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, 2018~~April 30, 2021



¨☐			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 INDUSTRIES INCORPORATED

(Exact name of registrant as specified in its charter)



Delaware						94-1369354
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

__________________________

One Liberty Plaza, 7^th 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 class

Trading Symbol

Name of each exchange on which registered

Common Stock, $0.01 par value

ABM

New 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 filer

þ☑

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~~

June 8, 2021: 67,131,306

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	1922
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3244
Item 4. Controls and Procedures		3244
PART II. OTHER INFORMATION		3244
Item 1. Legal Proceedings		3244
Item 1A. Risk Factors		3244
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3344
Item 3. Defaults Upon Senior Securities		3345
Item 4. Mine Safety Disclosures		3345
Item 5. Other Information		3345
Item 6. Exhibits		3446
SIGNATURES		3547

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 opportunities~~continue 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 service~~gain 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 beyond~~preserve 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~~ ~~2020Vision~~strategic ~~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 profitable~~ongoing 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 ~~insure~~manage our insurable risks through a combination of ~~insurance~~third-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 ~~losses~~loss reserves could result in a material ~~charge~~charges 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 assets~~or 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 liabilities~~representative 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 ~~relationship~~relation 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-organizing~~union 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 ~~company~~Company and as a result may have a material adverse effect on the value of our common stock.

•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, ~~2017~~2020, 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.

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)	April 30, 2021		October 31, 2020
ASSETS						ASSETS
Current assets						Current assets
Cash and cash equivalents	$	68.6	$	62.8		Cash and cash equivalents	$	435.7	$	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 $34.7 and $35.5 at April 30, 2021 and October 31, 2020, respectively						Trade accounts receivable, net of allowances of $34.7 and $35.5 at April 30, 2021 and October 31, 2020, respectively	878.4		854.2
Costs incurred in excess of amounts billed						Costs incurred in excess of amounts billed	37.7		52.2
Prepaid expenses	97.4		101.8			Prepaid expenses	88.8		85.4
Other current assets	32.1		32.8			Other current assets	58.5		55.9
Total current assets	1,218.1		1,235.5			Total current assets	1,499.0		1,441.9
Other investments	18.8		17.6			Other investments	12.4		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 $260.0 and $241.3 at April 30, 2021 and October 31, 2020, respectively						Property, plant and equipment, net of accumulated depreciation of $260.0 and $241.3 at April 30, 2021 and October 31, 2020, respectively	124.3		133.7
Right-of-use assets						Right-of-use assets	131.9		143.1
Other intangible assets, net of accumulated amortization of $365.9 and $343.8 at April 30, 2021 and October 31, 2020, respectively						Other intangible assets, net of accumulated amortization of $365.9 and $343.8 at April 30, 2021 and October 31, 2020, respectively	218.3		239.7
Goodwill	1,871.2		1,864.2			Goodwill	1,675.5		1,671.4
Deferred income tax asset, net						Deferred income tax asset, net	11.5		0
Other noncurrent assets	143.1		122.1			Other noncurrent assets	119.2		136.1
Total assets	$	3,797.0	$	3,812.6		Total assets	$	3,792.0	$	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	$	117.0	$	116.7
Trade accounts payable	203.5		230.8			Trade accounts payable	222.9		273.3
Accrued compensation	143.1		159.9			Accrued compensation	169.9		187.6
Accrued taxes—other than income	62.5		52.5			Accrued taxes—other than income	104.9		45.5
Insurance claims	114.1		112.5			Insurance claims	157.6		155.2
Income taxes payable	5.0		13.4			Income taxes payable	17.4		6.2
Current portion of lease liabilities						Current portion of lease liabilities	33.3		35.0
Other accrued liabilities	164.4		171.8			Other accrued liabilities	241.3		167.3
Total current liabilities	699.6		757.8			Total current liabilities	1,064.4		986.9
Long-term debt, net	1,173.4		1,161.3			Long-term debt, net	524.2		603.0
Long-term lease liabilities						Long-term lease liabilities	121.4		131.4
Deferred income tax liability, net	32.8		57.3			Deferred income tax liability, net	0		10.8
Noncurrent insurance claims	387.3		382.9			Noncurrent insurance claims	361.5		366.3
Other noncurrent liabilities	63.5		61.3			Other noncurrent liabilities	110.5		168.1
Noncurrent income taxes payable	23.7		16.3			Noncurrent income taxes payable	10.2		10.1
Total liabilities	2,380.2		2,436.9			Total liabilities	2,192.2		2,276.6
Commitments and contingencies						Commitments and contingencies	0		0
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 issued						Preferred stock, $0.01 par value; 500,000 shares authorized; NaN issued	0		0
Common stock, $0.01 par value; 100,000,000 shares authorized; 67,120,439 and 66,748,157 shares issued and outstanding at April 30, 2021 and October 31, 2020, respectively						Common stock, $0.01 par value; 100,000,000 shares authorized; 67,120,439 and 66,748,157 shares issued and outstanding at April 30, 2021 and October 31, 2020, respectively	0.7		0.7
Additional paid-in capital	677.1		675.2			Additional paid-in capital	737.1		724.1
Accumulated other comprehensive income (loss), net of taxes	2.7		(20.3		)
Accumulated other comprehensive loss, net of taxes						Accumulated other comprehensive loss, net of taxes	(23.6)		(30.8)
Retained earnings	736.2		720.1			Retained earnings	885.6		806.4
Total stockholders’ equity	1,416.8		1,375.7			Total stockholders’ equity	1,599.8		1,500.3
Total liabilities and stockholders’ equity	$	3,797.0	$	3,812.6		Total liabilities and stockholders’ equity	$	3,792.0	$	3,776.9

See accompanying notes to unaudited consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(UNAUDITED)


	Three Months Ended January 31,							Three Months Ended April 30,				Six Months Ended April 30,
(in millions, except per share amounts)	2018			2017			(in millions, except per share amounts)	2021		2020		2021		2020
Revenues	$	1,588.3		$	1,326.7		Revenues	$	1,497.4	$	1,496.0	$	2,989.8	$	3,109.0
Operating expenses	1,429.3			1,195.1			Operating expenses	1,274.5		1,306.1		2,523.8		2,739.9
Selling, general and administrative expenses	109.0			97.3			Selling, general and administrative expenses	161.9		119.4		284.5		237.0
Restructuring and related expenses	14.3			5.0			Restructuring and related expenses	0		1.8		0		5.0
Amortization of intangible assets	16.2			5.5			Amortization of intangible assets	10.7		12.5		21.5		25.1
Operating profit	19.5			23.8
Income from unconsolidated affiliates, net	0.5			1.4
Impairment loss							Impairment loss	0		172.8		0		172.8
Operating profit (loss)							Operating profit (loss)	50.3		(116.7)		160.1		(70.8)
Income from unconsolidated affiliates							Income from unconsolidated affiliates	0.2		0.9		0.8		1.8
Interest expense	(14.3		)	(3.2		)	Interest expense	(7.8)		(10.5)		(16.3)		(20.7)
Income from continuing operations before income taxes	5.8			22.0
Income tax benefit (provision)	22.2			(5.9		)
Income from continuing operations	28.0			16.1
Loss from discontinued operations, net of taxes	(0.1		)	(72.9		)
Income (loss) from continuing operations before income taxes							Income (loss) from continuing operations before income taxes	42.8		(126.2)		144.6		(89.7)
Income tax provision							Income tax provision	(11.7)		(10.6)		(38.9)		(19.2)
Income (loss) from continuing operations							Income (loss) from continuing operations	31.1		(136.8)		105.7		(108.9)
Income from discontinued operations, net of taxes							Income from discontinued operations, net of taxes	0		0		0		0.1
Net income (loss)	27.8			(56.8		)	Net income (loss)	31.1		(136.8)		105.7		(108.8)
Other comprehensive income (loss)							Other comprehensive income (loss)
Unrealized gains on interest rate swaps, net of taxes of $5.0 and $1.1, respectively	13.6			1.6
Foreign currency translation	9.4			3.3
Interest rate swaps							Interest rate swaps	1.6		(8.7)		2.8		(9.9)
Foreign currency translation and other							Foreign currency translation and other	1.2		(4.2)		5.2		(3.8)
Income tax (provision) benefit							Income tax (provision) benefit	(0.4)		2.4		(0.8)		2.7
Comprehensive income (loss)	$	50.9		$	(51.9	)	Comprehensive income (loss)	$	33.4	$	(147.3)	$	112.9	$	(119.8)
Net income (loss) per common share — Basic							Net income (loss) per common share — Basic
Income from continuing operations	$	0.42		$	0.29
Loss from discontinued operations	—			(1.30		)
Income (loss) from continuing operations							Income (loss) from continuing operations	$	0.46	$	(2.05)	$	1.57	$	(1.63)
Income from discontinued operations							Income from discontinued operations	0		0		0		0
Net income (loss)	$	0.42		$	(1.01	)	Net income (loss)	$	0.46	$	(2.05)	$	1.57	$	(1.63)
Net income (loss) per common share — Diluted							Net income (loss) per common share — Diluted
Income from continuing operations	$	0.42		$	0.28
Loss from discontinued operations	—			(1.28		)
Income (loss) from continuing operations							Income (loss) from continuing operations	$	0.46	$	(2.05)	$	1.56	$	(1.63)
Income from discontinued operations							Income from discontinued operations	0		0		0		0
Net income (loss)	$	0.42		$	(1.00	)	Net income (loss)	$	0.46	$	(2.05)	$	1.56	$	(1.63)
Weighted-average common and common equivalent shares outstanding							Weighted-average common and common equivalent shares outstanding
Basic	65.9			56.0			Basic	67.3		66.9		67.2		66.9
Diluted	66.3			56.6			Diluted	67.8		66.9		67.7		66.9
Dividends declared per common share	$	0.175		$	0.170

