnel costs, including furloughs or statements of cash flows. See Note 12, “Segment Information,”reduced hours for further details.

certain frontline employees in markets significantly impacted by business slowdowns and shutdowns.
Rounding
We round amounts in the Financial Statements to millions and calculate all percentages and per-share data from the underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on reported numbers due to rounding.

7

Discontinued Operations
Following the sale of our Security business in 2015, we record all costs associated with this former business in discontinued operations. Such costs generally relate to litigation we retained and insurance reserves.
Management Reimbursement Revenue by Segment
We operate certain parking facilities under managed locationmanagement reimbursement arrangements. Under these arrangements, we manage the parking facilityfacilities for a management feefees and pass through the revenuerevenues and expenses associated with the facilityfacilities to the owner.owners. These revenues and expenses are reported in equal amounts as costs reimbursed from our managed locations:
Three Months Ended January 31,
(in millions)20212020
Business & Industry$43.4 $73.7 
Aviation13.7 25.9 
Total$57.0 $99.6 
Recently Adopted Accounting Standards
The Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326) in June 2016 and subsequently issued these amendments to the initial guidance: ASU 2018-19, ASU 2019-04, ASU 2019-05, ASU 2019-11, and ASU 2020-03 (collectively, “Topic 326”). Topic 326 replaces the existing incurred loss impairment model with a methodology that incorporates all expected credit loss estimates, resulting in more timely recognition of losses. Under Topic 326, an organization is required to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported financial assets. It also requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses. We adopted this standard effective November 1, 2020, on a modified retrospective basis. The asset and liability classes that we have identified to be in the scope of Topic 326 at the time of the adoption are trade accounts receivable, costs incurred in excess of amounts billed, guarantees, reinsurance recoverables, and notes receivable. The adoption of this standard did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This accounting update aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The guidance also specifies that the presentation of capitalized implementation costs and the related amortization on the balance sheet, income statement, and statement of cash flows should align with the presentation of the hosting (service) element of the arrangement. We adopted this standard effective November 1, 2020, on a prospective basis. The adoption of the standard did not have a material impact on our consolidated financial statements.
No other recently adopted accounting standards have had a significant impact on our fiscal 2021 consolidated financial statements.
8
 Three Months Ended January 31,
(in millions)2018 2017
Business & Industry$63.0
 $57.8
Aviation25.5
 16.5
Healthcare4.9
 4.6
Total$93.4
 $78.9

3. ACQUISITIONSREVENUES

AcquisitionDisaggregation of GCA during 2017Revenues
On September 1, 2017, we acquired allWe generate revenues under several types of contracts, which are further explained below. Generally, the type of contract is determined by the nature of the outstanding stockservices provided by each of GCA, a providerour major service lines throughout our reportable segments; therefore, we disaggregate revenues from contracts with customers into major service lines. We have determined that disaggregating revenues into these categories best depicts how the nature, amount, timing, and uncertainty of integrated facility services to educational institutionsrevenues and commercial facilities, for a purchase price of approximately $1.3 billion. Ascash flows are affected by economic factors. Our reportable segments are Business & Industry (“B&I”), Technology and Manufacturing (“T&M”), Education, Aviation, and Technical Solutions, as described in Note 12,10, “Segment Information,Information.” we integrated GCA’s operations into our industry group model effective November 1, 2017. As
Three Months Ended January 31, 2021
(in millions)B&IT&MEducationAviationTechnical
Solutions		Total
Major Service Line
Janitorial(1)
$650.4 $196.9 $184.8 $29.1 $0 $1,061.2 
Parking(2)
69.0 11.7 0.2 55.4 0 136.2 
Facility Services(3)
89.9 40.6 24.5 6.9 0 161.9 
Building & Energy Solutions(4)
0 0 0 0 113.4 113.4 
Airline Services(5)
0.1 0 0 51.7 0 51.8 
$809.4 $249.2 $209.4 $143.1 $113.4 $1,524.5 
Elimination of inter-segment revenues(32.1)
Total$1,492.4 

Three Months Ended January 31, 2020
(in millions)B&IT&MEducationAviationTechnical
Solutions		Total
Major Service Line
Janitorial(1)
$593.5 $185.6 $186.2 $34.6 $0 $1,000.0 
Parking(2)
125.9 8.1 0.7 84.9 0 219.6 
Facility Services(3)
101.4 40.2 21.0 11.7 0 174.3 
Building & Energy Solutions(4)
0 0 0 0 142.0 142.0 
Airline Services(5)
0.1 0 0 107.5 0 107.6 
$820.9 $233.9 $208.0 $238.7 $142.0 $1,643.6 
Elimination of inter-segment revenues(30.6)
Total$1,612.9 
(1) Janitorial arrangements provide a resultwide range of essential cleaning services for commercial office buildings, airports and other transportation centers, educational institutions, government buildings, health facilities, industrial buildings, retail stores, and stadiums and arenas. These arrangements are often structured as monthly fixed-price, square-foot, cost-plus, and work order contracts.
(2) Parking arrangements provide parking and transportation services for clients at various locations, including airports and other transportation centers, commercial office buildings, educational institutions, health facilities, hotels, and stadiums and arenas. These arrangements are structured as management reimbursement, leased location, and allowance contracts. Certain of these arrangements are considered service concession agreements and are accounted for under the guidance of ASU 2017-10, Service Concession Arrangements (Topic 853): Determining the Customer of the acquisition, weOperation Services; accordingly, rent expense related to these arrangements is recorded as a reduction of the related parking service revenues.
(3) Facility Services arrangements provide onsite mechanical engineering and technical services and solutions relating to a broad range of facilities and infrastructure systems that are now a leading facilitiesdesigned to extend the useful life of facility fixed assets, improve equipment operating efficiencies, reduce energy consumption, lower overall operational costs for clients, and enhance the sustainability of client locations. These arrangements are generally structured as monthly fixed-price, cost-plus, and work order contracts.
(4) Building & Energy Solutions arrangements provide custom energy solutions, electrical, HVAC, lighting, and other general maintenance and repair services providerfor clients in the education market.public and private sectors and are generally structured as Energy Savings, Fixed-Price Repair, and Refurbishment contracts. We also franchise certain operations under franchise agreements relating to our Linc Network and TEGG brands, pursuant to franchise contracts.

9
Consideration Transferred

(in millions, except per share data)  
Shares of ABM common stock, net of shares withheld for taxes 9.4
ABM common stock closing market price at acquisition date $44.63
Fair value of ABM common stock at closing 421.3
Cash consideration 839.9
Total consideration transferred $1,261.3
(5) Airline Services arrangements support airlines and airports with services such as passenger assistance, catering logistics, and airplane cabin maintenance. These arrangements are often structured as monthly fixed-price, cost-plus, transaction price, and hourly contracts.

Contract Types
Preliminary Purchase Price AllocationWe have arrangements under various contract types, as described in Note 2, “Basis of Presentation and Significant Accounting Policies,” in our Annual Report on Form 10-K for the year ended October 31, 2020.

Certain arrangements involve variable consideration (primarily per transaction fees, reimbursable expenses, and sales-based royalties). We do not estimate the variable consideration for these arrangements; rather, we recognize these variable fees as they are earned.
Our preliminary purchase price allocationThe majority of our contracts include performance obligations that are primarily satisfied over time as we provide the related services. These contract types include: monthly fixed-price; square-foot; cost-plus; work orders; transaction-price; hourly; management reimbursement; leased location; allowance; energy savings contracts; and fixed-price repair and refurbishment contracts, as well as our franchise and royalty fee arrangements. We recognize revenue as the services are performed using a measure of progress that is determined by the contract type. Generally, most of our contracts are cancelable by either party without a substantive penalty, and the majority have a notification period of 30 to 60 days.
We primarily account for our performance obligations under the series guidance, using the as-invoiced practical expedient when applicable. We apply the as-invoiced practical expedient to record revenue as the services are provided, given the nature of the services provided and the frequency of billing under the customer contracts. Under this practical expedient, we recognize revenue in an amount that corresponds directly with the value to the customer of our performance completed to date and for which we have the right to invoice the customer.
Remaining Performance Obligations
At January 31, 2021, performance obligations that were unsatisfied or partially unsatisfied for which we expect to recognize revenue totaled $246.5 million. We expect to recognize revenue on approximately 61% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter, based on our estimates of project timing.
These amounts exclude variable consideration primarily related to: (i) contracts where we have determined that the contract consists of a series of distinct service periods and revenues are based on future performance that cannot be estimated at contract inception; (ii) parking contracts where we and the customer share the gross revenues or operating profit for the location; and (iii) contracts where transaction prices include performance incentives that are based on future performance and therefore cannot be estimated at contract inception. We apply the practical expedient that permits exclusion of information thatabout the remaining performance obligations with original expected durations of one year or less.
Contract Balances
The timing of revenue recognition, billings, and cash collections results in contract assets and contract liabilities, as further explained below. The timing of revenue recognition may differ from the timing of invoicing to customers.
Contract assets primarily consist of billed trade receivables, unbilled trade receivables, and costs incurred in excess of amounts billed. Billed and unbilled trade receivables represent amounts from work completed in which we have an unconditional right to bill our customer. Costs incurred in excess of amounts billed typically arise when the revenue recognized on projects exceeds the amount billed to the customer. These amounts are transferred to billed trade receivables when the rights become unconditional. Contract assets also include the capitalization of incremental costs of obtaining a contract with a customer, primarily commissions. Commissions expense is currently available,recognized on a straight-line basis over a weighted average expected customer relationship period.
Contract liabilities consist of deferred revenue and advance payments and billings in excess of revenue recognized. We generally classify contract liabilities as current since the related contracts are generally for a period of one year or less. Contract liabilities decrease as we are continuing to evaluaterecognize revenue from the underlying inputs and assumptions used in our valuations. Accordingly, consideration and purchase price allocations are subject to, among other items: working capital adjustments; further analysissatisfaction of tax accounts, including deferred tax liabilities; and final valuation of identifiable intangible assets. During the first quarter of 2018, we refined our valuation of customer relationships and certain other estimates.related performance obligation.


10


The following table presentstables present the balances in our preliminary estimates of fair values of thecontract assets we acquired and the liabilities we assumed on the date of acquisition as previously reported at year-end 2017 and at the end of the first quarter of 2018.contract liabilities:
(in millions)January 31, 2021October 31, 2020
Contract assets
Billed trade receivables(1)
$896.8 $835.8 
Unbilled trade receivables(1)
58.3 53.9 
Costs incurred in excess of amounts billed(2)
38.6 52.2 
Capitalized commissions(3)
24.9 25.2 

 As reported at 
 As reported at
(in millions) October 31, 2017 Adjustments January 31, 2018
Cash and cash equivalents $2.5
 $(2.4) $0.1
Trade accounts receivable(1)
 118.1
 

 118.1
Prepaid expenses and other current assets 10.3
 

 10.3
Property, plant and equipment 41.4
 

 41.4
Customer relationships(2)
 340.0
 (10.0) 330.0
Trade name(2)
 9.0
 

 9.0
Goodwill(3)
 933.9
 0.4
 934.3
Other assets 4.2
 

 4.2
Trade accounts payable (9.1) 

 (9.1)
Insurance reserves (35.5) 

 (35.5)
Income taxes payable (16.5) 8.2
 (8.3)
Accrued liabilities (36.5) 4.9
 (31.6)
Deferred income tax liability, net (92.6) (1.0) (93.6)
Other liabilities (8.1) 

 (8.1)
Net assets acquired $1,261.3
 $—
 $1,261.3
(1) The gross amount of Included in trade accounts receivable, was $122.0 million,net, on the unaudited Consolidated Balance Sheets. The fluctuations correlate directly to the execution of which $3.9 millionnew customer contracts and to invoicing and collections from customers in the normal course of business.
(2) Fluctuation is expectedprimarily due to be uncollectible.the timing of payments on our contracts measured using the cost-to-cost method of revenue recognition.

(2) The amortization periods for(3) Included in other current assets and other noncurrent assets on the acquired intangible assets are 15 years for customer relationships and 2 years for trade names.

(3) Goodwill is largely attributable to value we expect to obtain from long-term business growth, the established workforce, and buyer-specific synergies. This goodwill is not deductible for income tax purposes.

Financial Information

Forunaudited Consolidated Balance Sheets. During the three months ended January 31, 2018,2021, we recorded revenue related to GCA of $251.6 million and operating profit of $5.0 million. The following table presents our unaudited pro forma results as though the GCA acquisition occurred on November 1, 2015. The pro forma results include adjustments for the estimated amortization of intangible assets, interest expense, and the income tax impact of the pro forma adjustments at the statutory rate of 41%. These pro forma results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the pro forma information is not necessarily indicative of the results that would have been achieved if the acquisition had been effective on November 1, 2015.
 Three Months Ended
(in millions)January 31, 2017
Pro forma revenue$1,578.9
Pro forma income from continuing operations14.5

Other 2017 Acquisitions

Effective December 1, 2016, we acquired all of the outstanding stock of Mechanical Solutions, Inc. (“MSI”), a provider of specialized HVAC, chiller, and plumbing services, for a purchase price of $12.6 million. The purchase price includes up to $1.0capitalized $3.0 million of undiscounted contingent consideration that is basednew costs and amortized $3.3 million of previously capitalized costs. There was 0 impairment loss recorded on the expected achievement of certain pre-established revenue goals. See Note 6, “Fair Value of Financial Instruments,” regarding our valuation of contingent consideration liabilities. As of December 1, 2016,costs capitalized.
(in millions)Three Months Ended
January 31, 2021
Contract liabilities(1)
Balance at beginning of period$36.4 
Additional contract liabilities31.5 
Recognition of deferred revenue(14.8)
Balance at end of period$53.1 
(1) Included in other accrued liabilities on the operations of MSI are included in our Technical Solutions segment.unaudited Consolidated Balance Sheets.

11
Effective December 1, 2016, we also acquired all of the outstanding stock of OFJ Connections Ltd (“OFJ”), a provider of airport transportation services in the United Kingdom, for a purchase price of $6.3 million. As of December 1, 2016, the operations of OFJ are included in our Aviation segment.


Pro Forma and Other Supplemental Financial Information
Except for GCA, we do not present pro forma and other financial information for our other acquisitions, as they are not considered material business combinations individually or on a combined basis.
4. RESTRUCTURING AND RELATED COSTS
GCA Restructuring
Following the acquisition of GCA, during the first quarter of 2018 we initiated a restructuring program to achieve cost synergies from our combined operations. We expect our GCA restructuring and related activities to be complete by the second half of 2018.
2020Vision Restructuring
During the fourth quarter of 2015, our Board of Directors approved a comprehensive strategy intended to have a positive transformative effect on ABM (the “2020Vision”). As part of the 2020Vision, we identified key priorities to differentiate ABM in the marketplace, accelerate revenue growth for certain industry groups, and improve our margin profile. We incurred additional expenses primarily related to external support fees during the first quarter of 2018 relating to this strategy. We do not expect to incur significant 2020Vision restructuring and related expenses in the future, other than in connection with the continued consolidation of our real estate leases.
Rollforward of Restructuring and Related Liabilities
(in millions) 
Balance,
October 31, 2017
 
Costs Recognized(1)
 Payments Non-Cash Items 
Balance,
January 31, 2018
Employee severance $2.7
 $8.7
 $(3.3) $—
 $8.1
External support fees 2.5
 4.0
 (2.5) —
 4.0
Lease exit 2.8
 0.5
 (0.3) 0.2
 3.2
Other project fees 0.4
 1.0
 (0.6) —
 0.8
Total $8.4
 $14.3
 $(6.7) $0.2
 $16.1
(1) We include these costs within corporate expenses.
Cumulative Restructuring and Related Charges
(in millions)
External Support Fees
Employee Severance
Other Project Fees
Lease Exit Costs
Asset Impairment
Total
GCA
$2.0

$10.5

$0.8

$—

$—

$13.3
2020 Vision

30.0

13.7

10.6

6.3

4.7

65.1
Total
$32.0

$24.2

$11.4

$6.3

$4.7

$78.4


5. NET INCOME PER COMMON SHARE
Basic and Diluted Net Income Per Common Share Calculations
 Three Months Ended January 31,
(in millions, except per share amounts)2018 2017
Income from continuing operations$28.0
 $16.1
Loss from discontinued operations, net of taxes(0.1) (72.9)
Net income (loss)$27.8
 $(56.8)
    
Weighted-average common and common equivalent shares outstanding — Basic65.9
 56.0
Effect of dilutive securities   
Restricted stock units0.2
 0.3
Stock options0.1
 0.2
Performance shares0.1
 0.1
Weighted-average common and common equivalent shares outstanding — Diluted66.3
 56.6
    
Net income (loss) per common share — Basic   
Income from continuing operations$0.42
 $0.29
Loss from discontinued operations—
 (1.30)
Net income (loss)$0.42
 $(1.01)
    
Net income (loss) per common share — Diluted   
Income from continuing operations$0.42
 $0.28
Loss from discontinued operations—
 (1.28)
Net income (loss)$0.42
 $(1.00)
Three Months Ended January 31,
(in millions, except per share amounts)20212020
Income from continuing operations$74.6 $27.9 
Income from discontinued operations, net of taxes0 0.1 
Net income$74.6 $28.0 
Weighted-average common and common equivalent shares
outstanding — Basic		67.2 66.9 
Effect of dilutive securities
Restricted stock units0.2 0.1 
Stock options0.1 0.1 
Performance shares0.2 0.1 
Weighted-average common and common equivalent shares
outstanding — Diluted		67.6 67.2 
Net income per common share — Basic
Income from continuing operations$1.11 $0.42 
Income from discontinued operations0 0 
Net income$1.11 $0.42 
Net income per common share — Diluted
Income from continuing operations$1.10 $0.41 
Income from discontinued operations0 0 
Net income$1.10 $0.42 
Anti-Dilutive Outstanding Stock Awards Issued Under Share-Based Compensation Plans
Three Months Ended January 31,
(in millions)20212020
Anti-dilutive0.1 0.2 

12
 Three Months Ended January 31,
(in millions)2018 2017
Anti-dilutive0.2

—



6.5. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Hierarchy of Our Financial Instruments
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
(in millions)Fair Value HierarchyJanuary 31, 2021October 31, 2020
Cash and cash equivalents(1)
1$378.3 $394.2 
Insurance deposits(2)
10.70.7 
Assets held in funded deferred compensation plan(3)
12.8 2.6 
Credit facility(4)
2695.3 725.3 
Interest rate swap liabilities(5)
212.7 15.5 
(in millions)Fair Value Hierarchy January 31, 2018 October 31, 2017
Cash and cash equivalents(1)
1 $68.6
 $62.8
Insurance deposits(2)
1 10.2
 11.2
Assets held in funded deferred compensation plan(3)
1 4.6
 4.6
Credit facility(4)
2 1,192.5
 1,191.2
Interest rate swaps(5)
2 21.5
 2.9
Investments in auction rate securities(6)
3 8.0
 8.0
Contingent consideration liability(7)
3 0.9
 0.9
(1) Cash and cash equivalents are stated at nominal value, which equals fair value.
(2)Represents restricted deposits that are used to collateralize our insurance obligations and are stated at nominal value, which equals fair value. These insurance deposits are included in “Other noncurrent assets” on the accompanying unaudited consolidated balance sheets.Consolidated Balance Sheets. See Note 8,6, “Insurance,” for further information.
(3)Represents investments held in a Rabbi trust associated with one of our deferred compensation plans, which we include in “Other noncurrent assets” on the accompanying unaudited consolidated balance sheets.Consolidated Balance Sheets. The fair value of the assets held in the funded deferred compensation plan is based on quoted market prices.
(4)Represents gross outstanding borrowings under our syndicated line of credit and term loan. Due to variable interest rates, the carrying value of outstanding borrowings under our line of credit and term loan approximates the fair value. See Note 9,7, “Credit Facility,” for further information.
(5)Represents interest rate swap derivatives designated as cash flow hedges. The fair values of the interest rate swaps are estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates using observable benchmarks for LIBORthe London Interbank Offered Rate (“LIBOR”) forward rates at the end of the period. TheseAt January 31, 2021 and October 31, 2020, our interest rate swaps are included in “Other noncurrent assets”liabilities” on the accompanying unaudited consolidated balance sheets.Consolidated Balance Sheets. See Note 9,7, “Credit Facility,” for further information.
(6) The fair value of investments in auction rate securities is based on discounted cash flow valuation models, primarily utilizing unobservable inputs, including assumptions about the underlying collateral, credit risks associated with the issuer, credit enhancements associated with financial insurance guarantees, and the possibility of the security being re-financed by the issuer or having a successful auction. These amounts are included in “Other investments” on the accompanying unaudited consolidated balance sheets. See Note 7, “Auction Rate Securities,” for further information.
(7) Certain of our acquisitions involve the payment of contingent consideration. The fair value of these liabilities is based on the expected achievement of certain pre-established revenue goals. Our contingent consideration liability is included in “Other accrued liabilities” and “Other noncurrent liabilities” on the accompanying unaudited consolidated balance sheets.
During the three months ended January 31, 2018,2021, we had no transfers of assets or liabilities between any of the above hierarchy levels.
Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis
WeIn addition to assets and liabilities that are measured at fair value on a recurring basis, we are also required to measure certain assetsitems at fair value on a non-recurring basis, which are subject to fair value adjustments in certain circumstances.basis. These assets can include: goodwill; intangible assets; property, plant and equipment; lease-related ROU assets; and long-lived assets that have been reduced to fair value when they are held for sale.
On November 1, 2017, we reorganized our reportable segments and goodwill reporting units. In connection with this reorganization, we performed a qualitative goodwill If certain triggering events occur, or if an annual impairment test immediately before and afteris required, we would evaluate these non-financial assets for impairment. If an impairment were to occur, the segment realignment. In analyzingasset would be recorded at the results of operations and business conditions of the goodwill reporting units, we determined the likelihood of a goodwill impairment did not reach the more-likely-than not threshold specified in U.S. GAAP for any of the reporting units that were evaluated. Accordingly, we concluded that goodwill related to those reporting units was not impaired and further quantitative testing was not required.
7. AUCTION RATE SECURITIES
At January 31, 2018 and October 31, 2017, we held investments in auction rate securities from two different issuers that had an aggregate original principal amount of $10.0 million and an amortized cost andestimated fair value, of $8.0 million. These two auction rate securities are debt instruments with stated maturities in 2036 and 2050. The interest rates for these securities are designed to be reset through Dutch auctions approximately every thirty days, but auctions for these securities have not occurred since August 2007.using primarily unobservable Level 3 inputs.
At January 31, 2018 and October 31, 2017, there were no unrealized gains or losses on our auction rate securities included in accumulated other comprehensive income (loss), net of taxes (“AOCI”), and the total amount of other-than-temporary impairment credit loss on our auction rate security investments included in our retained earnings was $2.0 million.
Significant Assumptions Used to Determine the Fair Values of Our Auction Rate Securities
6. INSURANCE
AssumptionJanuary 31, 2018October 31, 2017
Discount ratesL + 0.53% and L + 1.18%
L + 0.42% and L + 0.79%
Yields2.15%, L + 2.00%2.15%, L + 2.00%
Average expected lives4 – 10 years4 – 10 years
L – One Month LIBOR
8. INSURANCE
We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. For the majority of these insurance programs, we retain the initial $1.0 million to $1.5 million of exposure on a per-occurrence basis, either through deductibles or self-insured retentions. Beyond the retained exposures, we have varying primary policy limits ranging between $1.0 million and $5.0 million per occurrence. To cover general liability and automobile liability losses above these primary limits, we maintain commercial umbrella insurance policies that provide aggregate limits of $200.0 million. Our insurance policies generally cover workers’ compensation losses to the full extent of statutory requirements. Additionally, to cover property damage risks above our retained limits, we maintain policies that provide per occurrence limits of $75.0 million. We are also self-insured for certain employee medical and dental plans. We maintain stop-loss insurance for our self-insured medical plan under which we retain up to $0.4$0.5 million of exposure on a per-participant, per-year basis with respect to claims.
The adequacy of
13

We maintain our reserves for workers’ compensation, general liability, automobile liability, and property damage insurance claims is based upon known trends and events and the actuarial estimates of required reserves considering the most recently completed actuarial reports. We use all available information to develop our best estimate of insurance claims reserves as information is obtained. The results of actuarial studiesreviews are used to estimate our insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.
Actuarial Review Performed During the First Quarter of 20182021
We review our self-insurance liabilities on a regular basis and adjust our accruals accordingly. Actual claims activity or development may vary from our assumptions and estimates, which may result in material losses or gains. As we obtain additional information that affects the assumptions and estimates used in our reserve liability calculations, we adjust our self-insurance rates and reserves for future periods and, if appropriate, adjust our reserves for claims incurred in prior accounting periods.
During the three months ended January 31, 2018,first quarter of 2021, we performed ana comprehensive actuarial review of the majority of our casualty insurance programs that consideredto evaluate changes in claim developmentsmade to claims reserves and claimclaims payment activity for the period commencingof May 1, 2017 and ending2020 through October 31, 2017 for all policy years2020 (the “Actuarial Review”). The Actuarial Review was comprehensive in which open claims existed.
nature and was based on loss development patterns, trend assumptions, and underlying expected loss costs during the period analyzed. The actuarial review indicatedActuarial Review again demonstrated that the claims reduction and safety initiativeschanges we implemented have had a positive impact on our claims costs in the most recent years. Most notably, over the past two years there has been a decrease in claim frequency for workers’ compensation lost-time claims and general liability bodily injury claims. However, there have been unfavorable developments in ultimate losses beyond our estimates for general liability and workers’ compensation claims related to prior years, as described below.
The actuarial review indicated a continued decrease over the most recent years in the total number of reported claims relatedmade to our general liability program, particularly with respectrisk management programs continue to bodily injury claims. However, in prior year claims we experienced adverse developments that are largely attributable to adjustments related to certain bodily injury claims and to losses for property damage.

We are experiencing a reducedpositively impact the frequency of claims in our workers’ compensation program. However, due to increases in projected costs and severity of claims in certain prior fiscal years, we increased our estimate of ultimate losses for workers’ compensation claims. Statutory, regulatory, and legal developments have contributed to the increase in our estimated losses.
Based on the results of the actuarial review and subsequent developments,Actuarial Review, we increaseddecreased our total reserves for known claims as well as our estimate of the loss amounts associated with incurred but not reported claims (“IBNR claims”) by $2.0$14.4 million during the three months ended January 31, 2018. This adjustment was $3.02021; $11.4 million lower than the total adjustment relatedof that amount relates to prior year claims of $5.0 million duringyears. During the three months ended January 31, 2017.2020, we decreased our total reserves related to prior year claims by $6.6 million. We will continue to assess ongoing developments, which may result in further adjustments to reserves.
Insurance Related Balances and Activity
(in millions)January 31, 2021October 31, 2020
Insurance claim reserves, excluding medical and dental$498.6 $504.9 
Medical and dental claim reserves18.3 16.6 
Insurance recoverables70.2 70.1 
(in millions)January 31, 2018 October 31, 2017
Insurance claim reserves excluding medical and dental$490.7
 $485.6
Medical and dental claim reserves10.7
 9.8
Insurance recoverables74.9
 73.1
At January 31, 20182021 and October 31, 2017,2020, insurance recoverables are included in both “Other current assets” and “Other noncurrent assets” on the accompanying unaudited consolidated balance sheets.Consolidated Balance Sheets.
Instruments Used to Collateralize Our Insurance Obligations
(in millions)January 31, 2021October 31, 2020
Standby letters of credit$141.4 $143.6 
Surety bonds85.7 82.6 
Restricted insurance deposits0.7 0.7 
Total$227.8 $226.9 

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(in millions)January 31, 2018 October 31, 2017
Standby letters of credit$136.7
 $137.6
Surety bonds77.5
 77.5
Restricted insurance deposits10.2
 11.2
Total$224.4
 $226.3