See accompanying notes to unaudited consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(UNAUDITED)


	Three Months Ended April 30,						Six Months Ended April 30,
	2021			2020			2021				2020
(in millions, except per share amounts)	Shares	Amount		Shares	Amount		Shares		Amount		Shares		Amount
Common Stock
Balance, beginning of period	67.1	$	0.7	66.8	$	0.7	$	66.7	$	0.7	$	66.6	$	0.7
Stock issued under employee stock purchase and share-based compensation plans	0	0		0	0		0.4		0		0.2		0
Repurchase of common stock	0	0		(0.2)	0		0		0		(0.2)		0
Balance, end of period	67.1	0.7		66.6	0.7		67.1		0.7		66.6		0.7
Additional Paid-in Capital
Balance, beginning of period		726.9			711.8				724.1				708.9
Stock issued (taxes withheld) under employee stock purchase and share-based compensation plans, net		1.1			1.1				(4.6)				(0.9)
Share-based compensation expense (reversal)		9.1			(0.7)				17.6				4.2
Repurchase of common stock		0			(5.1)				0				(5.1)
Balance, end of period		737.1			707.1				737.1				707.1
Accumulated Other Comprehensive Loss, Net of Taxes
Balance, beginning of period		(25.9)			(24.3)				(30.8)				(23.9)
Other comprehensive income (loss)		2.3			(10.5)				7.2				(11.0)
Balance, end of period		(23.6)			(34.9)				(23.6)				(34.9)
Retained Earnings
Balance, beginning of period		867.5			871.6				806.4				856.3
Net income (loss)		31.1			(136.8)				105.7				(108.8)
Dividends
Common stock ($0.190, $0.185, $0.380, and $0.370 per share)		(12.7)			(12.3)				(25.4)				(24.6)
Stock issued under share-based compensation plans		(0.2)			(0.1)				(1.0)				(0.5)
Balance, end of period		885.6			722.3				885.6				722.3
Total Stockholders’ Equity		$	1,599.8		$	1,395.2			$	1,599.8			$	1,395.2

See accompanying notes to unaudited consolidated financial statements.

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


	Three Months Ended January 31,							Six Months Ended April 30,
(in millions)	2018			2017			(in millions)	2021		2020
Cash flows from operating activities							Cash flows from operating activities
Net income (loss)	$	27.8		$	(56.8	)	Net income (loss)	$	105.7	$	(108.8)
Loss from discontinued operations, net of taxes	0.1			72.9
Income from continuing operations	28.0			16.1
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities of continuing operations
Income from discontinued operations, net of taxes							Income from discontinued operations, net of taxes	0		(0.1)
Income (loss) from continuing operations							Income (loss) from continuing operations	105.7		(108.9)
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities of continuing operations							Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities of continuing operations
Depreciation and amortization	29.0			14.0			Depreciation and amortization	44.3		49.1
Impairment loss							Impairment loss	0		172.8
Deferred income taxes	(30.3		)	9.9			Deferred income taxes	(23.0)		(12.7)
Share-based compensation expense	3.8			3.6			Share-based compensation expense	17.6		4.2
Provision for bad debt	2.6			0.4			Provision for bad debt	1.2		10.6
Amortization of accumulated other comprehensive gain on interest rate swaps							Amortization of accumulated other comprehensive gain on interest rate swaps	(3.2)		(3.4)
Discount accretion on insurance claims	0.2			0.1			Discount accretion on insurance claims	0		0.4
Gain on sale of assets	(0.1		)	(0.1		)
Income from unconsolidated affiliates, net	(0.5		)	(1.4		)
Loss on sale of assets							Loss on sale of assets	1.1		0.4
Income from unconsolidated affiliates							Income from unconsolidated affiliates	(0.8)		(1.8)
Distributions from unconsolidated affiliates	—			0.8			Distributions from unconsolidated affiliates	0		0.1
Changes in operating assets and liabilities, net of effects of acquisitions
Trade accounts receivable	15.7			(65.4		)
Changes in operating assets and liabilities							Changes in operating assets and liabilities
Trade accounts receivable and costs incurred in excess of amounts billed							Trade accounts receivable and costs incurred in excess of amounts billed	(10.9)		55.2
Prepaid expenses and other current assets	1.4			(2.4		)	Prepaid expenses and other current assets	(5.8)		(12.8)
Right-of-use assets							Right-of-use assets	11.2		8.7
Other noncurrent assets	(1.7		)	(7.5		)	Other noncurrent assets	15.2		(3.8)
Trade accounts payable and other accrued liabilities	(33.2		)	18.1			Trade accounts payable and other accrued liabilities	55.3		(74.6)
Long-term lease liabilities							Long-term lease liabilities	(10.0)		(9.4)
Insurance claims	5.8			8.3			Insurance claims	(2.4)		17.7
Income taxes payable	10.9			(11.0		)	Income taxes payable	11.5		25.1
Other noncurrent liabilities	2.2			6.8			Other noncurrent liabilities	(36.0)		11.1
Total adjustments	5.8			(25.8		)	Total adjustments	65.5		236.8
Net cash provided by (used in) operating activities of continuing operations	33.8			(9.7		)
Net cash used in operating activities of discontinued operations	(0.1		)	(1.4		)
Net cash provided by (used in) operating activities	33.7			(11.1		)
Net cash provided by operating activities of continuing operations							Net cash provided by operating activities of continuing operations	171.2		127.8
Net cash provided by operating activities of discontinued operations							Net cash provided by operating activities of discontinued operations	0		0.1
Net cash provided by operating activities							Net cash provided by operating activities	171.2		128.0
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	(14.9)		(19.1)
Proceeds from sale of assets	0.3			0.5			Proceeds from sale of assets	1.5		4.8
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 security							Proceeds from redemption of auction rate security	0		5.0
Net cash used in investing activities	(15.3		)	(29.1		)	Net cash used in investing activities	(13.4)		(9.3)
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	(5.6)		(1.4)
Repurchases of common stock	—			(7.9		)	Repurchases of common stock	0		(5.1)
Dividends paid	(11.5		)	(9.4		)	Dividends paid	(25.4)		(24.6)
Deferred financing costs paid	(0.1		)	—
Borrowings from credit facility	304.3			207.4			Borrowings from credit facility	2.6		1,048.3
Repayment of borrowings from credit facility	(303.0		)	(169.7		)	Repayment of borrowings from credit facility	(82.8)		(658.1)
Changes in book cash overdrafts	(1.2		)	5.1			Changes in book cash overdrafts	(13.3)		18.2
Financing of energy savings performance contracts	—			2.6			Financing of energy savings performance contracts	7.5		1.1
Repayment of capital lease obligations	(0.8		)	(0.1		)
Repayment of finance lease obligations							Repayment of finance lease obligations	(1.5)		(1.5)
Net cash (used in) provided by financing activities	(14.3		)	27.0			Net cash (used in) provided by financing activities	(118.5)		376.8
Effect of exchange rate changes on cash and cash equivalents	1.7			0.5			Effect of exchange rate changes on cash and cash equivalents	2.2		2.0
Net increase (decrease) in cash and cash equivalents	5.8			(12.7		)
Change in cash related to assets held for sale	—			(0.7		)
Net increase in cash and cash equivalents							Net increase in cash and cash equivalents	41.5		497.5
Cash and cash equivalents at beginning of year	62.8			56.0			Cash and cash equivalents at beginning of year	394.2		58.5
Cash and cash equivalents at end of period	$	68.6		$	42.6		Cash and cash equivalents at end of period	$	435.7	$	555.9

See accompanying notes to unaudited consolidated financial statements.

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 ~~five~~4 industry groups and ~~one~~1 Technical Solutions segment:

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 ~~ends~~end on October 31.

~~Acquisition~~Impact of ~~GCA Services Group~~the 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 ~~completed~~have assessed the ~~acquisition~~current impact of ~~GCA Services Group (“GCA”). Accordingly,~~the Pandemic on our ~~consolidated statements of comprehensive income (loss) and statements of cash flows include GCA’s~~financial 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’s~~unprecedented 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 result~~ultimate 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, statements~~company 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.

Discontinued Operations

Management Reimbursement Revenue by Segment

We operate certain parking facilities under ~~managed location~~management reimbursement arrangements. Under these arrangements, we manage the parking ~~facility~~facilities for a management ~~fee~~fees and pass through the ~~revenue~~revenues and expenses associated with the ~~facility~~facilities to the ~~owner.~~owners. These revenues and expenses are reported in equal amounts as costs reimbursed from our managed locations:


	Three Months Ended April 30,				Six Months Ended April 30,
(in millions)	2021		2020		2021		2020
Business & Industry	$	43.2	$	61.7	$	86.6	$	135.4
Aviation	12.9		20.7		26.5		46.6
Total	$	56.1	$	82.4	$	113.1	$	182.0

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.

Three Months Ended January 31,
(in millions) 2018 2017
Business & Industry $ 63.0
$ 57.8
Aviation 25.5
16.5
Healthcare 4.9
4.6
Total $ 93.4
$ 78.9

3. ~~ACQUISITIONS~~REVENUES

~~Acquisition~~Disaggregation of ~~GCA during 2017~~Revenues

~~On September 1, 2017, we acquired all~~We 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 stock~~services provided by each of ~~GCA, a provider~~our 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 institutions~~revenues and ~~commercial facilities, for a purchase price of approximately $1.3 billion. As~~cash 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 April 30, 2021												Six Months Ended April 30, 2021
(in millions)	B&I		T&M		Education		Aviation		Technical Solutions		Total		B&I		T&M		Education		Aviation		Technical Solutions		Total

Major Service Line
Janitorial(1)	$	644.4	$	197.3	$	187.6	$	29.1	$	0	$	1,058.4	$	1,291.3	$	394.2	$	372.4	$	58.2	$	0	$	2,116.1
Parking(2)	68.3		10.0		0.2		61.9		0		140.5		137.3		21.7		0.4		117.3		0		276.7
Facility Services(3)	83.4		39.0		26.3		6.8		0		155.5		176.8		79.6		50.8		13.7		0		320.9
Building & Energy Solutions(4)	0		0		0		0		125.5		125.5		0		0		0		0		238.8		238.8
Airline Services(5)	0.1		0		0		50.5		0		50.6		0.2		0		0		102.2		0		102.5
	$	796.2	$	246.3	$	214.2	$	148.3	$	125.5	$	1,530.5	$	1,605.6	$	495.5	$	423.6	$	291.5	$	238.8	$	3,055.0
Elimination of inter-segment revenues											(33.1)												(65.2)
Total											$	1,497.4											$	2,989.8


	Three Months Ended April 30, 2020												Six Months Ended April 30, 2020
(in millions)	B&I		T&M		Education		Aviation		Technical Solutions		Total		B&I		T&M		Education		Aviation		Technical Solutions		Total

Major Service Line
Janitorial(1)	$	597.0	$	190.3	$	177.5	$	31.9	$	0	$	996.7	$	1,190.5	$	376.0	$	363.7	$	66.7	$	0	$	1,996.9
Parking(2)	97.1		7.4		0.6		71.3		0		176.4		222.9		15.5		1.4		156.3		0		396.1
Facility Services(3)	91.3		35.9		22.0		7.9		0		157.1		192.8		76.1		43.0		18.5		0		330.3
Building & Energy Solutions(4)	0		0		0		0		122.3		122.3		0		0		0		0		264.3		264.3
Airline Services(5)	0.1		0		0		73.7		0		73.8		0.3		0		0		182.0		0		182.3
	$	785.6	$	233.7	$	200.1	$	184.7	$	122.3	$	1,526.4	$	1,606.5	$	467.6	$	408.0	$	423.5	$	264.3	$	3,170.0
Elimination of inter-segment revenues											(30.4)												(61.0)
Total											$	1,496.0											$	3,109.0

(1) Janitorial arrangements provide a ~~result~~wide 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, we~~Operation 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 facilities~~designed 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 ~~provider~~for 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.

(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.

~~Consideration Transferred~~

Contract Types

(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
We 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.

~~Preliminary Purchase Price Allocation~~The 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.

~~Our preliminary purchase price allocation is~~Remaining Performance Obligations

At April 30, 2021, performance obligations that were unsatisfied or partially unsatisfied for which we expect to recognize revenue totaled $282.4 million. We expect to recognize revenue on approximately 70% 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 ~~that~~about 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 evaluate~~recognize 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 analysis~~satisfaction 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.

The following ~~table presents~~tables present the balances in our ~~preliminary estimates of fair values of the~~contract 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)	April 30, 2021		October 31, 2020
Contract assets
Billed trade receivables(1)	$	812.5	$	835.8
Unbilled trade receivables(1)	100.6		53.9
Costs incurred in excess of amounts billed(2)	37.7		52.2
Capitalized commissions(3)	27.2		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~~net, on the unaudited Consolidated Balance Sheets. The fluctuations correlate directly to the execution of new customer contracts and to invoicing and collections from customers in the normal course of business.

(2) Fluctuation is primarily due to the timing of payments on our contracts measured using the cost-to-cost method of revenue recognition.

(3) Included in other current assets and other noncurrent assets on the unaudited Consolidated Balance Sheets. During the six months ended April 30, 2021, we capitalized $8.6 million of ~~which $3.9 million is expected to be uncollectible.~~

⁽²⁾~~The amortization periods for the acquired intangible assets are 15 years for customer relationships~~new costs 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~~

For the three months ended January 31, 2018, 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 operations 14.5

~~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 $1.0amortized $6.6 million of ~~undiscounted contingent consideration that is based~~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)	Six Months Ended April 30, 2021
Contract liabilities(1)
Balance at beginning of period	$	36.4
Additional contract liabilities	72.2
Recognition of deferred revenue	(61.0)
Balance at end of period	$	47.6

(1) Included in other accrued liabilities on the ~~operations of MSI are included in our Technical Solutions segment.~~unaudited Consolidated Balance Sheets.

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 (LOSS) PER COMMON SHARE

Basic and Diluted Net Income (Loss) Per Common Share Calculations


	Three Months Ended April 30,				Six Months Ended April 30,
(in millions, except per share amounts)	2021		2020		2021		2020
Income (loss) from continuing operations	$	31.1	$	(136.8)	$	105.7	$	(108.9)
Income from discontinued operations, net of taxes	0		0		0		0.1
Net income (loss)	$	31.1	$	(136.8)	$	105.7	$	(108.8)

Weighted-average common and common equivalent shares outstanding — Basic	67.3		66.9		67.2		66.9
Effect of dilutive securities(1)
Restricted stock units	0.4		0		0.3		0

Performance shares	0		0		0.1		0
Weighted-average common and common equivalent shares outstanding — Diluted	67.8		66.9		67.7		66.9

Net income (loss) per common share — Basic
Income (loss) from continuing operations	$	0.46	$	(2.05)	$	1.57	$	(1.63)
Income from discontinued operations	0		0		0		0
Net income (loss)	$	0.46	$	(2.05)	$	1.57	$	(1.63)

Net income (loss) per common share — Diluted
Income (loss) from continuing operations	$	0.46	$	(2.05)	$	1.56	$	(1.63)
Income from discontinued operations	0		0		0		0
Net income (loss)	$	0.46	$	(2.05)	$	1.56	$	(1.63)

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 — Basic 65.9
56.0
Effect of dilutive securities
Restricted stock units 0.2
0.3
Stock options 0.1
0.2
Performance shares 0.1
0.1
Weighted-average common and common equivalent shares outstanding — Diluted 66.3
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 )
(1) Excludes the impact of potentially dilutive outstanding share-based securities that are excluded from the calculation of diluted loss per share in periods when we have a loss, as their inclusion would have an anti-dilutive effect. Such impact is included in the table below.

Anti-Dilutive Outstanding Stock Awards Issued Under Share-Based Compensation Plans


	Three Months Ended April 30,		Six Months Ended April 30,
(in millions)	2021	2020	2021	2020
Anti-dilutive	0	0.8	0.1	0.6

Three Months Ended January 31,
(in millions) 2018 2017
Anti-dilutive 0.2

—

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 Hierarchy	April 30, 2021		October 31, 2020
Cash and cash equivalents(1)	1	$	435.7	$	394.2
Insurance deposits(2)	1	0.7		0.7
Assets held in funded deferred compensation plan(3)	1	2.9		2.6
Credit facility(4)	2	645.1		725.3
Interest rate swap liabilities(5)	2	9.5		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 ~~LIBOR~~the London Interbank Offered Rate (“LIBOR”) forward rates at the end of the period. ~~These~~At April 30, 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 withCompany does not currently have any 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, we had no transfers of~~ assets or liabilities ~~between any of~~recorded at fair value using Level 3 inputs, and there were no transfers to or from Level 3 financial assets or liabilities during the ~~above hierarchy levels.~~six months ended April 30, 2021.

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 ~~assets~~items 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. If certain triggering events occur, or if an annual impairment test is required, we would evaluate these non-financial assets for impairment. If an impairment were to occur, then the asset would be recorded at the estimated fair value, using primarily unobservable Level 3 inputs.

~~On November 1, 2017,~~We did not identify impairment to such non-financial assets for the three and six months ended April 30, 2021. During the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we ~~reorganized our reportable segments~~identified a triggering event and recognized impairment of goodwill and intangible assets, as further described below.

Goodwill

During the second quarter of 2020, we recognized a non-cash impairment charge totaling $163.8 million in 3 goodwill reporting ~~units. In connection with this reorganization, we performed a qualitative goodwill~~units ($99.3 million related to Education, $55.5 million related to Aviation, and $9.0 million related to our U.K. Technical Solutions business) as part of an interim impairment test ~~immediately before and after~~performed as a result of a triggering event arising from the ~~segment realignment. In analyzing the results of operations and business conditions~~Pandemic. The fair values of the goodwill reporting units wewere determined ~~the likelihood of~~using a ~~goodwill impairment did not reach the more-likely-than not threshold specified in U.S. GAAP for any~~combination of the ~~reporting units that were evaluated. Accordingly, we concluded that goodwill related to those reporting units was not impaired~~market approach 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 andincome approach. The market approach estimates the fair value of ~~$8.0 million. These two auction rate securities are debt instruments with stated maturities~~a reporting unit by using market comparables for reasonably similar public companies and a control premium. The income approach estimates fair value of a reporting unit by using discounted cash flows that included significant

management assumptions, such as revenue growth rates, operating margins, weighted average cost of capital, and future economic and operating conditions. The impairment charge is included 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.~~

~~At January 31, 2018 and October 31, 2017, there were no unrealized gains or losses~~“Impairment loss” on our ~~auction rate securities~~unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended April 30, 2020 and is not tax deductible.