9.7. CREDIT FACILITY
On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-year syndicated credit facility (the “Credit Facility”), consisting of a $900.0 million revolving line of credit and an $800.0 million amortizing term loan, both of which are scheduled to mature on September 1, 2022. TheIn accordance with the terms of the Credit Facility, the revolving line of credit reduceswas reduced to $800.0 million after one year.on September 1, 2018. The Credit Facility also provides for the issuance of up to $300.0 million for standby letters of credit and the issuance of up to $75.0 million in swingline advances. The obligations under the Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions. To further enhance our financial flexibility as a precautionary measure in response to uncertainty arising from the Pandemic, we amended our Credit Facility (the “Amendment”) on May 28, 2020.
BorrowingsThe Amendment modified the financial covenants under the Credit Facility, including: (i) replacing a maximum total leverage ratio with a maximum total net leverage ratio that varies on a quarterly basis and adjusts to 4.00 to 1.00 by the quarter ending October 31, 2022; (ii) modifying the minimum fixed charge coverage ratio on a quarterly basis, which adjusts to 1.25 to 1.00 as of the quarter ending April 30, 2022; and (iii) adding a minimum liquidity (defined in the Amendment as domestic cash plus available revolving loans) of $250.0 million. These financial covenants were effective with the quarter ended April 30, 2020. Our borrowing capacity is subject to, and limited by, compliance with these covenants. At January 31, 2021, we were in compliance with these covenants.
The Amendment also changed the interest rate, interest margins, and commitment fees applicable to loans and commitments under the Credit Facility. Prior to the Amendment, borrowings under the Credit Facility bore interest at a rate equal to 1-month LIBOR plus a spread that was based upon our leverage ratio. The spread ranged from 1.00% to 2.25% for Eurocurrency loans and 0.00% to 1.25% for base rate loans. We were also charged a commitment fee, which was paid quarterly in arrears and was based on our leverage ratio, that ranged from 0.200% to 0.350% on the average daily unused portion of the revolving line of credit. For purposes of this calculation, irrevocable standby letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings were included as outstanding under the line of credit.
Subsequent to the Amendment, borrowings under the Credit Facility bear interest at a rate equal to 1-month LIBOR plus a spread that is based upon our total leverage ratio. The spread ranges from 1.00% to 2.25%2.75% for revolving Eurocurrency loans and 0.00% to 1.25%1.75% for revolving base rate loans. At January 31, 2018,2021, the weighted average interest rate on our outstanding borrowings was 3.74%2.39%. We are also paycharged a commitment fee, which is paid quarterly in arrears and is based on our total leverage ratio, and payable quarterly in arrears, rangingthat ranges from 0.200% to 0.350%0.450% on the average daily unused portion of the revolving line of credit. For purposes of this calculation, irrevocable standby letters of credit, which are issued primarily in conjunction with our insurance programs, and cash borrowings are included as outstanding under the revolving line of credit.
The Credit Facility contains certain covenants, including a maximum leverage ratio of 4.75 to 1.0, which steps down to 3.50 to 1.0 by July 2020, and a minimum fixed charge coverage ratio of 1.50 to 1.0, as well as other financial and non-financial covenants. In the event of a material acquisition, as defined in the Credit Facility, we may elect to increase the leverage ratio to 3.75 to 1.0 for a total of four fiscal quarters, provided the leverage ratio had already been reduced to 3.50 to 1.0. Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At January 31, 2018, we were in compliance with these covenants.
The Credit Facility also includes customary events of default, includingsuch as: failure to pay principal, interest, or fees when due,due; failure to comply with covenants,covenants; the occurrence of certain material judgments, orjudgments; and a change in control of the Company. If an eventcertain events of default occurs,occur, including certain cross-defaults, insolvency, change in control, or violation of specific covenants, the lenders can terminate or suspend our access to the Credit Facility, and declare all amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require that we cash collateralize the outstanding standby letters of credit.
Total deferred financing costs related to the Credit Facility wereof $18.7 million, consisting of $13.4 million related to the term loan and $5.2 million related to the line of credit, which are being amortized to interest expense over the term of the Credit Facility. We incurred total fees of $4.6 million in conjunction with the Amendment, the majority of which we capitalized in the quarter ended July 31, 2020, and are amortizing over the remaining term of the Credit Facility.
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Credit Facility Information
(in millions)January 31, 2021October 31, 2020
Current portion of long-term debt
Gross term loan$120.0 $120.0 
Unamortized deferred financing costs(3.1)(3.3)
Current portion of term loan$116.9 $116.7 
Long-term debt
Gross term loan$530.0 $560.0 
Unamortized deferred financing costs(1.5)(2.3)
Total noncurrent portion of term loan528.5 557.7 
Revolving line of credit(1)(2)
45.3 45.3 
Long-term debt$573.8 $603.0 
(in millions) January 31, 2018 October 31, 2017
Current portion of long-term debt    
Gross term loan $10.0
 $20.0
Less: unamortized deferred financing costs (3.0) (3.1)
Current portion of term loan $7.0
 $16.9
     
Long-term debt    
Gross term loan $770.0
 $780.0
Less: unamortized deferred financing costs (9.1) (9.9)
Total noncurrent portion of term loan 760.9
 770.1
Line of credit(1)(2)
 412.5
 391.2
Long-term debt $1,173.4
 $1,161.3
(1)Standby letters of credit amounted to $145.5$151.0 million at January 31, 2018.2021.

(2)At January 31, 2018,2021, we had borrowing capacity of $330.5$599.4 million, howeverreflecting covenant restrictions limited our actual borrowing capacity to $245.5 million.


restrictions.
Term Loan Maturities

During the first quarter,three months ended January 31, 2021, we made $20.0 millionprincipal payments under the term loan of principal payments.$30.0 million. As of January 31, 2018,2021, the following principal payments are required under the term loan:loan.
(in millions) 2019 2020 2021 2022(in millions)20212022
Debt maturities $40.0
 $60.0
 $120.0
 $560.0
Debt maturities$90.0 $560.0 
Interest Rate Swaps

We enter into interest rate swaps to manage the interest rate risk associated with our floating-rate, LIBOR-based borrowings under our Credit Facility.borrowings. Under these arrangements, we typically pay a fixed interest rate in exchange for LIBOR-based variable interest throughout the life of the agreement. We initially report the derivative’s mark-to-market gain or loss on a derivative as a component of AOCIaccumulated other comprehensive loss (“AOCL”) and subsequently reclassify the gain or loss into earnings when the hedged transactions occur and affect earnings. Interest payables and receivables under the swap agreements are accrued and recorded as adjustments to interest expense. All of our interest rate swaps werehave been designated and accounted for as cash flow hedges from inception. See Note 6,5, “Fair Value of Financial Instruments,” regarding the valuation of our interest rate swaps.
Interest Rate Swaps Information
Notional AmountsAmountFixed Interest RatesRateEffective DatesDateMaturity DatesDate
$ 105.090.0 million1.05%2.83%
November 1, 2018
April 7, 2016 and
May 11, 2016
April 7,30, 2021 and
May 11, 2021
$ 215.090.0 million1.65%2.84%November 1, 20172018October 31, 2021
$ 130.0 million2.86%November 1, 2018April 30, 2022
$ 130.0 million2.84%November 1, 2018September 1, 2022
$ 285.0 million1.69%November 13, 2017September 1, 2022
At January 31, 20182021 and October 31, 2017,2020, amounts recorded in AOCIAOCL for interest rate swaps were $15.7a loss of $2.5 million, net of taxes of $5.8$0.5 million, and $1.7a loss of $3.3 million, net of taxes of $0.9 million, respectively. These amounts included the gain associated with the interest rate swaps we terminated in 2018, which is being amortized to interest expense as interest payments are made over the term of our Credit Facility. During the three months ended January 31, 2021, we amortized $1.2 million respectively. Additionally, atof this gain, net of taxes of $0.4 million, to interest expense. During the three months ended January 31, 2018,2020, we amortized $1.2 million, net of taxes of $0.4 million. At January 31, 2021, the total amount expected to be reclassified from AOCIAOCL to earnings during the next twelve months was $5.0is a loss of $4.3 million, net of a tax benefit of $1.4 million.


10.
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8. COMMITMENTS AND CONTINGENCIES
Letters of Credit and Surety Bonds
We use letters of credit and surety bonds to secure certain commitments related to insurance programs and for other purposes. As of January 31, 2018,2021, these letters of credit and surety bonds totaled $145.5$151.0 million and $470.0$640.6 million, respectively.
Guarantees
In some instances, we offer clients guaranteed energy savings under certain energy savings contracts. At January 31, 2018,2021, total guarantees were $164.6$173.8 million and extend through 2038.2040. We accrue for the estimated cost of guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. Historically, we have not incurred any material losses in connection with these guarantees.
In connection with an unconsolidated joint venture in which one of our subsidiaries has a 33% ownership interest, that subsidiary and the other joint venture partners have each jointly and severally guaranteed the obligations of the joint venture to perform under certain contracts extending through 2019. Annual revenues relating to the underlying contracts are approximately $35 million. Should the joint venture be unable to perform under these contracts, the joint venture partners would be jointly and severally liable for any losses incurred by the client due to the failure to perform.
Sales Tax AuditsTaxes
We collect sales tax from clients and remit those collections to the applicable states. When clients fail to pay their invoices, including the amount of any sales tax that we paid on their behalf, in some cases we are entitled to seek a refund of that amount of sales tax from the applicable state.
Sales tax laws and regulations enacted by the various states are subject to interpretation, and our compliance with such laws is routinely subject to audit and review by such states. Audit risk is concentrated in several states and these statesthat are conducting ongoing audits. The outcomes of ongoing and any future audits and changes in the states’ interpretation of the sales tax laws and regulations could materially adversely impact our results of operations.
Legal Matters
We are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business, including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may be brought as class actions on behalf of a class or purported class of employees.
At January 31, 2018,2021, the total amount accrued for all probable litigation losses where a reasonable estimate of the loss could be made was $10.0$13.8 million. This $10.0 million includes anWe do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. The estimation of reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Our management currently estimates the range of loss for all reasonably possible losses for which a reasonable estimate of the loss can be made is between 0 and $5 million. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate. The amounts above do not include any accrual or loss estimates with respect to the Bucio case described below, because a reasonable estimate of $3.8 million in connection with the Hussein case discussed below.loss or range of loss cannot be made at this time.
Litigation outcomes are difficult to predict and the estimation of probable losses requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. If one or more matters are resolved in a particular period in an amount in excess of, or in a manner different than, what we anticipated, this could have a material adverse effect on our financial position, results of operations, or cash flows.
We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. The estimation of reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Our management currently estimates the range of loss for all reasonably possible losses for which a reasonable estimate of the loss can be made is between zero and $8 million. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.
In some cases, although a loss is probable or reasonably possible, we cannot reasonably estimate the maximum potential losses for probable matters or the range of losses for reasonably possible matters. Therefore, our accrual for probable losses and our estimated range of loss for reasonably possible losses do not represent our maximum possible exposure.

While the results of these lawsuits, claims, and proceedings cannot be predicted with any certainty, our management believes that the final outcome of these matters will not have a material adverse effect on our financial position, results of operations, or cash flows.
Certain Legal Proceedings
Certain lawsuits to which we are a party are discussed below. In determining whether to include any particular lawsuit or other proceeding in our disclosure below, we consider both quantitative and qualitative factors. These factors include, but are not limited to: the amount of damages and the nature of any other relief sought in the proceeding; if such damages 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
17

likelihood that a class will be certified by the court; the jurisdiction in which the proceeding is pending; and the potential impact of the proceeding on our reputation.

The Consolidated Cases of Bucio and Martinez v. ABM Janitorial Services filed on April 7, 2006, pending in the Superior Court of California, County of San Francisco (the “Bucio case”)

The Bucio case is a class action pending in San Francisco Superior Court that alleges we failed to provide legally required meal periods and make additional premium payments for such meal periods, pay split shift premiums when owed, and reimburse janitors for travel expenses. There is also a claim for penalties under the California Labor Code Private Attorneys General Act (“PAGA”). On April 19, 2011, the trial court held a hearing on plaintiffs’ motion to certify the class. At the conclusion of that hearing, the trial court denied plaintiffs’ motion to certify the class. On May 11, 2011, the plaintiffs filed a motion to reconsider, which was denied. The plaintiffs appealed the class certification issues. The trial court stayed the underlying lawsuit pending the decision in the appeal. The Court of Appeal of the State of California, First Appellate District (the “Court of Appeal”), heard oral arguments on November 7, 2017. On December 11, 2017, the Court of Appeal reversed the trial court’s order denying class certification and remanded the matter for certification of a meal period, travel expense reimbursement, and split shift class. The case was remitted to the trial court for further proceedings on class certification, discovery, dispositive motions, and trial.

HusseinOn September 20, 2018, the trial court entered an order defining 4 certified subclasses of janitors who were employed by the legacy ABM janitorial companies in California at any time between April 7, 2002 and Hirsi v. Air Serv Corporation filedApril 30, 2013, on January 20, 2016, pending in the United States District Courtclaims based on alleged previous automatic deduction practices for the Western Districtmeal breaks, unpaid meal premiums, unpaid split shift premiums, and unreimbursed business expenses, such as mileage reimbursement for use of Washington at Seattle (the “Hussein case”) and

Isse et al. v. Air Serv Corporation filed on February 7, 2017 in the Superior Court of Washington for King County (the “Isse” case)

The Hussein case was a certified class action involving a class of certain hourly Air Serv employees at Seattle-Tacoma International Airport in SeaTac, Washington. The plaintiffs alleged that Air Serv violated a minimum wage requirement in an ordinance applicablepersonal vehicles to certain employers in the local city of SeaTac (the “Ordinance”). Plaintiffs sought retroactive wages, double damages, interest, and attorneys’ fees. This matter was removed to federal court. In a separate lawsuit brought by Filo Foods, LLC, Alaska Airlines, and several other employers at SeaTac airport, the King County Superior Court issued a decision that invalidated the Ordinance as it applied to workers at SeaTac airport. Subsequently, the Washington Supreme Court reversed the Superior Court’s decision.travel between worksites. On February 7, 2017,1, 2019, the Isse case was filed against Air Serv on behalf of 60 individual plaintiffs (whotrial court held that the discovery related to PAGA claims allegedly arising after April 30, 2013 would otherwise be membersstayed until after the class and PAGA claims accruing prior to April 30, 2013 had been tried. The parties engaged in mediation in July 2019, which did not result in settlement of the Hussein class), whocase. On October 17, 2019, the plaintiffs filed a motion asking the trial court to certify additional classes based on an alleged failure to comply with bothmaintain time records, an alleged failure to provide accurate wage statements, and an alleged practice of combining meal and rest breaks. The trial court denied the minimum wage provisionplaintiffs’ motion to certify additional classes on December 26, 2019. The case was re-assigned to a new judge on January 6, 2020. ABM filed motions for summary adjudication as to certain of plaintiffs’ class claims, and the sick and safe time provisiontrial court denied those motions in November 2020. The parties engaged in another mediation in January 2021, which did not result in a settlement of the Ordinance. case. Plaintiffs filed motions for summary adjudication and/or summary judgment on some claims in December 2020, and a hearing on these motions is currently set for March 17, 2021.
The Isse plaintiffs sought retroactive wagesparties are currently engaged in substantive briefing and sick benefits, double damagesbegan expert discovery in January 2021.The expert discovery serves to provide us with detailed information regarding the plaintiffs’ damage calculations. The class action claims accruing prior to April 30, 2013, are currently set for wages and sick benefits, interest, and attorneys’ fees. The Isse case later expanded to approximately 220 individual plaintiffs.