Intangible Assets

During the second quarter of 2020 and in connection with the goodwill triggering event previously mentioned, we recognized net impairment charges of $5.6 million related to Aviation (consisting of a $13.8 million reduction in the gross carrying amount of the underlying customer relationships less $8.2 million of accumulated amortization) and $3.4 million related to our U.K. Technical Solutions business (consisting of an $8.7 million reduction in the gross carrying amount of the underlying customer relationships less $5.3 million of accumulated amortization). The fair value of customer contracts and relationships was determined based on discounted cash flows associated with the customer relationships that included significant management assumptions, including expected proceeds. These impairment charges are included in ~~accumulated other comprehensive income (loss), net of taxes (“AOCI”), and the total amount of other-than-temporary impairment credit loss~~“Impairment loss” on our ~~auction rate security investments included in our retained earnings was $2.0 million.~~unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended April 30, 2020.

~~Significant Assumptions Used to Determine the Fair Values of Our Auction Rate Securities~~

6. INSURANCE



~~Assumption~~			~~January 31, 2018~~	~~October 31, 2017~~
~~Discount rates~~	~~L + 0.53% and L + 1.18%~~	~~L + 0.42% and L + 0.79%~~
~~Yields~~	~~2.15%, L + 2.00%~~	~~2.15%, L + 2.00%~~
~~Average expected lives~~	~~4 – 10 years~~	~~4 – 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~~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 ~~studies~~reviews are used to estimate our insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.

Actuarial Review and Interim Update Performed During 2021

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 ~~First Quarter of 2018~~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~~first quarter of 2021, we performed a comprehensive actuarial review of the majority of our casualty insurance programs to evaluate changes made to claims reserves and claims payment activity for the period of May 1, 2020 through October 31, ~~2018,~~2020 (the “Actuarial Review”). 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.

During the second quarter of 2021, we performed an interim actuarial ~~review~~update of the majority of our casualty insurance programs that considered changes in ~~claim developments~~claims development and ~~claim~~claims payment activity for the period ~~commencing May~~of November 1, ~~2017~~2020 through January 31, 2021 (the “Interim Update”). This Interim Update was abbreviated in nature based on actual versus expected developments during the periods analyzed and ~~ending October 31, 2017 for all policy years in which open claims existed.~~

~~The actuarial review indicated~~relied on the ~~claims reduction and safety initiatives we implemented have had a positive impact on our claims costs~~key assumptions in the ~~most recent years. Most~~Actuarial Review (most notably ~~over the past two years there has been a decrease in claim frequency for workers’ compensation lost-time claims~~loss development patterns, trend assumptions, 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. underlying expected loss costs).

The actuarial review indicated a continued decrease over the most recent years in the total number of reported claims related to our general liability program, particularly with respect 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 reduced 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~~Actuarial Review and ~~subsequent developments,~~Interim Update at April 30, 2021, we ~~increased~~decreased 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~~$17.4 million during the ~~three~~six months ended ~~January 31, 2018. This adjustment was $3.0~~April 30, 2021; $11.4 million ~~lower than~~of that amount relates to prior years. During the six months ended April 30, 2020, we decreased our total ~~adjustment~~reserves related to prior year claims ~~of $5.0 million during the three months ended January 31, 2017.~~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)	April 30, 2021		October 31, 2020
Insurance claim reserves, excluding medical and dental	$	501.3	$	504.9
Medical and dental claim reserves	17.8		16.6
Insurance recoverables	70.2		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 reserves 10.7
9.8
Insurance recoverables 74.9
73.1

At ~~January 31, 2018~~April 30, 2021 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)	April 30, 2021		October 31, 2020
Standby letters of credit	$	139.6	$	143.6
Surety bonds	85.4		82.6
Restricted insurance deposits	0.7		0.7
Total	$	225.7	$	226.9

(in millions) January 31, 2018 October 31, 2017
Standby letters of credit $ 136.7
$ 137.6
Surety bonds 77.5
77.5
Restricted insurance deposits 10.2
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. ~~The~~In accordance with the terms of the Credit Facility, the revolving line of credit ~~reduces~~was 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.

~~Borrowings~~The 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 April 30, 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,~~April 30, 2021, the weighted

average interest rate on our outstanding borrowings was ~~3.74%~~2.12%. We are also ~~pay~~charged a commitment fee, which is paid quarterly in arrears and is based on our total leverage ratio, ~~and payable quarterly in arrears, ranging~~that 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, ~~including~~such as: failure to pay principal, interest, or fees when ~~due,~~due; failure to comply with ~~covenants,~~covenants; the occurrence of certain material ~~judgments, or~~judgments; and a change in control of the Company. If ~~an event~~certain 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 ~~were~~of $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.

Credit Facility Information


(in millions)	April 30, 2021		October 31, 2020
Current portion of long-term debt
Gross term loan	$	120.0	$	120.0
Unamortized deferred financing costs	(3.0)		(3.3)
Current portion of term loan	$	117.0	$	116.7

Long-term debt
Gross term loan	$	500.0	$	560.0
Unamortized deferred financing costs	(0.9)		(2.3)
Total noncurrent portion of term loan	499.1		557.7
Revolving line of credit(1)(2)	25.1		45.3
Long-term debt	$	524.2	$	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~~$149.2 million at ~~January 31, 2018.~~April 30, 2021.

⁽²⁾At ~~January 31, 2018,~~April 30, 2021, we had borrowing capacity of ~~$330.5~~$622.1 million, ~~however~~reflecting covenant ~~restrictions limited our actual borrowing capacity to $245.5 million.~~

restrictions.

Term Loan Maturities

During the ~~first quarter,~~three and six months ended April 30, 2021, we made ~~$20.0~~principal payments under the term loan of $30.0 million ~~of principal payments.~~and $60.0 million, respectively. As of ~~January 31, 2018,~~April 30, 2021, the following principal payments are required under the term ~~loan:~~loan.


(in millions)	2019		2020		2021		2022		(in millions)	2021		2022
Debt maturities	$	40.0	$	60.0	$	120.0	$	560.0	Debt maturities	$	60.0	$	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 ~~AOCI~~accumulated 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 ~~were~~have 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 Amount

Fixed Interest Rate

Effective Date

Maturity Date

~~Notional Amounts~~$ 90.0 million

~~Fixed Interest Rates~~2.84%

~~Effective Dates~~November 1, 2018

~~Maturity Dates~~October 31, 2021

$ ~~105.0~~130.0 million

~~1.05%~~2.86%

November 1, 2018

April ~~7, 2016 and~~

~~May 11, 2016~~

~~April 7, 2021 and~~

~~May 11, 2021~~

30, 2022

$ ~~215.0~~130.0 million

~~1.65%~~2.84%

November 1, ~~2017~~2018

September 1, 2022

~~$ 285.0 million~~

~~1.69%~~

~~November 13, 2017~~

~~September 1, 2022~~

At ~~January 31, 2018~~April 30, 2021 and October 31, ~~2017,~~2020, amounts recorded in ~~AOCI~~AOCL for interest rate swaps were ~~$15.7~~a loss of $1.3 million, net of taxes of ~~$5.8~~$0.1 million, and ~~$1.7~~a 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 and six months ended April 30, 2021, we amortized $1.2 million, net of taxes of $0.4 million, and $2.3 million, net of taxes of $0.9 million, respectively, of this gain to interest expense. During the three and six months ended April 30, 2020, we amortized $1.2 million, net of taxes of $0.5 million, and $2.4 million, net of taxes of $0.9 million, respectively. ~~Additionally, at January 31, 2018,~~At April 30, 2021, the total amount expected to be reclassified from ~~AOCI~~AOCL to earnings during the next twelve months ~~was $5.0~~is a loss of $1.6 million, net of a tax benefit of $0.4 million.

~~10.~~

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,~~April 30, 2021, these letters of credit and surety bonds totaled ~~$145.5~~$149.2 million and ~~$470.0~~$600.7 million, respectively.

Guarantees

In some instances, we offer clients guaranteed energy savings under certain energy savings contracts. At ~~January 31, 2018,~~April 30, 2021, total guarantees were ~~$164.6~~$206.5 million and extend through ~~2038.~~2041. 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 Audits~~Taxes

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 states~~that 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,~~April 30, 2021, the total amount accrued for ~~all~~ probable litigation losses where a reasonable estimate of the loss could be made was ~~$10.0~~$14.6 million. ~~This $10.0 million includes an~~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 0 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. The amounts above do not include any accrual ~~of $3.8 million in connection~~or loss estimates with respect to the ~~Hussein~~Bucio case, ~~discussed~~which are detailed below.

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 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.

~~Hussein~~On 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 filed~~April 30, 2013, on ~~January 20, 2016, pending in the United States District Court~~claims based on alleged previous automatic deduction practices for ~~the Western District~~meal 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 (who~~trial court held that the discovery related to PAGA claims allegedly arising after April 30, 2013 would ~~otherwise~~ be ~~members~~stayed 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), who~~case. 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 both~~maintain 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 provision~~plaintiffs’ 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 provision~~trial 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.

In February and March 2021, the parties engaged in expert discovery which provided detailed information regarding the plaintiffs’ damage calculations on the class claims. On February 25, 2021, the California Supreme Court issued an opinion in Donohue v. AMN Services, which addresses the standard for adjudicating meal period claims under California law and we believe is supportive of ABM’s legal position in the Bucio case. On May 5, 2021, the trial court denied all of the plaintiffs’ December 2020 motions for summary adjudication and/or summary judgment and the case was assigned to a new judge. On May 5, 2021, the trial court ordered the parties to attend a mandatory settlement conference before a separate judge on June 11, 2021. The ~~Isse~~ ~~plaintiffs sought retroactive wages and sick benefits, double damages for wages and sick benefits, interest, and attorneys’ fees. The~~ ~~Isse~~ ~~case later expanded~~Company filed a motion to ~~approximately 220 individual plaintiffs.~~

~~In mediations~~decertify the classes on ~~November 2 and 3, 2017, and without admitting liability in either matter, we agreed to settle the~~ ~~Hussein~~ ~~and~~ ~~Isse~~ ~~cases~~May 24, 2021, which is set for a ~~combined total~~hearing on June 28, 2021. The current trial date is July 12, 2021.