In mediationstrial on November 2 and 3, 2017, and without admitting liabilityJuly 12, 2021, although it is unclear whether the trial will proceed at that time in either matter, we agreed to settle the Hussein and Isse cases for a combined total of $8.3 million, inclusive of damages, interest, attorneys’ fees, and employer payroll taxes. Eligible employees will be able to participate in either the Hussein or Isse settlements, but cannot recover in both settlements. The settlements in both cases require court approval becauselight of the naturePandemic and courtroom protocols. Prior to trial, we will have the opportunity to, among other things, seek decertification of the claims being released. On December 8, 2017,classes, seek interlocutory appellate review, or engage in further mediation if we deem such actions appropriate. We intend to engage in one or more such activities before the Superior Court of Washington for King County approvedtrial during the settlement agreement for the 220 Isse plaintiffs, andsecond and/or third quarter.
While we subsequently made a settlement payment of $4.5 millionbelieve we have valid defenses to the Isse plaintiffs. The Hussein settlement documents have not been finalizedclaims in this proceeding and will continue to vigorously defend ourselves, there can be subject to court approval.


Castro and Marmolejo v. ABM Industries, Inc., et al., filed on October 24, 2014, pending in the United States District Court for the Northern District of California (the “Castro” case)

On October 24, 2014, Plaintiff Marley Castro filed a class action lawsuit alleging that ABM did not reimburse janitorial employees in California for using their personal cell phones for work-related purposes, in violation of California Labor Code section 2802. On January 23, 2015, Plaintiff Lucia Marmolejo was added to the case as a named plaintiff. On October 27, 2017, plaintiffs moved for class certification seeking to represent a class of all employees who were, are, or will be employed by ABM in the State of California with the Employee Master Job Description Code “Cleaner” (hereafter referred to as “Cleaner Employees”) beginning from October 24, 2010. ABM filed its opposition to class certification on November 27, 2017. On January 26, 2018, the district court granted plaintiffs’ motion for class certification. The court rejected plaintiffs’ proposed class, instead certifying three classesno assurance that the court formulatedfinal resolution of this matter will not have a material adverse effect on its own: (1) all employees who were, are,our business, financial condition, results of operations, or will be employed by ABM in the State of California as Cleaner Employees who used a personal cell phone to punch in and out of the EPAY system and who (a) worked atcash flows.







18

9. INCOME TAXES
Our quarterly tax provision is calculated using an ABM facilityestimated annual tax rate that did not provide a biometric clock and (b) were not offered an ABM-provided cell phoneis adjusted for discrete items occurring during the period beginning on January 1, 2012, through the date of notice to the Class Members that a class has been certified in this action; (2) all employees who were, are, or will be employed by ABM in the State of California as Cleaner Employees who used a personal cell phone to report unusual or suspicious circumstances to supervisors and were not offered (a) an ABM-provided cell phone or (b) a two-way radio during the period beginning four years prior to the filing of the original complaint, October 24, 2014, through the date of notice to the Class Members that a class has been certified in this action; and (3) all employees who were, are, or will be employed by ABM in the State of California as Cleaner Employees who used a personal cell phone to respond to communications from supervisors and were not offered (a) an ABM-provided cell phone or (b) a two-way radio during the period beginning four years prior to the filing of the original complaint, October 24, 2014, through the date of notice to the Class Members that a class has been certified in this action. On February 9, 2018, ABM filed a petition for permission to appeal the district court’s order granting class certification with the United States Court of Appeals for the Ninth Circuit.
11. INCOME TAXES
The Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017, represents the most significant overhaul of the U.S. tax code in more than 30 years. Among other provisions, the Tax Act provides for a reduction of the federal corporate income tax rate from 35% to 21% and a “transition tax” to be levied on the deemed repatriation of indefinitely reinvested earnings of international subsidiaries. Since we have an October 31 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of 23.3% for fiscal 2018 and 21% for subsequent fiscal years. Other provisions under the Tax Act will not be effective for us until fiscal 2019, including limitations on deductibility of interest and executive compensation as well as anti-deferral provisions on Global Intangible Low-Taxed Income (“GILTI”). As a result, in 2019 we expectarrive at our effective tax rate to increase from the 2018 rate.
Due to the complexities of implementing the provisions of the Tax Act, the staff of the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act and permits a measurement period not to exceed one year from the enactment date for companies to complete the required analyses and accounting. As permitted under SAB 118, some elements of the tax adjustments recorded in the first quarter of 2018 due to the enactment of the Tax Act, including the remeasurement of deferred tax assets and liabilities and the transition tax, are based on reasonable estimates and are considered provisional.
We remeasured certain deferred tax assets and liabilities based on the new rates at which they are expected to reverse in the future and recorded a net discrete tax benefit of $28.7 million during During the three months ended January 31, 2018. In addition,2021 and 2020, we recorded an expensehad effective tax rates of $7.026.7% and 23.6%, respectively, resulting in provisions for taxes of $27.2 million and $8.6 million, respectively. The difference between the effective tax rate and statutory rate is primarily related to tax credits. The rate difference between periods is driven by increased income in 2021.
Our effective tax rates for the one-time transitionthree months ended January 31, 2021 and January 31, 2020, were not impacted by any significant discrete items.
In response to COVID-19, Congress enacted the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) on March 27, 2020. The CARES Act provides various tax onprovisions, including payroll tax provisions, which we have evaluated for applicability. Through December 31, 2020, we deferred approximately $132 million of payroll tax, which the deemed repatriationCARES Act requires to be remitted by December 31, 2021 and December 31, 2022 in equal parts. The impact of indefinitely reinvested earnings of our international subsidiaries. the income tax provisions was not material.
We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion. Weexpansion, and we do not anticipate remitting such earnings to the United States, and whileStates. While U.S. federal tax expense has been recognized as a result of the Tax Cuts and Jobs Act of 2017, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.
We continue to analyze certain aspects of the Tax Act and refine our calculation of the impact on our deferred tax balances, which could potentially affect the measurement of these balances. The provisional amount recorded is based on our estimate of the expected reversals of certain tax assets and liabilities, which may be revised in future quarters during the one-year measurement period as additional information becomes available. The final impact related to the one-time transition tax may differ from our current estimate due to the complexity of calculating and supporting U.S. tax attributes involved in foreign tax credit calculations, such as accumulated foreign earnings and

profits, foreign tax paid, and other tax components. Changes to our estimates over the one-year measurement period could be material, due to, among other things, changes in interpretations of the Tax Act, future legislative action to address questions that arise because of the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the provisional amounts.10. SEGMENT INFORMATION
Beginning in fiscal year 2019, provisions under GILTI could result in incremental taxability of our foreign subsidiaries’ income in excess of an allowed return on certain tangible property. The Financial Accounting Standards Board has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. We are still evaluating the impacts of GILTI on our business model and have not yet made any accounting adjustments or policy decisions regarding this new source of incremental U.S. taxable income.
Our quarterly provision for income taxes from continuing operations is calculated using an estimated annual effective income tax rate, which is adjusted for discrete items that occur during the reporting period. During the three months ended January 31, 2018, we had an income tax benefit on income from continuing operations of $22.2 million. The three months ended January 31, 2018 was favorably impacted by a net discrete tax benefit of $21.7 million related to the enactment of the Tax Act.
During the three months ended January 31, 2017, we had an income tax provision on income from continuing operations of $5.9 million. The three months ended January 31, 2017 was favorably impacted by $2.0 million of excess tax benefits related to the vesting of share-based compensation awards and the 2017 work opportunity tax credit.
12. SEGMENT INFORMATION
Effective November 1, 2017, we reorganized our reportable segments to reflect the integration of GCA into our industry group model. Ourcurrent reportable segments consist of Business & Industry (“B&I”),&I, T&M, Education, Aviation, Technology & Manufacturing (“T&M”), Education,and Technical Solutions, and Healthcare, as further described below. Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” for information related to our former Government Services business.
REPORTABLE SEGMENTS AND DESCRIPTIONS
B&IB&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parking services for commercial real estate properties, and sports and entertainment venues.venues, and traditional hospitals and non-acute healthcare facilities. B&I also provides vehicle maintenance and other services to rental car providers (“Vehicle Services Contracts”).providers.
T&MT&M provides janitorial, facilities engineering, and parking services to industrial and high-tech manufacturing facilities.
EducationEducation delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.
AviationAviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.
T&MT&M combines our legacy Industrial & Manufacturing business, which was previously included in our B&I segment, with our legacy High Tech industry group, which was previously reported as part of our Emerging Industries Group. T&M provides janitorial, facilities engineering, and parking services.
EducationEducation delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities. This business was previously reported as part of our Emerging Industries Group.
Technical SolutionsTechnical Solutions specializes in mechanical and electrical services. These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.
HealthcareHealthcare offers janitorial, facilities management, clinical engineering, food and nutrition, laundry and linen, parking and guest services, and patient transportation services at traditional hospitals and non-acute facilities. This business was previously reported as part of our Emerging Industries Group.

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Financial Information by Reportable Segment
Three Months Ended January 31,Three Months Ended January 31,
(in millions)2018 2017(in millions)20212020
Revenues   Revenues
Business & Industry$722.1
 $655.6
Business & Industry$809.4 $820.9 
Aviation256.2
 231.9
Technology & Manufacturing232.0
 171.5
Technology & Manufacturing249.2 233.9 
Education206.3
 67.0
Education209.4 208.0 
AviationAviation143.1 238.7 
Technical Solutions104.0
 107.7
Technical Solutions113.4 142.0 
Healthcare67.7
 61.7
Government Services—
 31.4
Elimination of inter-segment revenuesElimination of inter-segment revenues(32.1)(30.6)
$1,588.3
 $1,326.7
$1,492.4 $1,612.9 
Operating profit (loss)   Operating profit (loss)
Business & Industry$28.5
 $27.1
Business & Industry$85.7 $38.2 
Aviation5.8
 4.6
Technology & Manufacturing16.9
 12.6
Technology & Manufacturing26.9 16.7 
Education9.2
 3.6
Education21.5 11.2 
AviationAviation3.2 5.6 
Technical Solutions5.5
 7.9
Technical Solutions6.0 8.3 
Healthcare2.7
 2.5
Government Services(0.7) 1.9
Government Services(0.1)0 
Corporate(47.4) (34.6)Corporate(32.6)(33.3)
Adjustment for income from unconsolidated affiliates, net, included in Aviation and Government Services(0.6) (1.3)
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical SolutionsAdjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions(0.6)(0.9)
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions(0.3) (0.5)Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions(0.2)0 
19.5
 23.8
109.7 45.8 
Income from unconsolidated affiliates, net0.5
 1.4
Income from unconsolidated affiliatesIncome from unconsolidated affiliates0.6 0.9 
Interest expense(14.3) (3.2)Interest expense(8.5)(10.2)
Income from continuing operations before income taxes$5.8
 $22.0
Income from continuing operations before income taxes$101.9 $36.5 
The accounting policies for our segments are the same as those disclosed within our significant accounting policies in Note 2, “Basis of Presentation and Significant Accounting Policies.” Our management evaluates the performance of each reportable segment based on its respective operating profit results, which include the allocation of certain centrally incurred costs. Corporate expenses not allocated to segments include certain CEO and other finance and human resource departmental expenses, certain information technology costs, share-based compensation, certain legal costs and settlements, restructuring and related costs, certain actuarial adjustments resulting from actuarial developments ofto self-insurance reserves, and direct acquisition costs. Management does not review asset information by segment, therefore we do not present assets in this note.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&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 unaudited consolidated financial statements and the accompanying notes (“Financial Statements”)Statements and our Annual Report on Form 10-K for the year ended October 31, 2017 (“Annual Report”),2020, which has been filed with the Securities and Exchange Commission (“SEC”).SEC. This MD&A contains forward-looking statements about our business, operations, and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, and intentions. Our future results and financial condition may be materially different from those we currently anticipate. See “Forward-Looking Statements” for more information.
Throughout the MD&A, amounts and percentages may not recalculate due to rounding. Unless otherwise indicated, all information in the MD&A and references to years are based on our fiscal year,years, which endsend on October 31.
Business Overview
ABM is a leading provider of integrated facility services,solutions, customized by industry, with a mission to make a difference, every person, every day.day.
2020Vision
In September 2015,COVID-19 Pandemic
COVID-19 has resulted in a worldwide health Pandemic. To date, COVID-19 has surfaced in regions all around the world and resulted in business slowdowns and shutdowns, as well as global travel restrictions. We, along with many of our clients, have been impacted by recommendations and/or mandates from federal, state, and local authorities to practice social distancing, to refrain from gathering in groups, and, in some areas, to refrain from non-essential movements outside of homes. The Pandemic has also created unanticipated circumstances and uncertainty, disruption, and significant volatility in the broader economy. Refer to “Consolidated Results of Operations” and “Results of Operations by Segment” for additional information related to the impact of the Pandemic on our financial results.
Given the unprecedented and uncertain nature and potential duration of this situation, we announcedcannot reasonably estimate the full extent of the impact the Pandemic will have on our financial condition, results of operations, or cash flows. The ultimate extent of the effects of the Pandemic on our company is highly uncertain and will depend on future developments, and such effects could exist for an extended period of time even after the Pandemic subsides.
Our priority has been and continues to be the health, safety, and support of our employees, our clients, and the communities that we serve. We have also taken actions to strengthen our liquidity, cash flows, and financial position to help mitigate potential future impacts on our operations and financial performance. These priorities and measures include, but are not limited to, the following:
Health and Safety of our Employees and Clients
As the Pandemic has developed, we have taken steps to support our employees and clients based on recommendations from various global experts, including the World Health Organization, the Centers for Disease Control and Prevention, the Occupational Safety and Health Administration, and the U.K. National Health Service. To help protect our employees and our clients, face masks and other personal protective equipment (“PPE”) are being used by our employees. We have also encouraged our employees to practice social distancing and wash hands frequently. Additionally, we transitioned many office-based employees to a comprehensive transformation initiative (“2020Vision”) intendedremote work environment, suspended non-essential travel, and adopted technologies to drive long-term profitable growth through an industry-based go-to-market approach. Our 2020Vision involves three phases: During Phase 1, completed on November 1, 2016,allow employees to effectively perform their functions remotely.
Client Focus
Over the past few years, we realigned our organization; in Phase 2, which is continuing today, we arehave focused on improvementsconsolidating purchasing activities to leverage our operational framework to promote efficienciesscale and process enhancements;identify preferred suppliers. While we have seen a reduction in the availability of supplies and an increase in Phase 3,costs, our procurement efforts have helped create a positive supply chain for our company and
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clients during the Pandemic, particularly as city and state mandates on the foundation of benefits realized from Phases 1 and 2, we anticipate accelerating growth with our industry-based, go-to-market service model.
2020Vision Developments in 2018
During 2018, we expect to continue focusing on certain aspects of our business practices to further build the foundation upon which we deliver leading industry-based facility services.PPE for employees have arisen. We anticipate that we will continue to roll out enterprise-wide standard operating procedures (the “ABMWay”)monitor our supply chain for potential impacts as future developments unfold.
The Pandemic continues to create a dynamic client environment, and improvewe are working diligently to ensure our account planning, labor management, manager development,clients’ changing staffing and service needs are met. We developed new cleaning initiatives in accordance with various protocols issued by global experts, including deep cleaning services, special project cleaning services, and other work orders.
In April 2020, we announced our EnhancedCleanTM Program (“EnhancedClean”), an innovative solution that helps provide clients with healthy spaces. We designed EnhancedClean under the guidance of experts on infectious diseases and industrial hygiene to help provide our clients with processes that use hospital-grade disinfectants, specialized equipment, and innovative solutions and technology. These solutions include: hygiene and safety initiatives. To achieve this,protocols, utilization of disinfecting procedures and products for high-touch surfaces, employment of PPE, and communication and training protocols.
Management of Direct Labor
As we are focusing on long term, profitable growth relatingadapt to both existing clientsthe changing demand environment resulting from the Pandemic, we continue to actively manage direct labor and targeted opportunities,related personnel costs, including furloughs or reduced hours for certain frontline employees in markets significantly impacted by business slowdowns and shutdowns.
Liquidity, Cash Flows, and Financial Position
As of January 31, 2021, we had $378.3 million of cash and cash equivalents, and we have launched a “Tag Pricer” tool that will help us capture work orders more efficiently. In addition, we continue consolidating our procurementhad net cash provided by operating activities and investing in technology platforms to help drive and sustain 2020Vision performance.
Developments and Trends
United States Tax Reform
The Tax Cuts and Jobs Act (the “Tax Act”), which was enacted on December 22, 2017, represents the most significant overhaul of the U.S. tax code in more than 30 years. Among other provisions, the Tax Act provides for a reduction of the federal corporate income tax rate from 35% to 21% and a “transition tax” to be levied on the deemed repatriation of indefinitely reinvested earnings of international subsidiaries. Since we have an October 31 fiscal year-end, the lower corporate income tax rate will be phased in, resulting in a U.S. statutory federal rate of 23.3% for fiscal 2018 and 21% for subsequent fiscal years. Other provisions under the Tax Act will not be effective for us until fiscal 2019, including limitations on deductibility of interest and executive compensation as well as anti-deferral provisions on Global Intangible Low-Taxed Income (“GILTI”). As a result, in 2019 we expect our effective tax rate to increase from the 2018 rate. The estimated impact of the Tax Act, as summarized below for$45.3 million during the three months ended January 31, 2018, is2021. We have taken and continue to take actions to help preserve cash, increase liquidity, and strengthen our financial position, including:
•Amending our Credit Facility on May 28, 2020, to further enhance our financial flexibility as a precautionary measure in response to uncertainty arising from the Pandemic (refer to “Liquidity and Capital Resources” for more information);
•Focusing on collection of client receivables and monitoring the adequacy of our reserves;
•Extending vendor payment terms where possible;
•Utilizing certain governmental relief efforts (as further described below); and
•Suspending share repurchases under our share repurchase program.
As a result of the actions taken above, we were able to strengthen our cash flow during the first quarter. As of January 31, 2021, this resulted in Note 11, “Income Taxes,”a borrowing capacity of $599.4 million, reflecting covenant restrictions, in addition to the cash and cash equivalents amount noted above.
In response to the Pandemic, Congress enacted the CARES Act on March 27, 2020. The CARES Act provides various tax provisions, including payroll tax provisions, which we have evaluated for applicability. Through December 31, 2020, we deferred approximately $132 million of payroll tax, which the CARES Act requires to be remitted by December 31, 2021 and December 31, 2022 in equal parts. The impact of the income tax provisions was not material. Additionally, we received grants under the United Kingdom’s job retention scheme to reimburse us for a portion of certain furloughed employees’ salaries.
The Pandemic is an unprecedented situation and is continuously evolving. Since we cannot predict the duration or scope of the Pandemic, we cannot fully anticipate or reasonably estimate all the ways in which the current global health crisis and financial market conditions could adversely impact our business in 2021 or in the Financial Statements.future. Even after the Pandemic has moderated and the business and social distancing restrictions have eased, we may continue to experience adverse effects on our business, consolidated results of operations, financial position, and cash flows resulting from a recessionary economic environment that may persist.
 Three Months Ended
(in millions)January 31, 2018
Remeasurement of U.S. deferred tax assets and liabilities$28.7
Transition tax on non-U.S. subsidiaries’ earnings(7.0)
Total impact of the Tax Act on the benefit for income taxes$21.7

Due toThe Pandemic has had a profoundly negative impact on the complexities of implementing the provisionspublic health and safety of the Tax Act,global and American public. As a result, the staffglobal and U.S. economies continue to experience significant uncertainty. Gross domestic product has demonstrated considerable volatility since the onset of the U.S. SecuritiesPandemic, contracting to a historic and Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”),sudden low during 2020. While the unemployment rate has been slightly decreasing since its peak in April
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2020, it continues to remain well above pre-Pandemic levels, given the struggling macroeconomic environment. These factors have led to lower demand for some of our services in certain end-markets. At present, the Pandemic is expected to continue impacting global communities and commerce for the foreseeable future.
Insurance
We review our self-insurance liabilities on a regular basis and adjust our accruals accordingly. Actual claims activity or development may vary from our assumptions and estimates, which provides guidance onmay result in material losses or gains. As we obtain additional information that affects the assumptions and estimates used in our reserve liability calculations, we adjust our self-insurance rates and reserves for future periods and, if appropriate, adjust our reserves for claims incurred in prior accounting for tax effectsperiods.
During the first quarter of 2021, we performed a comprehensive actuarial review of the Tax Actmajority of our casualty insurance programs to evaluate changes made to claims reserves and permits a measurementclaims payment activity for the period notof May 1, 2020 through October 31, 2020. The Actuarial Review was comprehensive in nature and was based on loss development patterns, trend assumptions, and underlying expected loss costs during the period analyzed. The Actuarial Review again demonstrated that the changes we have made to exceed one year from the enactment date for companies to complete the required analyses and accounting. Weour risk management programs continue to analyze certain aspectspositively impact the frequency and severity of claims.
The claims management strategies and programs that we have implemented have resulted in improvements. Furthermore, we continue to adjust our reserves consistent with known fact patterns. Based on the results of the Tax Act and refineActuarial Review, we decreased our calculation of the impact on our deferred tax balances, which could potentially affect the measurement of these balances. The provisional amount recorded is based ontotal reserves for known claims as well as our estimate of the expected reversals of certain tax assets and liabilities, which may be revised in future quartersloss amounts associated with IBNR claims by $14.4 million during the one-year measurement period as additional information becomes available. The final impact related to the one-time transition tax may differ from our current estimate due to the complexity of calculating and supporting U.S. tax attributes involved in foreign tax credit calculations, such as accumulated foreign earnings and profits, foreign tax paid, and other tax components. Changes to our estimates over the one-year measurement period could be material, due to, among other things, changes in interpretations of the Tax Act, future legislative action to address questions that arise because of the Tax Act, changes in accounting standards for income taxes or related interpretations in response to the Tax Act, or any updates or changes to estimates we have utilized to calculate the provisional amounts.    
Beginning in fiscal year 2019, provisions under GILTI could result in incremental taxability of our foreign subsidiaries’ income in excess of an allowed return on certain tangible property. The Financial Accounting Standards Board has determined that filers have a policy choice to account for this tax on either a period basis or a deferred tax basis. We are still evaluating the impacts of GILTI on our business model and have not yet made any accounting adjustments or policy decisions regarding this new source of incremental U.S. taxable income.
GCA Services Group
On September 1, 2017, we acquired GCA Services Group (“GCA”), a provider of integrated facility services to educational institutions and commercial facilities, for approximately $1.3 billion, consisting of $839.9 million in cash and approximately 9.4 million shares of ABM common stock with a fair value of $421.3 million at closing. Refer to Note 3, “Acquisitions,” in the Financial Statements for more information on this transaction.
Our consolidated statements of comprehensive income (loss) and statements of cash flows include GCA’s results of operations in the three months ended January 31, 2018, but exclude GCA’s results of operations in the three months ended January 31, 2017, as2021; $11.4 million of that wasamount relates to prior to the acquisition date.years. During the three months ended January 31, 2018,2020, we recognizeddecreased our total incremental revenues from GCA of $251.6 million, as summarized below.

Three Months Ended
(in millions)January 31, 2018
Education$140.5
Technology & Manufacturing58.6
Business & Industry40.7
Healthcare7.5
Aviation4.3
Total$251.6
Following this acquisition, during 2018 we initiated a restructuring program to achieve cost synergies from our combined operations. We include these costs within corporate expenses. We do not expect to incur significant severance expensesreserves related to GCA restructuringprior year claims by $6.6 million. We will continue to assess ongoing developments, which may result in the future.

Three Months Ended
(in millions)January 31, 2018
Employee Severance$8.8
External Support Fees2.0
Other Project Fees0.8
Total$11.7


further adjustments to reserves.
Segment Reporting

Effective November 1, 2017, we reorganized our reportable segments to reflect the integration of GCA into our industry group model. Our current reportable segments consist of Business & Industry (“B&I”),&I, T&M, Education, Aviation, Technology & Manufacturing (“T&M”), Education,and Technical Solutions, and Healthcare, as further described below.
REPORTABLE SEGMENTS AND DESCRIPTIONS
fy18bni.jpgabm-20210131_g4.jpg
B&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parking services for commercial real estate properties, and sports and entertainment venues.venues, and traditional hospitals and non-acute healthcare facilities. B&I also provides vehicle maintenance and other services to rental car providers (“Vehicle Services Contracts”).providers.
fy18aviationa01.jpgabm-20210131_g5.jpg
T&M provides janitorial, facilities engineering, and parking services to industrial and high-tech manufacturing facilities.
abm-20210131_g6.jpg
Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.
abm-20210131_g7.jpg
Aviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.
fy18tnm.jpg
T&M combines our legacy Industrial & Manufacturing business, which was previously included in our B&I segment, with our legacy High Tech industry group, which was previously reported as part of our Emerging Industries Group. T&M provides janitorial, facilities engineering, and parking services.
fy18educationa01.jpg
Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities. This business was previously reported as part of our Emerging Industries Group.
fy18technicalsolutions.jpgabm-20210131_g8.jpg
Technical Solutions specializes in mechanical and electrical services. These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.
fy18healthcare.jpg
Healthcare offers janitorial, facilities management, clinical engineering, food and nutrition, laundry and linen, parking and guest services, and patient transportation services at traditional hospitals and non-acute facilities. This business was previously reported as part of our Emerging Industries Group.


Prior Year Reclassifications


Effective with the reorganization of our reportable segments, we have revised our prior period segment information to conform with our fiscal 2018 presentation. These changes had no impact on our previously reported consolidated balance sheets, statements of comprehensive income (loss),
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Key Financial Highlights
•Revenues decreased by $120.5 million, or statements of cash flows.


Government Services Business

We sold our Government Services business on May 31, 2017. The reported results for this business are through the date of sale and future results could include run-off costs. As this business has been sold and is no longer part of our ongoing operations, we have excluded a discussion of its results for the periods in this report.
Insurance
During the three months ended January 31, 2018, we performed an actuarial review of the majority of our casualty insurance programs that considered changes in claim developments and claim payment activity for the period commencing May 1, 2017 and ending October 31, 2017 for all policy years in which open claims existed. The actuarial review indicated the claims reduction and safety initiatives we implemented have had a positive impact on our claims costs in the most recent years. Most notably, there has been a decrease in claim frequency for workers’ compensation lost-time claims and general liability bodily injury claims over the past two years. However, there have been unfavorable developments in ultimate losses beyond our estimates for general liability and workers’ compensation claims related to prior years.
Based on the results of the actuarial review and subsequent developments, we increased our total reserves for known claims as well as our estimate of the loss amounts associated with incurred but not reported claims for prior years by $2.0 million7.5%, during the three months ended January 31, 2018. This adjustment was $3.0 million lower than the total adjustment related to prior year claims of $5.0 million during the three months ended January 31, 2017. We will continue to assess ongoing developments, which may result in further adjustments to reserves.
Key Financial Highlights
Revenues increased by $261.6 million, or 19.7%, including $253.9 million of incremental revenues primarily from the GCA acquisition, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020, primarily due to the impact of Pandemic-related disruptions across our businesses. However, this decrease was partially offset by an increase in work orders, primarily as a result of the Pandemic, and the expansion of certain accounts and new business within B&I and T&M.
•Operating profit decreasedincreased by $4.3$63.9 million or 18.2%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017. The decrease in operating profit is2020. This change was primarily attributable to higher amortization expense, incremental selling, general and administrative expenses, and restructuring and related costs associated with the GCA acquisition. This decrease wasmanagement of direct labor and related personnel costs during the Pandemic and an increase in work orders with higher margins as a result of the Pandemic (primarily within B&I and T&M). These benefits were partially offset by higheraccount compression resulting from Pandemic-related disruptions in certain markets.
•Our effective tax rate on income from continuing operations was 26.7% for the three months ended January 31, 2021, as compared to 23.6% for the three months ended January 31, 2020. Our effective tax rate for the three months ended January 31, 2021 was not impacted by any significant discrete items.
•Net cash provided by operating profit in our Education and T&M segments associated with the GCA acquisition.
Interest expense increased by $11.1activities was $45.3 million during the three months ended January 31, 2018, as compared to2021. This includes the three months ended January 31, 2017, primarily related to increased indebtedness incurred to funddeferred remittance of approximately $31 million of payroll taxes under the GCA acquisition and higher relative interest rates under our credit facility.CARES Act.
Our income taxes from continuing operations for the three months ended January 31, 2018 were favorably impacted by a net discrete tax benefit of $21.7 million related to the Tax Act.
Net cash provided by operating activities was $33.7 million during the three months ended January 31, 2018.
•Dividends of $11.5$12.7 million were paid to shareholders and dividends totaling $0.175$0.190 per common share were declared during the three months ended January 31, 2018.2021.
•At January 31, 2018,2021, total outstanding borrowings under our credit facilityCredit Facility were $1.2 billion, and$695.3 million. At January 31, 2021, we had up to $330.5$599.4 million of borrowing capacity, under our credit facility; however,reflecting covenant restrictions limited our actual borrowing capacity to $245.5 million.restrictions.