The Company denies that it has liability to the plaintiffs in this case and we believe we have strong legal arguments as to liability, damages, and to decertification of ~~$8.3 million, inclusive~~the classes. However, to the extent trial proceeds, and the plaintiffs are successful on all certified class claims, ABM estimates that, based on the plaintiffs’ theories and damages model (with which the Company does not agree), the class claims damages award could range up to $160 million. That said, if plaintiffs’ most aggressive damages models and theories are credited, the class damages award could be significantly in excess of ~~damages, interest,~~$160 million. The PAGA claims and the plaintiffs’ claim for attorneys’ fees ~~and employer payroll taxes. Eligible employees will~~are not currently estimable, but an award of penalties under PAGA could be ~~able to participate~~material as the statute provides for penalties per class member per pay period in ~~either the~~ ~~Hussein~~ or ~~Isse~~ ~~settlements, but cannot recover in both settlements. The settlements in both cases require court approval because~~which a violation of the ~~nature of the claims being released. On December 8, 2017, the Superior Court of Washington for King County approved the settlement agreement for the 220~~ ~~Isse~~ ~~plaintiffs, and we subsequently made a settlement payment of $4.5 million to the~~ ~~Isse~~ ~~plaintiffs. The~~ ~~Hussein~~ ~~settlement documents have not been finalized and will 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~~has been proven, and Plaintiffs are seeking multiple PAGA penalties per class member per pay period. There is a wide range of potential exposure in this case in the event of an adverse verdict. Based on the expert discovery described above, the recent court rulings, and the range of potential exposure, the Company recorded a reserve of $30 million for the quarter. ended April 30, 2021.

As noted previously, litigation outcomes are difficult to predict, and the estimation of probable losses requires an analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Accordingly, the recorded reserve of $30 million for the quarter ended April 30, 2021 is based on a host of factors, considerations, and judgments, and the ultimate resolution of this matter could result in a loss in excess of the recorded reserve. Whether the ultimate resolution results in a loss in excess of the reserve already recorded will depend on many factors, including (but not limited to) settlement discussions, the unpredictable nature of juries, and court rulings. While we believe we have strong defenses to the ~~case as a named plaintiff. On October 27, 2017, plaintiffs moved for class certification seeking~~claims in this proceeding and will continue to ~~represent a class of all employees who were, are, or will~~vigorously defend ourselves, there can 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 formulated~~final 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 at~~cash flows.

9. INCOME TAXES

Our quarterly tax provision is calculated using an ~~ABM facility~~estimated annual tax rate that ~~did not provide a biometric clock and (b) were not offered an ABM-provided cell phone~~is 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. During the three and six months ended April 30, 2021, we had effective tax rates of 27.3% and 26.9%, respectively, resulting in provisions for taxes of $11.7 million and $38.9 million, respectively. During the three and six months ended April 30, 2020, we had effective tax rates of (8.4)% and (21.4)%, respectively, resulting in provisions for taxes of $10.6 million and $19.2 million, respectively. The effective tax rate for the three and six months ended April 30, 2020, excluding an impairment loss of non-deductible goodwill of $163.8 million, was 28.1% and 25.9% respectively. The difference between the effective tax rate and statutory rate is primarily related to ~~increase from the 2018 rate.~~tax credits. The rate difference between periods is driven by increased income in 2021.

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 accountingOur effective tax rate 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~~ the three months ended ~~January 31, 2018. In addition, we recorded an expense of $7.0 million~~April 30, 2021 was not impacted by any significant discrete items. Our effective tax rate for the ~~one-time transition~~three months ended April 30, 2020 was impacted by an impairment loss of non-deductible goodwill as described in Note 5.

Our effective tax rate for the six months ended April 30, 2021 was not impacted by any significant discrete items. Our effective tax rate for the six months ended April 30, 2020 was impacted by an impairment loss of non-deductible goodwill as described in Note 5 and a $1.5 million tax provision related to the Work Opportunity Tax Credit (“WOTC”).

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 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 ~~deemed repatriation~~CARES Act requires to be remitted in equal parts by December 31, 2021 and December 31, 2022. 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. We~~expansion, and we do not anticipate remitting such earnings to the United ~~States, and while~~States. 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.

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.

10. SEGMENT INFORMATION

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. 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. ~~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&I		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.
T&M		T&M provides janitorial, facilities engineering, and parking services to industrial and high-tech manufacturing facilities.
Education		Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.
Aviation		Aviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.
~~T&M~~	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.
~~Education~~	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.
Technical Solutions		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.
~~Healthcare~~	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.

Financial Information by Reportable Segment


	Three Months Ended April 30,				Six Months Ended April 30,
(in millions)	2021		2020		2021		2020
Revenues
Business & Industry	$	796.2	$	785.6	$	1,605.6	$	1,606.5
Technology & Manufacturing	246.3		233.7		495.5		467.6
Education	214.2		200.1		423.6		408.0
Aviation	148.3		184.7		291.5		423.5
Technical Solutions	125.5		122.3		238.8		264.3
Elimination of inter-segment revenues	(33.1)		(30.4)		(65.2)		(61.0)
	$	1,497.4	$	1,496.0	$	2,989.8	$	3,109.0
Operating profit (loss)
Business & Industry	$	85.3	$	59.2	$	171.0	$	97.4
Technology & Manufacturing	26.9		19.7		53.8		36.3
Education(1)	13.6		(85.8)		35.0		(74.6)
Aviation(2)	5.8		(60.5)		9.0		(54.9)
Technical Solutions(3)	10.2		(8.4)		16.3		(0.1)
Government Services	0		0		(0.1)		0
Corporate	(90.8)		(39.5)		(123.4)		(72.8)
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions	(0.2)		(0.9)		(0.8)		(1.8)
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions	(0.4)		(0.4)		(0.6)		(0.4)
	50.3		(116.7)		160.1		(70.8)
Income from unconsolidated affiliates	0.2		0.9		0.8		1.8
Interest expense	(7.8)		(10.5)		(16.3)		(20.7)
Income (loss) from continuing operations before income taxes	$	42.8	$	(126.2)	$	144.6	$	(89.7)

Three Months Ended January 31,
(in millions) 2018 2017
Revenues
Business & Industry $ 722.1
$ 655.6
Aviation 256.2
231.9
Technology & Manufacturing 232.0
171.5
Education 206.3
67.0
Technical Solutions 104.0
107.7
Healthcare 67.7
61.7
Government Services —
31.4
$ 1,588.3
$ 1,326.7
Operating profit (loss)
Business & Industry $ 28.5
$ 27.1
Aviation 5.8
4.6
Technology & Manufacturing 16.9
12.6
Education 9.2
3.6
Technical Solutions 5.5
7.9
Healthcare 2.7
2.5
Government Services (0.7 ) 1.9
Corporate (47.4 ) (34.6 )
Adjustment for income from unconsolidated affiliates, net, included in Aviation and Government Services (0.6 ) (1.3 )
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions (0.3 ) (0.5 )
19.5
23.8
Income from unconsolidated affiliates, net 0.5
1.4
Interest expense (14.3 ) (3.2 )
Income from continuing operations before income taxes $ 5.8
$ 22.0
(1) Reflects impairment charges totaling $99.3 million on goodwill during the three and six months ended April 30, 2020.

(2) Reflects impairment charges totaling $61.1 million on goodwill and intangible assets during the three and six months ended April 30, 2020.

(3)Reflects impairment charges totaling $12.4 million on goodwill and intangible assets during the three and six months ended April 30, 2020.

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 of~~to self-insurance reserves, and direct acquisition costs. Management does not review asset information by segment, therefore we do not present assets in this note.

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 ~~ends~~end 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. These factors have led to lower demand for some of our services in certain end-markets, particularly in our Aviation segment. 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 ~~announced~~cannot 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 we may continue to experience adverse effects on our business, consolidated results of operations, financial position, and cash flows resulting from a ~~comprehensive transformation initiative~~recessionary economic environment that may persist.

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 (“~~2020Vision~~”PPE”) ~~intended~~are being used by our employees. We have also encouraged our employees 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,~~practice social distancing and wash hands frequently. Additionally, we ~~realigned our organization; in Phase 2, which is continuing today,~~transitioned many office-based employees to a remote work environment, suspended non-essential travel, and adopted technologies to allow employees to effectively perform their functions remotely.

Client Focus

Over the past few years, we ~~are~~have focused on ~~improvements~~consolidating purchasing activities to leverage our ~~operational framework to promote efficiencies~~scale and ~~process enhancements;~~identify preferred suppliers. While we have seen a reduction in the availability of supplies and an

increase in ~~Phase 3, on~~costs, our procurement efforts have helped create a positive supply chain for our company and clients during 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.~~Pandemic. 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 ~~improve~~we 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 relating~~adapt to ~~both existing clients~~the 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 April 30, 2021, we had $435.7 million of cash and cash equivalents, and we had net cash provided by operating activities of $171.2 million during the six months ended April 30, 2021. We have ~~launched a “Tag Pricer” tool that will help us capture work orders more efficiently. In addition, we~~taken and continue ~~consolidating our procurement activities and investing in technology platforms~~to take actions to help ~~drive~~preserve cash, increase liquidity, and ~~sustain~~ ~~2020Vision~~ ~~performance.~~strengthen our financial position, including:

~~Developments~~•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 ~~Trends~~Capital Resources” for more information);

~~United States Tax Reform~~•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.