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Results of Operations

Consolidated
Three Months Ended January 31,
($ in millions)20212020Increase / (Decrease)
Revenues$1,492.4 $1,612.9 $(120.5)(7.5)%
Operating expenses1,249.4 1,433.7 (184.3)(12.9)%
Gross margin16.3 %11.1 %518 bps
Selling, general and administrative expenses122.6 117.6 5.0 4.2%
Restructuring and related expenses— 3.1 (3.1)NM*
Amortization of intangible assets10.8 12.6 (1.8)(14.7)%
Operating profit109.7 45.8 63.9 NM*
Income from unconsolidated affiliates0.6 0.9 (0.3)(32.1)%
Interest expense(8.5)(10.2)1.7 16.9%
Income from continuing operations before income taxes101.9 36.5 65.4 NM*
Income tax provision(27.2)(8.6)(18.6)NM*
Income from continuing operations74.6 27.9 46.7 NM*
Income from discontinued operations, net of taxes— 0.1 (0.1)NM*
Net income74.6 28.0 46.6 NM*
Other comprehensive income (loss)
Interest rate swaps1.2 (1.1)2.3 NM*
Foreign currency translation and other4.0 0.4 3.6 NM*
Income tax (provision) benefit(0.4)0.3 (0.7)NM*
Comprehensive income$79.5 $27.6 $51.9 NM*
*Not meaningful
Three Months Ended January 31, 20182021 Compared with the Three Months Ended January 31, 20172020
Consolidated
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$1,588.3
 $1,326.7
 $261.6
 19.7%
Operating expenses1,429.3
 1,195.1
 234.2
 19.6%
Gross margin10.0% 9.9% 9 bps  
Selling, general and administrative expenses109.0
 97.3
 11.7
 12.1%
Restructuring and related expenses14.3
 5.0
 9.3
 NM*
Amortization of intangible assets16.2
 5.5
 10.7
 NM*
Operating profit19.5
 23.8
 (4.3) (18.2)%
Income from unconsolidated affiliates, net0.5
 1.4
 (0.9) (61.0)%
Interest expense(14.3) (3.2) (11.1) NM*
Income from continuing operations before income taxes5.8
 22.0
 (16.2) (73.8)%
Income tax benefit (provision)22.2
 (5.9) 28.1
 NM*
Income from continuing operations28.0
 16.1
 11.9
 74.1%
Loss from discontinued operations, net of taxes(0.1) (72.9) 72.8
 (99.8)%
Net income (loss)27.8
 (56.8) 84.6
 NM*
Other comprehensive income (loss)       
Unrealized gains on interest rate swaps, net of taxes of $5.0 and $1.1, respectively13.6
 1.6
 12.0
 NM*
Foreign currency translation9.4
 3.3
 6.1
 NM*
Comprehensive income (loss)$50.9
 $(51.9) $102.8
 NM*
*Not meaningful
Revenues
Revenues increaseddecreased by $261.6$120.5 million, or 19.7%7.5%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017. The increase in revenues2020. This decrease was primarily attributabledue to $253.9 millionthe impact of incremental revenues from acquisitions, including GCA, and organic growth in B&I and Aviation. This increasePandemic-related disruptions across our businesses. However, this decrease was partially offset by lower project revenuesan increase in our Technical Solutions businesswork orders, primarily as a result of the Pandemic, and the saleexpansion of our Government Servicescertain accounts and new business on May 31, 2017.within B&I and T&M.
Operating Expenses
Operating expenses increaseddecreased by $234.2$184.3 million, or 19.6%12.9%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. Gross margin increased slightly by 9518 bps duringto 16.3% in the three months ended January 31, 2018.2021 from 11.1% in the three months ended January 31, 2020. The increase in gross margin was primarily associated with the management of direct labor and related personnel costs during the Pandemic and an increase in work orders with higher margins as a lowerresult of the Pandemic (primarily within B&I and T&M). The increase in gross margin was also driven by self-insurance adjustment related to prior year claims and favorable margins on certain U.S. Technical Solutions projects. This increase wasreserve adjustments. These benefits were partially offset by lower profit margins onaccount compression resulting from Pandemic-related disruptions in certain B&I accounts and the loss of certain high margin contracts in our U.K. Technical Solutions business.markets.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increased by $11.7$5.0 million, or 12.1%4.2%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. The increase in selling, general and administrative expenses was primarily related to $10.1 million of incremental expenses related to the GCA acquisition and attributable to:
•a $3.7$2.2 million increase in costscertain technology projects and related support;
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•a $1.5 million increase related to investments in EnhancedClean; and
•a $0.6 million increase in bad debt expense primarily associated with 2020Vision technology investments. This increase was partially offset by a $1.0 million decrease in sales tax reserve.

higher reserves established for client receivables mainly associated with increasing credit risk resulting from the Pandemic.
Restructuring and Related Expenses
Restructuring and related expenses increaseddecreased by $9.3$3.1 million during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017, as a result of restructuring2020. The decrease was due to expenses incurred in the prior year related to our ongoing technology initiatives. By the GCA acquisition.end of 2020, we substantially completed the restructuring program. The remaining technology-based modernization efforts including system integration will be part of a new technology transformation project going forward.
Amortization of Intangible Assets
Amortization of intangible assets increaseddecreased by $10.7$1.8 million, or 14.7%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017, as2020. The decrease was due to a resultlower intangible assets balance resulting from the impairment loss recorded in the second quarter of 2020 and to certain intangible assets being amortized using the sum-of-the-years’-digits method, which results in declining amortization expense over the useful lives of the amortization of acquired intangible assets associated with the GCA acquisition.assets.
Interest Expense
Interest expense increaseddecreased by $11.1$1.7 million, or 16.9%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017,2020, primarily relateddue to increased indebtedness incurred to fund the GCA acquisition and higherlower relative interest rates in the current year and lower outstanding borrowing under our credit facility.
Income Taxes from Continuing Operations
DuringOur effective tax rates on income from continuing operations for the three months ended January 31, 2018, we had an income2021, and January 31, 2020, were 26.7% and 23.6%, respectively, resulting in provisions for taxes of $27.2 million and $8.6 million, respectively. The difference between the effective tax benefit on income from continuing operations of $22.2 million,rate and statutory rate is primarily due to a net discrete tax benefit of $21.7 million related to the Tax Act.tax credits. The rate difference between periods is driven by increased income in 2021. Our effective tax rates for these periods were not impacted by any significant discrete items.
Loss from Discontinued Operations, NetInterest Rate Swaps
We had a gain of Taxes
Loss from discontinued operations, net of taxes, decreased by $72.8$1.2 million on interest rate swaps during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017, in which a legal reserve was established in connection with certain legal settlement agreements.
Unrealized Gains on Interest Rate Swaps
Unrealized gains on interest rate swaps increased by $12.0loss of $1.1 million during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. The increase was2020, primarily due to an increaseunderlying changes in the notional amountfair value of our interest rate swaps and to changing interest rates. In November 2017, we entered into three additional interest rate swaps with a combined notional amount of $500.0 million and fixed interest rates of 1.65% and 1.69%.swaps.
Foreign Currency Translation
Foreign currency translation gain increased by $6.1$3.6 million during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. This increasechange was relateddue to fluctuations in the weakening ofexchange rate between the U.S. Dollar (“USD”) againstand the Great Britain Pound during the three months ended January 31, 2018.(“GBP”). Future gains and losses on foreign currency translation will be dependent upon changes in the relative value of foreign currencies to the USD and the extent of our foreign assets and liabilities.

26



Segment Information
Financial Information for Each Reportable Segment
Three Months Ended January 31,    Three Months Ended January 31,
($ in millions)2018 2017 Increase / (Decrease)($ in millions)20212020Increase / (Decrease)
Revenues      Revenues
Business & Industry$722.1
 $655.6
 $66.5
 10.1%Business & Industry$809.4 $820.9 $(11.5)(1.4)%
Aviation256.2
 231.9
 24.3
 10.5%
Technology & Manufacturing232.0
 171.5
 60.5
 35.3%Technology & Manufacturing249.2 233.9 15.3 6.5%
Education206.3
 67.0
 139.3
 NM*Education209.4 208.0 1.4 0.7%
AviationAviation143.1 238.7 (95.6)(40.0)%
Technical Solutions104.0
 107.7
 (3.7) (3.4)%Technical Solutions113.4 142.0 (28.6)(20.2)%
Healthcare67.7
 61.7
 6.0
 9.8%
Government Services—
 31.4
 (31.4) NM*
Elimination of inter-segment revenuesElimination of inter-segment revenues(32.1)(30.6)(1.5)(4.8)%
$1,588.3
 $1,326.7
 $261.6
 19.7%$1,492.4 $1,612.9 $(120.5)(7.5)%
Operating profit (loss)      Operating profit (loss)
Business & Industry$28.5
 $27.1
 $1.4
 5.1%Business & Industry$85.7 $38.2 $47.5 NM*
Operating profit margin3.9% 4.1% (19) bps
 
Aviation5.8
 4.6
 1.2
 25.5%
Operating profit margin2.3% 2.0% 27 bps
 Operating profit margin10.6 %4.7 %593 bps
Technology & Manufacturing16.9
 12.6
 4.3
 33.6%Technology & Manufacturing26.9 16.7 10.2 61.3%
Operating profit margin7.3% 7.4% (9) bps
 Operating profit margin10.8 %7.1 %366 bps
Education9.2
 3.6
 5.6
 NM*Education21.5 11.2 10.3 91.3%
Operating profit margin4.4% 5.4% (99) bps
 Operating profit margin10.2 %5.4 %485 bps
AviationAviation3.2 5.6 (2.4)(42.9)%
Operating profit marginOperating profit margin2.2 %2.3 %(11) bps
Technical Solutions5.5
 7.9
 (2.4) (30.5)%Technical Solutions6.0 8.3 (2.3)(27.7)%
Operating profit margin5.3% 7.3% (205) bps
 
Healthcare2.7
 2.5
 0.2
 10.1%
Operating profit margin4.0% 4.0% 1 bps
 Operating profit margin5.3 %5.9 %(56) bps
Government Services(0.7) 1.9
 (2.6) NM*Government Services(0.1)— (0.1)NM*
Operating profit marginNM*
 6.0% NM*
 Operating profit marginNM*NM*NM*
Corporate(47.4) (34.6) (12.8) 36.9%Corporate(32.6)(33.3)0.7 2.1%
Adjustment for income from unconsolidated affiliates, net, included in Aviation and Government Services(0.6) (1.3) 0.7
 53.3%
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical SolutionsAdjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions(0.6)(0.9)0.3 32.1%
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions(0.3) (0.5) 0.2
 (39.4)%Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions(0.2)— (0.2)NM*
$19.5
 $23.8
 $(4.3) (18.2)%$109.7 $45.8 $63.9 NM*
*Not meaningful
Three Months Ended January 31, 2021 Compared with the Three Months Ended January 31, 2020
Business & Industry
 Three Months Ended January 31,
($ in millions)20212020(Decrease) / Increase
Revenues$809.4 $820.9 $(11.5)(1.4)%
Operating profit85.7 38.2 47.5 NM*
Operating profit margin10.6 %4.7 %593 bps
*Not meaningful
Business & Industry       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$722.1
 $655.6
 $66.5
 10.1%
Operating profit28.5
 27.1
 1.4
 5.1%
Operating profit margin3.9% 4.1% (19) bps
  
B&I revenues increaseddecreased by $66.5$11.5 million, or 10.1%1.4%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. The increasedecrease was primarily attributable to incremental revenuesaccount compression resulting from Pandemic-related disruptions in certain markets within both our U.S. and U.K. businesses. The decrease was partially offset by the GCA acquisition of $40.7 million and to net new janitorial business, including new contract wins in the U.K.,targeted expansion of existing accounts,certain key clients, new business, and additional tag revenue.an increase in work orders (primarily as a result of the Pandemic). Management reimbursement revenues for this segment totaled $63.0$43.4 million and $57.8$73.7 million for the three months ended January 31, 20182021 and 2017,2020, respectively.
27

Operating profit increased by $1.4$47.5 million or 5.1%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. Operating profit margin decreasedincreased by 19593 bps to 3.9% in the

three months ended January 31, 2018 from 4.1%10.6% in the three months ended January 31, 2017.2021, from 4.7% in the three months ended January 31, 2020. The decreaseincrease in operating profit margin was primarily associated with loweran increase in work orders, which have higher margins. Additionally, the increase in operating profit margin was impacted by higher margins on certain janitorial accounts in both our U.S. and Vehicle Services ContractsU.K. businesses, driven by the management of direct labor and with higher amortization expense related topersonnel costs during the GCA acquisition.Pandemic. The decreaseincrease was partially offset by the management of selling, general and administrative expenses.account compression resulting from Pandemic-related disruptions in certain markets.
Technology & Manufacturing
 Three Months Ended January 31,
($ in millions)20212020Increase
Revenues$249.2 $233.9 $15.3 6.5%
Operating profit26.9 16.7 10.2 61.3%
Operating profit margin10.8 %7.1 %366 bps
Aviation       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase
Revenues$256.2
 $231.9
 $24.3
 10.5%
Operating profit5.8
 4.6
 1.2
 25.5%
Operating profit margin2.3% 2.0% 27 bps
 
AviationT&M revenues increased by $24.3$15.3 million, or 10.5%6.5%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. The increase was primarily attributable to organic growthan increase in parking, cabin cleaning,work orders (primarily as a result of the Pandemic) and catering logistics and to incremental revenuesnew business. This increase was partially offset by the compression of $5.9 million primarilycertain accounts, mainly resulting from the GCA acquisition. Management reimbursement revenues for this segment totaled $25.5 million and $16.5 million for the three months ended January 31, 2018 and 2017, respectively.Pandemic-related disruptions.
Operating profit increased by $1.2$10.2 million, or 25.5%61.3%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. Operating profit margin increased by 27366 bps to 2.3%10.8% in the three months ended January 31, 20182021, from 2.0%7.1% in the three months ended January 31, 2017.2020. The increase in operating profit margin was primarily attributable to the termination of an unprofitable contract at the end of 2017 andhigher margins on work orders, the management of selling, generaldirect labor and administrative expenses.related personnel costs during the Pandemic, and lower reserves established for client receivables.
Education
 Three Months Ended January 31,
($ in millions)20212020Increase
Revenues$209.4 $208.0 $1.4 0.7%
Operating profit21.5 11.2 10.3 91.3%
Operating profit margin10.2 %5.4 %485 bps
Technology & Manufacturing       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$232.0
 $171.5
 $60.5
 35.3%
Operating profit16.9
 12.6
 4.3
 33.6%
Operating profit margin7.3% 7.4% (9) bps
  
T&MEducation revenues increased by $60.5$1.4 million, or 35.3%0.7%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. The increase was relatedprimarily attributable to incremental revenues froman increase in work orders (primarily as a result of the GCA acquisition of $58.6 million.Pandemic).
Operating profit increased by $4.3$10.3 million, or 33.6%,91.3% during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. Operating profit margin decreasedincreased by 9485 bps to 7.3%10.2% in the three months ended January 31, 20182021, from 7.4%5.4% in the three months ended January 31, 2017.2020. The increase in operating margin was primarily attributable to the management of direct labor and related personnel costs during Pandemic-related school closures, an increase in work orders with higher margins as a result of the Pandemic, and lower amortization of intangible assets. This increase was partially offset by higher reserves established for client receivables mainly associated with increasing credit risk resulting from the Pandemic.
Aviation
 Three Months Ended January 31,
($ in millions)20212020Decrease
Revenues$143.1 $238.7 $(95.6)(40.0)%
Operating profit3.2 5.6 (2.4)(42.9)%
Operating margin2.2 %2.3 %(11) bps
Aviation revenues decreased by $95.6 million, or 40.0%, during the three months ended January 31, 2021, as compared to the three months ended January 31, 2020. The decrease was primarily attributable to travel restrictions and a dramatic decline in passenger demand resulting from the Pandemic. Significant volume reductions impacted janitorial, cabin cleaning, transportation, parking, passenger services, and catering accounts.
28

The decrease was partially offset by Pandemic-related cleaning services. Management reimbursement revenues for this segment totaled $13.7 million and $25.9 million for the three months ended January 31, 2021 and 2020, respectively.
Operating profit decreased by $2.4 million, or 42.9%, during the three months ended January 31, 2021, as compared to the three months ended January 31, 2020. Operating profit margin decreased by 11 bps to 2.2% in the three months ended January 31, 2021, from 2.3% in the three months ended January 31, 2020. The decrease was primarily attributable to Pandemic-related volume reductions and higher reserves established for client receivables mainly associated with increasing credit risk resulting from the Pandemic. The decrease was partially offset by the management of direct labor and related personnel costs during the Pandemic and by an increase in Pandemic-related cleaning services with higher margins.
Technical Solutions
 Three Months Ended January 31,
($ in millions)20212020Decrease
Revenues$113.4 $142.0 $(28.6)(20.2)%
Operating profit6.0 8.3 (2.3)(27.7)%
Operating profit margin5.3 %5.9 %(56) bps
Technical Solutions revenues decreased by $28.6 million, or 20.2%, during the three months ended January 31, 2021, as compared to the three months ended January 31, 2020. This decrease was primarily attributable to a slower than expected ability to convert our active projects, otherwise defined as churn rate, due to regional access restrictions in our U.S. business resulting from the Pandemic.
Operating profit decreased by $2.3 million, or 27.7%, during the three months ended January 31, 2021, as compared to the three months ended January 31, 2020. Operating profit margin decreased by 56 bps to 5.3% in the three months ended January 31, 2021, from 5.9% in the three months ended January 31, 2020. The decrease in operating profit margin was primarily attributable to revenue compression resulting from Pandemic-related disruptions and higher amortization expense related toreserves established for client receivables mainly associated with increasing credit risk resulting from the GCA acquisition,Pandemic. The decrease was partially offset by certain acquired higher margin contracts.the management of project related expenses.
Education       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$206.3
 $67.0
 $139.3
 NM*
Operating profit9.2
 3.6
 5.6
 NM*
Operating profit margin4.4% 5.4% (99) bps
 
Corporate
 Three Months Ended January 31,
($ in millions)20212020Decrease
Corporate expenses$32.6 $33.3 $(0.7)(2.1)%
*Not meaningful
Education revenues increasedCorporate expenses decreased by $139.3$0.7 million, or 2.1%, during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017.2020. The increase was attributable to incremental revenues from the GCA acquisition of $140.5 million.
Operating profit increased by $5.6 million during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. Operating profit margin decreased by 99 bps to 4.4% in the three months

ended January 31, 2018 from 5.4% in the three months ended January 31, 2017. The decrease in operating profit margin was primarily associated with higher amortization expense related to the GCA acquisition, partially offset by certain acquired higher margin contracts.
Technical Solutions       
 Three Months Ended January 31,    
($ in millions)2018 2017 Decrease
Revenues$104.0
 $107.7
 $(3.7) (3.4)%
Operating profit5.5
 7.9
 (2.4) (30.5)%
Operating profit margin5.3% 7.3% (205) bps
  
Technical Solutions revenues decreased by $3.7 million, or 3.4%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. This decrease was primarily attributable to the timing of new project bookings and the completion of certain bundled energy solutions projects.
Operating profit decreased by $2.4 million, or 30.5%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. Operating profit margin decreased by 205 bps to 5.3% in the three months ended January 31, 2018 from 7.3% in the three months ended January 31, 2017. The decrease in operating profit margin was primarily attributable to higher compensation and related expenses due to investment in sales personnel and the loss of certain high margin contracts in our U.K. business. This decrease was partially offset by favorable margins on certain projects in our U.S. business.
Healthcare       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase
Revenues$67.7
 $61.7
 $6.0
 9.8%
Operating profit2.7
 2.5
 0.2
 10.1%
Operating profit margin4.0% 4.0% 1 bps
  
Healthcare revenues increased by $6.0 million, or 9.8%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. This increase was primarily attributable to incremental revenues from the GCA acquisition of $7.5 million, the expansion of existing janitorial accounts, and new business. This increase was partially offset by the loss of a large facilities management contract.
Operating profit increased by $0.2 million or 10.1% during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. Operating profit margin remained flat at 4.0% in the three months ended January 31, 2018 and 2017.
Corporate       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase
Corporate expenses$47.4
 $34.6
 $12.8
 36.9%
Corporate expenses increased by $12.8 million, or 36.9%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. The increase in corporate expenses was primarily related to attributable to:
•a $9.3$4.8 million increasedecrease in restructuring and related costs as a result of the GCA acquisition and a $3.7 million increase in costs primarily associated with 2020Vision technology investments. This increase was partially offset by a $3.0 million lower self-insurance adjustmentreserves related to prior year claims as a result of an actuarial reviewthe Actuarial Review completed in the three months ended January 31, 2018.2021; and

•a $3.1 million decrease in restructuring and related expenses due to expenses incurred in the prior year related to our technology initiatives.
This decrease was partially offset by:
•a $4.6 million increase in compensation and related expenses; and
•a $2.2 million increase in certain technology projects and related support.
29

Liquidity and Capital Resources

Our primary sources of liquidity are operating cash flows and borrowing capacity under our credit facility.Credit Facility. We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet those needs.

In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include funding legal settlements, insurance claims, dividend payments, capital expenditures, share repurchases, and integration costs related to the GCA acquisition.strategic initiatives, including technology transformation. We anticipate long-term cash uses willmay also include strategic acquisitionsacquisitions. On a long-term basis, we will continue to rely on our Credit Facility for any long-term funding not provided by operating cash flows.
We believe that the Pandemic has had, and will likely continue to have, an adverse impact on our consolidated financial position, results of operations, and cash flows. Since we cannot predict the duration or scope of the Pandemic, we cannot fully anticipate or reasonably estimate all the ways in which the current global health crisis and financial market conditions could adversely impact our business in fiscal 2021 or in the future. It is also possible that our accounts receivable cash collections will be adversely impacted by our clients’ Pandemic related challenges.
We have taken and continue to take certain steps to preserve liquidity. We have also actively managed direct labor and related personnel costs, including: imposing furloughs or reduced hours for certain frontline employees in markets significantly impacted by business slowdowns and shutdowns; managing our operating expenditures and certain selling, general and administrative expenses; and suspending share repurchases.

repurchases under our share repurchase program. In addition, we continue focusing on collection of customer receivables, monitoring the adequacy of our reserves, and extending vendor payment terms where possible. We evaluated the business tax provisions of the CARES Act and have deferred remittance of approximately $132 million of payroll tax through December 31, 2020, which the CARES Act requires to be remitted by December 31, 2021 and December 31, 2022 in equal parts.
We believe that our operating cash flows and borrowing capacity under our credit facilityCredit Facility are sufficient to fund our cash requirements for the next twelve months. In the event that our plans change or our cash requirements are greater than we anticipate, we may need to access the capital markets to finance future cash requirements. However, there can be no assurance that such financing will be available to us should we need it or, if available, that the terms will be satisfactory to us and not dilutive to existing shareholders.

Credit Facility
On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a long-termnew senior, secured five-year syndicated credit facility consisting of a $900.0 million revolving line of credit and an $800.0 million amortizing term loan, both of which are scheduled to mature on September 1, 2022. In accordance with the terms of the Credit Facility, the revolving line of credit was reduced to $800.0 million on September 1, 2018. The Credit Facility also provides for the issuance of up to $300.0 million for standby letters of credit and the issuance of up to $75.0 million in swingline advances. The obligations under the Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions. To further enhance our financial flexibility as a precautionary measure in response to uncertainty arising from the Pandemic, we amended our Credit Facility on May 28, 2020.
The Amendment also modified the financial covenants under the Credit Facility, including: (i) replacing a maximum total leverage ratio with a maximum total net leverage ratio (allowing for up to $100 million in cash and cash equivalents to be excluded from the calculation of total indebtedness) that varies on a quarterly basis and adjusted to 4.00 to 1.00 by the quarter ending October 31, 2022; (ii) modifying the minimum fixed charge coverage ratio on a quarterly basis, which adjusts to 1.25 to 1.00 as of the quarter ending April 30, 2022; and (iii) adding a minimum liquidity (defined in the Amendment as domestic cash plus available revolving loans) of $250.0 million. These financial covenants were effective with the quarter ended April 30, 2020. Our borrowing capacity is subject to, and limited by, compliance with these covenants. At January 31, 2021, we were in compliance with these covenants and expect to be in compliance in the foreseeable future.
During the three months ended January 31, 2021, we made principal payments of $30.0 million under the term loan. At January 31, 2021, the total outstanding borrowings under our Credit Facility in the form of cash
30

borrowings and standby letters of credit were $695.3 million. At January 31, 2021, we had up to $599.4 million of borrowing capacity, reflecting covenant restrictions.
In July 2017, the U.K. Financial Conduct Authority, the regulator of LIBOR, indicated that it will no longer require banks to submit rates to the LIBOR administrator after 2021. This announcement signaled that the calculation of LIBOR and its continued use could not be guaranteed after 2021. A change away from LIBOR after 2021 may impact our Credit Facility and interest rate swaps. Our current credit agreement as well as our International Swaps and Derivatives Association, Inc. agreement provide for any changes away from LIBOR to a successor rate to be based on prevailing or equivalent standards. On March 5, 2021, the U.K. Financial Conduct Authority confirmed that certain key LIBOR settings will cease as of December 31, 2021, and June 30, 2023. We continue to rely onmonitor developments related to the LIBOR transition and/or identification of an alternative, market-accepted rate. The impact related to any changes cannot be predicted at this time.
Reinvestment of Foreign Earnings
We plan to reinvest our credit facility for working capitalforeign earnings to fund future non-U.S. growth and long-term fundingexpansion, and we do not provided by operating cash flows. In addition, we anticipate that future cash generated from operations will be augmented by working capital improvements driven by our 2020Vision,remitting such earnings to the United States. While U.S. federal tax expense has been recognized as a result of the managementTax Cuts and Jobs Act of costs through consolidated procurement.2017, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.

IFM Insurance Company
IFM Assurance Company (“IFM”) is a wholly-owned captive insurance company that we formed in 2015. IFM is part of our enterprise-wide, multi-year insurance strategy that is intended to better position our risk and safety programs and provide us with increased flexibility in the end-to-end management of our insurance programs. IFM began providing coverage to us as of January 1, 2015. In 2018, we expect accelerated cash tax savings related to coverage provided by IFM will be between $5 million and $10 million.
Credit Facility
On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-year syndicated credit facility (the “Credit Facility”), consisting of a $900.0 million revolving line of credit and an $800.0 million amortizing term loan, scheduled to mature on September 1, 2022. The line of credit reduces to $800.0 million after one year. Initial borrowings under the Credit Facility were used to finance, in part, the cash portion of the purchase price related to the GCA acquisition, to refinance certain existing indebtedness of ABM, and to pay transaction costs.
Our ability to draw down available capacity under the Credit Facility is subject to, and limited by, compliance with certain financial covenants, which include a maximum leverage ratio of 4.75 to 1.0 that steps down to 3.50 to 1.0 by July 2020 and a minimum fixed charge coverage ratio of 1.50 to 1.0. Other covenants under the Credit Facility include limitations on liens, dispositions, fundamental changes, investments, and certain transactions and payments. At January 31, 2018, we were in compliance with these covenants and expect to be in compliance in the foreseeable future.
During the first quarter, we made $20.0 million of principal payments under the Credit Facility. At January 31, 2018, the total outstanding amounts under the Credit Facility in the form of cash borrowings and standby letters of credit were $1.2 billion and $145.5 million, respectively. At January 31, 2018, we had up to $330.5 million of borrowing capacity under the Credit Facility, however covenant restrictions limited our actual borrowing capacity to $245.5 million.
Reinvestment of Foreign Earnings
We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion. We do not anticipate remitting such earnings to the United States, and while U.S. federal tax expense has been recognized as a result of the Tax Act, no deferred tax liabilities with respect to state income taxes or foreign withholding taxes have been recognized.