In response to the Pandemic, Congress enacted the CARES Act on March 27, 2020. The ~~Tax Cuts~~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 in equal parts by December 31, 2021 and ~~Jobs Act (the “Tax Act”), which was enacted on~~ December ~~22, 2017, represents the most significant overhaul~~31, 2022. The impact of the ~~U.S.~~income tax ~~code in more than 30 years. Among other~~ provisions was not material. Additionally, we received grants under the ~~Tax Act provides~~United Kingdom’s job retention scheme to reimburse us for a ~~reduction~~portion 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”). certain furloughed employees’ salaries.

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~~actions taken above, we were able to strengthen our cash flow during the second quarter. As of April 30, 2021, this resulted in a borrowing capacity of $622.1 million, reflecting covenant restrictions, in addition to the cash and cash equivalents amount noted above.

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 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 first quarter of 2021, we performed a comprehensive actuarial review of the majority of our casualty insurance programs to evaluate changes made to claims reserves and claims payment activity for the

period of 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.

During the second quarter of 2021, we performed an interim actuarial update of the majority of our casualty insurance programs that considered changes in claims development and claims payment activity for the ~~three months ended~~period of November 1, 2020 through January 31, ~~2018, is further described~~2021. This Interim Update was abbreviated in ~~Note 11, “Income Taxes,”~~nature based on actual versus expected developments during the periods analyzed and relied on the key assumptions in the ~~Financial Statements.~~Actuarial Review (most notably loss development patterns, trend assumptions, and underlying expected loss costs).

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~~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. The Actuarial Review and Interim Update again demonstrated that the ~~complexities~~changes we have made to our risk management programs continue to positively impact the frequency and severity of ~~implementing~~claims. Based on the ~~provisions~~results of the ~~Tax Act, the staff of the U.S. Securities~~Actuarial Review and ~~Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting~~Interim Update at April 30, 2021, we decreased our total reserves 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. 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 onknown claims as well as our estimate of the ~~expected reversals~~loss amounts associated with IBNR claims by $17.4 million during the six months ended April 30, 2021; $11.4 million of ~~certain tax assets and liabilities,~~that amount relates to prior years. During the six months ended April 30, 2020, we decreased our total reserves related to prior year claims by $6.6 million. We will continue to assess ongoing developments, 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.

~~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 choicefurther adjustments 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, as that was prior to the acquisition date. During the~~ ~~three months ended~~ ~~January 31, 2018, we recognized total incremental revenues from GCA of $251.6 million, as summarized below.~~

Three Months Ended
(in millions) January 31, 2018
Education $ 140.5
Technology & Manufacturing 58.6
Business & Industry 40.7
Healthcare 7.5
Aviation 4.3
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 expenses related to GCA restructuring in the future.

Three Months Ended
(in millions) January 31, 2018
Employee Severance $ 8.8
External Support Fees 2.0
Other Project Fees 0.8
Total $ 11.7

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
		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.
		T&M provides janitorial, facilities engineering, and parking services to industrial and high-tech manufacturing facilities.
		Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.
		Aviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.
		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.
	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.
	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.
	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),

Key Financial Highlights

•Revenues increased by $1.4 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 million0.1%, 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,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017.~~April 30, 2020, primarily due to an increase in work orders as a result of the Pandemic, and the expansion of certain accounts and new business within B&I and T&M. However, this increase was offset by Pandemic-related disruptions across our businesses.

~~Operating profit decreased by $4.3 million, or 18.2%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. The decrease in~~•We had an operating profit is primarily attributable to higher amortization expense, incremental selling, general and administrative expenses, and restructuring and related costs associated with the GCA acquisition. This decrease was partially offset by higher operating profit in our Education and T&M segments associated with the GCA acquisition.

~~Interest expense increased by $11.1~~of $50.3 million during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to an operating loss of $116.7 million during the three months ended ~~January 31, 2017,~~April 30, 2020. This change was primarily driven by the absence of impairment charges recorded on goodwill and intangible assets totaling $172.8 million during the three months ended April 30, 2020. This change was also positively impacted by an increase in work orders with higher margins as a result of the Pandemic (primarily within B&I and T&M) and the management of direct labor and related topersonnel costs during the Pandemic. These benefits were partially offset by account compression resulting from Pandemic-related disruptions in certain markets and increased ~~indebtedness incurred to fund the GCA acquisition~~legal costs and ~~higher relative interest rates under our credit facility.~~settlements.

•Our effective tax rate on income ~~taxes~~ from continuing operations was 27.3% for the three months ended ~~January 31, 2018 were favorably~~April 30, 2021, as compared to (8.4)% for the three months ended April 30, 2020. Our effective tax rate for the three months ended April 30, 2020 was impacted by a ~~net discrete tax benefit~~non-deductible impairment loss of ~~$21.7 million related to the Tax Act.~~$163.8 million.

•Net cash provided by operating activities was ~~$33.7~~$171.2 million during the ~~three~~six months ended ~~January 31, 2018.~~April 30, 2021. This includes the deferred remittance of payroll taxes under the CARES Act.

•Dividends of ~~$11.5~~$25.4 million were paid to shareholders and dividends totaling ~~$0.175~~$0.380 per common share were declared during the ~~three~~six months ended ~~January 31, 2018.~~April 30, 2021.

•At ~~January 31, 2018,~~April 30, 2021, total outstanding borrowings under our ~~credit facility~~Credit Facility were ~~$1.2 billion, and~~$645.1 million. At April 30, 2021, we had up to ~~$330.5~~$622.1 million of borrowing capacity, ~~under our credit facility; however,~~reflecting covenant ~~restrictions limited our actual borrowing capacity to $245.5 million.~~restrictions.

Results of Operations

Three Months Ended ~~January 31, 2018~~April 30, 2021 Compared with the Three Months Ended ~~January 31, 2017~~April 30, 2020

Consolidated

Three Months Ended January 31,
($ in millions) 2018 2017 Increase / (Decrease)
Revenues $ 1,588.3
$ 1,326.7
$ 261.6
19.7%
Operating expenses 1,429.3
1,195.1
234.2
19.6%
Gross margin 10.0 % 9.9 % 9 bps
Selling, general and administrative expenses 109.0
97.3
11.7
12.1%
Restructuring and related expenses 14.3
5.0
9.3
NM*
Amortization of intangible assets 16.2
5.5
10.7
NM*
Operating profit 19.5
23.8
(4.3 ) (18.2)%
Income from unconsolidated affiliates, net 0.5
1.4
(0.9 ) (61.0)%
Interest expense (14.3 ) (3.2 ) (11.1 ) NM*
Income from continuing operations before income taxes 5.8
22.0
(16.2 ) (73.8)%
Income tax benefit (provision) 22.2
(5.9 ) 28.1
NM*
Income from continuing operations 28.0
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, respectively 13.6
1.6
12.0
NM*
Foreign currency translation 9.4
3.3
6.1
NM*
Comprehensive income (loss) $ 50.9
$ (51.9 ) $ 102.8
NM*

*Not meaningful


	Three Months Ended April 30,
(in millions, except per share amounts)	2021			2020			Increase / (Decrease)
Revenues	$	1,497.4		$	1,496.0		$	1.4	0.1%
Operating expenses	1,274.5			1,306.1			(31.6)		(2.4)%
Gross margin	14.9		%	12.7		%	220 bps
Selling, general and administrative expenses	161.9			119.4			42.5		35.6%
Restructuring and related expenses	—			1.8			(1.8)		NM*
Amortization of intangible assets	10.7			12.5			(1.8)		(14.5)%
Impairment loss	—			172.8			(172.8)		NM*
Operating profit (loss)	50.3			(116.7)			167.0		NM*
Income from unconsolidated affiliates	0.2			0.9			(0.7)		(75.8)%
Interest expense	(7.8)			(10.5)			2.7		25.5%
Income (loss) from continuing operations before income taxes	42.8			(126.2)			169.0		NM*
Income tax provision	(11.7)			(10.6)			(1.1)		10.3%
Income (loss) from continuing operations	31.1			(136.8)			167.9		NM*
Income from discontinued operations, net of taxes	—			—			—		NM*
Net income (loss)	31.1			(136.8)			167.9		NM*
Other comprehensive income (loss)
Interest rate swaps	1.6			(8.7)			10.3		NM*
Foreign currency translation and other	1.2			(4.2)			5.4		NM*
Income tax (provision) benefit	(0.4)			2.4			(2.8)		NM*
Comprehensive income (loss)	$	33.4		$	(147.3)		$	180.7	NM*

*Not meaningful

Revenues

Revenues increased by ~~$261.6~~$1.4 million, or ~~19.7%~~0.1%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017. The increase in revenues was primarily attributable to $253.9 million of incremental revenues from acquisitions, including GCA, and organic growth in B&I and Aviation.~~April 30, 2020. This increase was ~~partially~~primarily due to an increase in work orders as a result of the Pandemic, and the expansion of certain accounts and new business within B&I and T&M. However, this increase was offset by ~~lower project revenues in~~Pandemic-related disruptions across our ~~Technical Solutions business and the sale of our Government Services business on May 31, 2017.~~businesses.

Operating Expenses

Operating expenses ~~increased~~decreased by ~~$234.2~~$31.6 million, or ~~19.6%~~2.4%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017.~~April 30, 2020. Gross margin increased ~~slightly~~ by 9220 bps ~~during~~to 14.9% in the three months ended ~~January 31, 2018.~~April 30, 2021 from 12.7% in the three months ended April 30, 2020. The increase in gross margin was primarily associated with an increase in work orders with higher margins as a ~~lower~~result of the Pandemic (primarily within B&I and T&M) and the management of direct labor and related personnel costs during the Pandemic. 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 was~~reserve adjustments. These benefits were partially offset by ~~lower profit margins on~~account 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~~$42.5 million, or ~~12.1%~~35.6%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017.~~April 30, 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~~$32.2 million increase in legal costs and settlements, of which $30 million was attributed to the accrual of a legal reserve for the Bucio case;

•a $14.5 million increase in certain technology projects and other enterprise initiatives, including marketing events; and

•an $11.7 million increase in compensation and related expenses, primarily ~~associated~~driven by updated assessments regarding financial performance target achievements in connection with certain performance share awards; during the three months ended April 30, 2020,~~Vision~~ ~~technology investments.~~ we recorded a reversal of shared-based compensation expense based upon our then current assessment of probable financial achievements for such awards.

This increase was partially offset by by:

•a ~~$1.0~~$9.9 million decrease in ~~sales tax reserve.~~bad debt expense, primarily associated with higher reserves established for client receivables in the prior year, due to increasing credit risk resulting from the Pandemic; and

•the absence of a $3.9 million medical and dental insurance expense as a result of an actuarial evaluation performed in the prior year.

Restructuring and Related Expenses

Restructuring and related expenses ~~increased~~decreased by ~~$9.3~~$1.8 million during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017, as a result~~April 30, 2020. We substantially completed the restructuring program by the end of ~~restructuring related to the GCA acquisition.~~fiscal year 2020.

Amortization of Intangible Assets

Amortization of intangible assets ~~increased~~decreased by ~~$10.7~~$1.8 million, or 14.5%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017, as~~April 30, 2020. The decrease was due to a ~~result~~lower 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~~assets.

Impairment Loss

During the three months ended April 30, 2020, we recorded impairment charges on goodwill related to our Education, Aviation, and U.K. Technical Solutions businesses totaling $163.8 million. Additionally, we recorded impairment charges on customer relationships related to our Aviation and U.K. Technical Solutions businesses totaling $9.0 million. During the second quarter of ~~acquired~~2020, these businesses were adversely impacted by the market and business conditions resulting from the Pandemic. We did not record any impairment charges to goodwill or intangible assets ~~associated with~~for the ~~GCA acquisition.~~three months ended April 30, 2021.

Interest Expense

Interest expense ~~increased~~decreased by ~~$11.1~~$2.7 million, or 25.5%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017,~~April 30, 2020, primarily ~~related~~due to ~~increased indebtedness incurred to fund the GCA acquisition and higher~~lower relative interest rates in the current year and lower outstanding borrowings under our credit facility.

Income Taxes from Continuing Operations

~~During the three months ended January 31, 2018, we had an income~~Our effective tax ~~benefit~~rates on income from continuing operations for the three months ended April 30, 2021 and April 30, 2020 were 27.3% and (8.4)%, respectively, resulting in provisions for taxes of ~~$22.2~~$11.7 million ~~primarily due to~~and $10.6 million, respectively. The effective tax rate for the three months ended April 30, 2020, excluding a ~~net~~nondeductible impairment loss of $163.8 million, was 28.1%.

Our effective tax rate for the three months ended April 30, 2021 was not impacted by any significant discrete items. Our effective tax ~~benefit of $21.7 million~~rate for the three months ended April 30, 2020 was impacted by the non-deductible impairment loss. The difference between the effective tax rate and statutory rate is primarily related to ~~the Tax Act.~~tax credits. The rate difference between periods is driven by increased income in 2021.

~~Loss from Discontinued Operations, Net~~

Interest Rate Swaps

We had a gain of ~~Taxes~~

~~Loss from discontinued operations, net of taxes,~~ ~~decreased~~ by ~~$72.8~~$1.6 million on interest rate swaps during the three months ended ~~January 31, 2018,~~April 30, 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 $12.0~~loss of $8.7 million during the three months ended ~~January 31, 2018, as compared to the three months ended January 31, 2017. The increase was~~April 30, 2020, primarily due to ~~an increase~~underlying changes in the ~~notional amount~~fair 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~~We had a foreign currency translation gain ~~increased by $6.1~~of $1.2 million during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to a foreign currency translation loss of $4.2 million during the three months ended ~~January 31, 2017.~~April 30, 2020. This ~~increase~~change was ~~related~~due to fluctuations in the ~~weakening of~~exchange rate between the U.S. Dollar (“USD”) ~~against~~and 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.

Segment Information

Financial Information for Each Reportable Segment


												Three Months Ended April 30,
	Three Months Ended January 31,
($ in millions)	2018			2017			Increase / (Decrease)
(in millions)											(in millions)	2021			2020			Increase / (Decrease)
Revenues											Revenues
Business & Industry	$	722.1		$	655.6		$	66.5		10.1%	Business & Industry	$	796.2		$	785.6		$	10.6	1.4%
Aviation	256.2			231.9			24.3			10.5%
Technology & Manufacturing	232.0			171.5			60.5			35.3%	Technology & Manufacturing	246.3			233.7			12.6		5.4%
Education	206.3			67.0			139.3			NM*	Education	214.2			200.1			14.1		7.0%
Aviation											Aviation	148.3			184.7			(36.4)		(19.7)%
Technical Solutions	104.0			107.7			(3.7		)	(3.4)%	Technical Solutions	125.5			122.3			3.2		2.6%
Healthcare	67.7			61.7			6.0			9.8%
Government Services	—			31.4			(31.4		)	NM*
Elimination of inter-segment revenues											Elimination of inter-segment revenues	(33.1)			(30.4)			(2.7)		(9.0)%
	$	1,588.3		$	1,326.7		$	261.6		19.7%		$	1,497.4		$	1,496.0		$	1.4	0.1%
Operating profit (loss)											Operating profit (loss)
Business & Industry	$	28.5		$	27.1		$	1.4		5.1%	Business & Industry	$	85.3		$	59.2		$	26.1	44.1%
Operating profit margin	3.9		%	4.1		%	(19) bps				Operating profit margin	10.7		%	7.5		%	318 bps
Aviation	5.8			4.6			1.2			25.5%
Operating profit margin	2.3		%	2.0		%	27 bps
Technology & Manufacturing	16.9			12.6			4.3			33.6%	Technology & Manufacturing	26.9			19.7			7.2		36.6%
Operating profit margin	7.3		%	7.4		%	(9) bps				Operating profit margin	10.9		%	8.4		%	249 bps
Education	9.2			3.6			5.6			NM*	Education	13.6			(85.8)			99.4		NM*
Operating profit margin	4.4		%	5.4		%	(99) bps
Operating margin											Operating margin	6.3		%	(42.9)		%	NM*
Aviation											Aviation	5.8			(60.5)			66.3		NM*
Operating margin											Operating margin	3.9		%	(32.7)		%	NM*
Technical Solutions	5.5			7.9			(2.4		)	(30.5)%	Technical Solutions	10.2			(8.4)			18.6		NM*
Operating profit margin	5.3		%	7.3		%	(205) bps
Healthcare	2.7			2.5			0.2			10.1%
Operating profit margin	4.0		%	4.0		%	1 bps
Government Services	(0.7		)	1.9			(2.6		)	NM*
Operating profit margin	NM*			6.0		%	NM*
Operating margin											Operating margin	8.2		%	(6.9)		%	NM*

Corporate	(47.4		)	(34.6		)	(12.8		)	36.9%	Corporate	(90.8)			(39.5)			(51.3)		NM*
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 Solutions											Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions	(0.2)			(0.9)			0.7		75.8%
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	(0.4)			(0.4)			—		1.6%
	$	19.5		$	23.8		$	(4.3	)	(18.2)%		$	50.3		$	(116.7)		$	167.0	NM*

*Not meaningful


Business & Industry										Business & Industry
	Three Months Ended January 31,										Three Months Ended April 30,
($ in millions)	2018			2017			Increase / (Decrease)			($ in millions)	2021			2020			Increase
Revenues	$	722.1		$	655.6		$	66.5	10.1%	Revenues	$	796.2		$	785.6		$	10.6��	1.4%
Operating profit	28.5			27.1			1.4		5.1%	Operating profit	85.3			59.2			26.1		44.1%
Operating profit margin	3.9		%	4.1		%	(19) bps			Operating profit margin	10.7		%	7.5		%	318 bps

B&I revenues increased by ~~$66.5~~$10.6 million, or ~~10.1%~~1.4%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017.~~April 30, 2020. The increase was primarily attributable to ~~incremental revenues from~~ 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 and ~~additional tag revenue.~~an increase in work orders (primarily as a result of the Pandemic). The increase was partially offset by account compression resulting from Pandemic-related disruptions in certain markets within both our U.S. and U.K. businesses. Management reimbursement revenues for this segment totaled ~~$63.0~~$43.2 million and ~~$57.8~~$61.7 million for the three months ended ~~January 31, 2018~~April 30, 2021 and ~~2017,~~2020, respectively.

Operating profit increased by ~~$1.4~~$26.1 million, or ~~5.1%~~44.1%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017.~~April 30, 2020. Operating profit margin ~~decreased~~increased by 19318 bps to ~~3.9% in the~~

~~three months ended January 31, 2018 from 4.1%~~10.7% in the three months ended ~~January 31, 2017.~~April 30, 2021, from 7.5% in the three months ended April 30, 2020. The ~~decrease~~increase in operating profit margin was primarily associated with ~~lower~~an 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 Contracts~~U.K. businesses and a decrease in bad debt expense as higher reserves were recorded in the prior year mainly associated with ~~higher amortization expense related to~~increasing credit risk resulting from the ~~GCA acquisition. The decrease was partially offset by the management of selling, general and administrative expenses.~~Pandemic.