Share Repurchases
On September 2, 2015,Effective December 18, 2019, our Board of Directors authorizedreplaced our then-existing share repurchase program with a new share repurchase program tounder which we may repurchase up to $200.0$150.0 million shares of our common stock. Purchasesstock (the “2019 Share Repurchase Program”). These purchases may take place on the open market or otherwise, and all or part of the repurchases may be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions. The timing of repurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share price, share availability, and share availability.other factors at our discretion. Repurchased shares are retired and returned to an authorized but unissued status. The repurchase program2019 Share Repurchase Program may be suspended or discontinued at any time without prior notice. There were no shareDue to the market and business conditions arising from the Pandemic, we have suspended further repurchases during the three months ended January 31, 2018.of our common stock since March 2020. At January 31, 2018,2021, authorization for $134.1$144.9 million of repurchases remained under our share repurchase program. We do not anticipate additional repurchases in the near future.2019 Share Repurchase Program.
Cash Flows
In addition to revenues and operating profit, our management views operating cash flows as a good indicator of financial performance because strong operating cash flows provide opportunities for growth both organically and through acquisitions. Net cash provided by operating activities of continuing operations was $33.7$45.3 million, which includes the deferral of approximately $31 million of payroll tax under the CARES Act, during the three months ended January 31, 2018. We expect operating activities of continuing operations to provide positive cash flows for 2018.2021. Operating cash flows primarily depend on: revenue levels; the quality and timing of collections of accounts receivable; the timing of payments to suppliers and other vendors; the timing and amount of income tax payments; and the timing and amount of payments on insurance claims and legal settlements.
Three Months Ended January 31,
(in millions)(in millions)20212020
Net cash provided by (used in) operating activitiesNet cash provided by (used in) operating activities$45.3 $(34.3)
Three Months Ended January 31,
(in millions)2018 2017
Net cash provided by (used in) operating activities$33.7
 $(11.1)
Net cash used in investing activities(15.3) (29.1)Net cash used in investing activities(5.2)(2.3)
Net cash (used in) provided by financing activities(14.3) 27.0
Net cash (used in) provided by financing activities(57.8)48.4 
Operating Activities
Net cash provided by operating activities was $33.7$45.3 million during the three months ended January 31, 2018,2021, as compared to net cash used in operating activities of $11.1$34.3 million during the three months ended
31

January 31, 2017, a change of $44.8 million.2020. This change was primarily related to the timing of client receivable collections but wasand vendor payments and partially offset bydue to deferred remittance of approximately $31 million of payroll taxes under the timing of vendor payments.CARES Act.
Investing Activities
Net cash used in investing activities decreasedincreased by $13.8$2.9 million during the three months ended January 31, 2018,2021, as compared to the three months ended January 31, 2017. The decrease2020. This increase was primarily related to the absence of proceeds from the redemption of an $16.2 million year-over-year decreaseauction rate security, partially offset by lower additions to property, plant and equipment in cash paid, net of cash acquired, for acquisitions.the current year.
Financing Activities
Net cash used in financing activities was $14.3$57.8 million during the three months ended January 31, 2018,2021, as compared withto net cash provided by financing activities of $27.0$48.4 million during the three months ended January 31, 2017, a change of $41.3 million.2020. The change was primarily related to lowerhigher net repayments on borrowings from our Credit Facility of $36.4 million.in the current year.


Contingencies
We are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business, including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may be brought as class actions on behalf of a class or purported class of employees.
At January 31, 2018,2021, the total amount accrued for all probable litigation losses where a reasonable estimate of the loss could be made was $10.0 million.$13.8 million.
Litigation outcomes are difficult to predict and the estimation of probable losses requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. If one or more matters are resolved in a particular period in an amount in excess of, or in a manner different than, what we anticipated, this could have a material adverse effect on our financial position, results of operations, or cash flows.
We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. The estimation of reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Our management currently estimates the range of loss for all reasonably possible losses for which a reasonable estimate of the loss can be made is between zero and $8$5 million. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.
In some cases, although a loss is probable or reasonably possible, we cannot reasonably estimate the maximum potential losses for probable matters or the range of losses for reasonably possible matters. Therefore, our accrual for probable losses and our estimated range of loss for reasonably possible losses do not represent our maximum possible exposure.
For additional information about our contingencies, see Note 10,8, “Commitments and Contingencies,” in the Financial Statements.

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Critical Accounting Policies and Estimates
Our accompanying Financial Statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”),GAAP, which require us to make certain estimates in the application of our accounting policies based on the best assumptions, judgments, and opinions of our management. There have been no significant changes to our critical accounting policies and estimates. For a description of our critical accounting policies, see Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report.Report on Form 10-K for the year ended October 31, 2020.
RecentRecently Issued Accounting Pronouncements    
Accounting Standard Update(s)DescriptionTopicSummaryEffective Date/
Method of Adoption		Effect on the Financial Statements
In February 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-02, Income Statement—Reporting Comprehensive Income2021-01
Reference Rate Reform (Topic 220)848): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.ScopeThis ASU, permits an entity to reclassifyissued in January 2021, clarifies that derivatives affected by the income tax effects of the Tax Act on items within accumulated other comprehensive income into retained earnings.This standard will be applied either in the period of adoption or retrospectively to each period in which the effect of the change in the tax laws or rates were recognized.
discounting transition are explicitly eligible for certain optional expedients and exceptions under Topic 848.

We are currently evaluating the impact of implementing this guidance on our consolidated financial statements.
This ASU was effective upon issuance and can be applied to hedging relationships retrospectively or prospectively no later than December 31, 2022.
In August 2017,2020-04
Reference Rate Reform (Topic 848): Facilitation of the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities.
Effects of Reference Rate Reform on Financial Reporting		This ASU, better alignsissued in March 2020, provides optional expedients to assist with the discontinuance of LIBOR. The expedients allow companies to ease the potential accounting rules withburden when modifying contracts and hedging relationships that use LIBOR as a company’s risk management activities; better reflects economic results of hedging in financial statements; and simplifies hedge accounting treatment.
We early adopted this standard in the first quarter of 2018 using a modified retrospective approach.Our adoption of this guidance did not have a material impact on our current hedging arrangements or on the disclosures related to such arrangements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842).
This ASU improves transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilities on the balance sheet and to disclose key information about leasing arrangements.November 1, 2019

When transitioning to the new standard, wereference rate, if certain criteria are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach.		met.

We are currently evaluating the impact of implementing this guidance on our consolidated financial statements.		This update can be adopted prospectively no later than December 1, 2022, with early adoption permitted.
In May 2014,2020-01
Investments—Equity Securities (Topic 321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606).Interactions between Topic 321, Topic 323, and Topic 815This ASU, introducesissued in January 2020, clarifies the interaction between Topic 321, Topic 323, and Topic 815. The new guidance, among other things, states that a new principles-based frameworkcompany should consider observable transactions that require it to either apply or discontinue the equity method of accounting for revenue recognition and disclosure. The core principlethe purposes of applying the standard is when an entity transfers goodsfair value measurement alternative immediately before applying or servicesupon discontinuing the equity method.

While we are currently evaluating the impact of implementing this guidance on our financial statements, we do not expect adoption to customers it will recognize revenue in an amount that reflects the consideration the entity expects to be entitled to for those goods or services.have a material impact.		November 1, 2018

2021

This standardupdate will be applied as a full retrospectiveprospectively.
2019-12Income Taxes (Topic 740): Simplifying the Accounting for Income TaxesThis ASU, issued in December 2019, removes certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. This ASU also amends other aspects of the guidance to help simplify and promote consistent application of Topic 740.

We are currently evaluating the impact of implementing this guidance on our financial statements.		November 1, 2021

The amendments have differing adoption to all periods presented methods including retrospectively, prospectively, and/or on a modified retrospective adoption approach with a cumulative-effect adjustment to retained earnings as of the beginning of the year of adoption.
We have begun our process for implementing this guidance, including a preliminary review of all revenue streams to identify changes from our current method of revenue recognition. We are continuing to evaluate the impact of this ASU on our consolidated financial statements.

basis.



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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There are no material changes related to market risk from the disclosures in our Annual Report on Form 10-K for the year ended October 31, 2017.2020.
ITEM 4. CONTROLS AND PROCEDURES.
a.Disclosure Controls and Procedures.
As of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer evaluated our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission,SEC and (2) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
b. Changes in Internal Control Over Financial Reporting.
During 2017, we completedTo support the acquisitiongrowth of GCA, as described elsewhere in this report. We continue to integrate policies, processes, personnel, technology,our financial shared service capabilities and operations relating to this transaction and will continue to evaluate the impact of any related changes tostandardize our control over financial reporting. Additionally,systems, we continue to migrate manyupdate several key platforms, including our human resources information systems, ERP system, and labor management system. The implementation of several key platforms involves changes in the systems that include internal controls. Although some of the transitions have proceeded to date without material adverse effects, the possibility exists that they could adversely affect our internal controls over financial reporting and other processes to our Enterprise Services Center as part of our 2020Vision strategic transformation initiative.procedures.
There were no other changes in our internal control over financial reporting during the first quarter of 20182021 identified in connection with the evaluation required by RuleRules 13a-15(d) and 15d-15(d) of the Exchange Act that hashave materially affected, or isare reasonably likely to materially affect, our internal control over financial reporting. As a result of the Pandemic, many of our office-based employees began working remotely in March 2020. This change to the working environment did not have a material effect on our internal controls over financial reporting during the first quarter of 2021. We are continually monitoring and assessing the impact of the Pandemic and the resulting changes to our working environment on our internal controls over financial reporting.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
A discussion of material developments in our litigation matters occurring in the period covered by this report is found in Note 10,8, “Commitments and Contingencies,” to the Financial Statements in this Form 10-Q.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risk factors identified in our Annual Report on Form 10-K for the year ended October 31, 2017,2020 in response to Item 1A., “Risk Factors,” of Part I of the Annual Report, except as described below.Report.

The Risk Factor under the caption “Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences could adversely affect our results of operations” in our Annual Report on Form 10-K for the year ended October 31, 2017 is amended by replacing in its entirety the text below such caption with the following paragraph:

The Company is subject to income tax laws and regulations in the United States and certain foreign jurisdictions. Significant judgment is required in evaluating and estimating our provision and accruals for these taxes. Our income tax liabilities are dependent upon the location of earnings among different jurisdictions. Our income tax provision and income tax liabilities could be adversely affected by the jurisdictional mix of earnings, changes in valuations of deferred tax assets and liabilities, and changes in tax treaties, laws, and regulations, including changes introduced by the U.S. Tax Cuts and Jobs Act of 2017, which effected significant changes to the U.S. corporate income tax system. Our preliminary estimate of the effects of this law is subject to finalization of management’s analysis related to certain matters. Changes to our preliminary estimate of the effects of this law, which will be recorded in the period completed, could have material adverse effect on the Company’s financial condition or results of operations, as well as our effective tax rate in the period in which the adjustments are made. Furthermore, we are subject to tax audits by government authorities, primarily in the United States and the United Kingdom. If we experience unfavorable

results from one or more such tax audits, there could be an adverse effect on our tax rate and therefore on our net income.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
On September 2, 2015,Effective December 18, 2019, our Board of Directors authorizedreplaced our then-existing share repurchase program with a new share repurchase program tounder which we may repurchase up to $200.0$150.0 million shares of our common stock. DuringThese purchases may take place on the three months ended January 31, 2018, there were noopen market or otherwise, and all or part of the repurchases may be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions. The timing of repurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share repurchases.price, share availability, and other factors at our discretion. Repurchased shares are retired and returned to an authorized but unissued status. The 2019 Share Repurchase Program may be suspended or discontinued at any time without prior notice. Due to the market and business conditions arising from the Pandemic, we have suspended further repurchases of our common stock since March 2020. At January 31, 2018,2021, authorization for $134.1$144.9 million of repurchases remained under our share repurchase program.the 2019 Share Repurchase Program.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
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ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.

35

ITEM 6. EXHIBITS.
(a) Exhibits
Exhibit No.Exhibit Description
10.1*‡31.1†
Executive Employment Agreement, dated as of November 1, 2017, by and between ABM Industries Incorporated and Scott Giacobbe.
10.2*‡
Change in Control Agreement, dated as of November 1, 2017, by and between ABM Industries Incorporated and Scott Giacobbe.

10.3*‡
Executive Employment Agreement, dated as of January 1, 2018, by and between ABM Industries Incorporated and Rene Jacobsen.

10.4*‡
Change in Control Agreement, dated as of January 1, 2018, by and between ABM Industries Incorporated and Rene Jacobsen.
31.1‡
Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2‡31.2†
Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32†32‡
Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS101.INS†Inline XBRL Report Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH101.SCH†Inline XBRL Taxonomy Extension Schema Document
101.CAL101.CAL†Inline XBRL Taxonomy Calculation Linkbase Document
101.DEF101.DEF†Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB101.LAB†Inline XBRL Taxonomy Label Linkbase Document
101.PRE101.PRE†Inline XBRL Presentation Linkbase Document
104†Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
*Indicates management contract or compensatory plan, contract, or arrangement.
†
‡Indicates filed herewith
†‡Indicates furnished herewith

36



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 thereunto duly authorized.
ABM Industries Incorporated



March 7, 201810, 2021/s/ D. Anthony ScaglioneEarl R. Ellis
D. Anthony Scaglione
Earl R. Ellis
Executive Vice President and Chief Financial Officer

(Duly Authorized Officer)





March 7, 201810, 2021/s/ Dean A. Chin
Dean A. Chin

Senior Vice President, Controller and
Chief Accounting Officer
and Corporate Controller

(Principal Accounting Officer)








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