Aviation
Technology & Manufacturing										Technology & Manufacturing
	Three Months Ended January 31,										Three Months Ended April 30,
($ in millions)	2018			2017			Increase			($ in millions)	2021			2020			Increase
Revenues	$	256.2		$	231.9		$	24.3	10.5%	Revenues	$	246.3		$	233.7		$	12.6	5.4%
Operating profit	5.8			4.6			1.2		25.5%	Operating profit	26.9			19.7			7.2		36.6%
Operating profit margin	2.3		%	2.0		%	27 bps			Operating profit margin	10.9		%	8.4		%	249 bps

~~Aviation~~T&M revenues increased by ~~$24.3~~$12.6 million, or ~~10.5%~~5.4%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January 31, 2017.~~April 30, 2020. The increase was primarily attributable to ~~organic growth~~an increase in ~~parking,~~work orders (primarily as a result of the Pandemic) and new business. This increase was partially offset by the compression of certain accounts, mainly resulting from Pandemic-related disruptions.

Operating profit increased by $7.2 million, or 36.6%, during the three months ended April 30, 2021, as compared to the three months ended April 30, 2020. Operating profit margin increased by 249 bps to 10.9% in the three months ended April 30, 2021, from 8.4% in the three months ended April 30, 2020. The increase in operating profit margin was primarily attributable to a decrease in bad debt expense, driven by net recoveries of certain previously reserved receivables, and higher margins on work orders.


Education
	Three Months Ended April 30,
($ in millions)	2021			2020			Increase
Revenues	$	214.2		$	200.1		$	14.1	7.0%
Operating profit (loss)	13.6			(85.8)			99.4		NM*
Operating margin	6.3		%	(42.9)		%	NM*

*Not meaningful

Education revenues increased by $14.1 million, or 7.0%, during the three months ended April 30, 2021, as compared to the three months ended April 30, 2020. The increase was primarily attributable to an increase in work orders (primarily as a result of the Pandemic).

We had an operating profit of $13.6 million during the three months ended April 30, 2021, as compared to an operating loss of $85.8 million during the three months ended April 30, 2020. Operating margin increased to 6.3% in the three months ended April 30, 2021 from (42.9)% in the three months ended April 30, 2020. The increase in operating margin was primarily attributable to the absence of prior year impairment charges of $99.3 million on goodwill due to the adverse impact of market and business conditions resulting from the Pandemic. Additionally, the increase in operating profit margin was impacted by an increase in work orders with higher margins as a result of the Pandemic and lower reserves established for client receivables. Operating margin was negatively impacted by increased direct labor costs in concentrated geographies due to a limited labor supply in those regions that impacted certain customer contracts.


Aviation
	Three Months Ended April 30,
($ in millions)	2021			2020			(Decrease) / Increase
Revenues	$	148.3		$	184.7		$	(36.4)	(19.7)%
Operating profit (loss)	5.8			(60.5)			66.3		NM*
Operating margin	3.9		%	(32.7)		%	NM*

*Not meaningful

Aviation revenues decreased by $36.4 million, or 19.7%, during the three months ended April 30, 2021, as compared to the three months ended April 30, 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 ~~logistics~~accounts. The decrease was partially offset by Pandemic-related cleaning services and ~~to incremental revenues of $5.9 million primarily from the GCA acquisition.~~new parking-related services. Management reimbursement revenues for this segment totaled ~~$25.5~~$12.9 million and ~~$16.5~~$20.7 million for the three months ended ~~January 31, 2018~~April 30, 2021 and ~~2017,~~2020, respectively.

We had an operating profit of $5.8 million during the three months ended April 30, 2021, as compared to an operating loss of $60.5 million during the three months ended April 30, 2020. Operating ~~profit~~margin increased to 3.9% in the three months ended April 30, 2021 from (32.7)% in the three months ended April 30, 2020. The increase was primarily attributable to the absence of prior year impairment charges of $55.5 million on goodwill and $5.6 million on customer relationships due to the adverse impact of market and business conditions resulting from the Pandemic. Additionally, operating margin increased due to the management of direct labor and related personnel costs during the Pandemic, higher margins on Pandemic-related cleaning services, and growth in parking and transportation contracts. These increases were partially offset by Pandemic-related volume reductions.


Technical Solutions
	Three Months Ended April 30,
($ in millions)	2021			2020			Increase
Revenues	$	125.5		$	122.3		$	3.2	2.6%
Operating profit (loss)	10.2			(8.4)			18.6		NM*
Operating margin	8.2		%	(6.9)		%	NM*

*Not meaningful

Technical Solutions revenues increased by ~~$1.2~~$3.2 million, or ~~25.5%~~2.6%, during the three months ended ~~January 31, 2018,~~April 30, 2021, as compared to the three months ended ~~January~~ April 30, 2020. This increase was primarily attributable to an increase in the volume of our U.S. and U.K. businesses due to the easing of Pandemic-related lockdowns, which provided access to facilities that were previously restricted.

We had an operating profit of $10.2 million during the three months ended April 30, 2021, as compared to an operating loss of $8.4 million during the three months ended April 30, 2020. Operating margin increased to 8.2% in the three months ended April 30, 2021 from (6.9)% in the three months ended April 30, 2020. The increase in operating margin was primarily attributable to the absence of prior year impairment charges of $9.0 million on goodwill and $3.4 million on customer relationships related to our U.K. business due to the adverse impact of market and business conditions resulting from the Pandemic. Additionally, operating margin was positively impacted by the management of indirect operating expenses and selling expenses.


Corporate
	Three Months Ended April 30,
($ in millions)	2021		2020		Increase
Corporate expenses	$	(90.8)	$	(39.5)	$	51.3	NM*

Corporate expenses increased by $51.3 million during the three months ended April 30, 2021, as compared to the three months ended April 30, 2020. The increase in corporate expenses was primarily attributable to:

•a $32.0 million increase in legal costs and settlements, of which $30 million was attributed to the accrual of a legal reserve for the Bucio case;

•a $14.5 million increase in certain technology projects and other enterprise initiatives including marketing events; and

•a $13.7 million increase in compensation and related expenses, primarily driven by updated assessments regarding financial performance target achievements in connection with certain performance share awards; during the three months ended April 30, 2020, we recorded a reversal of shared-based compensation expense based upon our then current assessment of probable financial achievements for such awards.

This increase was partially offset by:

•the absence of a $3.9 million medical and dental insurance expense as a result of an actuarial evaluation performed in the prior year;

•a $1.8 million decrease in restructuring and related expenses due to the completion of our restructuring program in fiscal year 2020; and

31 ~~2017.~~

•the absence of a $1.3 million reserve established for an outstanding client receivable that was being litigated in the prior year and deemed to be uncollectible.

Results of Operations

Six Months Ended April 30, 2021Compared with the Six Months Ended April 30, 2020

Consolidated


	Six Months Ended April 30,
(in millions)	2021			2020			Increase / (Decrease)
Revenues	$	2,989.8		$	3,109.0		$	(119.2)	(3.8)%
Operating expenses	2,523.8			2,739.9			(216.1)		(7.9)%
Gross margin	15.6		%	11.9		%	371 bps
Selling, general and administrative expenses	284.5			237.0			47.5		20.0%
Restructuring and related	—			5.0			(5.0)		NM*
Amortization of intangible assets	21.5			25.1			(3.6)		(14.6)%
Impairment loss	—			172.8			(172.8)		NM*
Operating profit (loss)	160.1			(70.8)			230.9		NM*
Income from unconsolidated affiliates	0.8			1.8			(1.0)		(54.2)%
Interest expense	(16.3)			(20.7)			4.4		21.3%
Income (loss) from continuing operations before income taxes	144.6			(89.7)			234.3		NM*
Income tax provision	(38.9)			(19.2)			(19.7)		NM*
Income (loss) from continuing operations	105.7			(108.9)			214.6		NM*
Income from discontinued operations, net of taxes	—			0.1			(0.1)		NM*
Net income (loss)	105.7			(108.8)			214.5		NM*
Other comprehensive income (loss)
Interest rate swaps	2.8			(9.9)			12.7		NM*
Foreign currency translation and other	5.2			(3.8)			9.0		NM*
Income tax (provision) benefit	(0.8)			2.7			(3.5)		NM*
Comprehensive income (loss)	$	112.9		$	(119.8)		$	232.7	NM*

*Not meaningful

Revenues

Revenues decreased by $119.2 million, or 3.8%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. The decrease was 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 Expenses

Operating expenses decreased by $216.1 million, or 7.9%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. Gross margin increased by 371 bps to 15.6% in the six months ended April 30, 2021 from 11.9% in the six months ended April 30, 2020. The increase in gross margin was primarily associated with an increase in work orders with higher margins as a result of the Pandemic (primarily within B&I and T&M) and the management of direct labor and related personnel costs during the Pandemic. The increase in gross margin was also driven by self-insurance reserve adjustments. These benefits were partially offset by account compression resulting from Pandemic-related disruptions in certain markets.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $47.5 million, or 20.0%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. The increase in selling, general and administrative expenses was primarily attributable to:

•a $32.6 million increase in legal costs and settlements, of which $30 million was attributed to the accrual of a legal reserve for the Bucio case;

•a $17.2 million increase in certain technology projects and other enterprise initiatives, including marketing events; and

•an $11.2 million increase in compensation and related expenses, primarily driven by updated assessments regarding financial performance target achievements in connection with certain performance share awards; during the six months ended April 30, 2020, we recorded a reversal of shared-based compensation expense based upon our then current assessment of probable financial achievements for such awards.

This increase was partially offset by:

•a $9.3 million decrease in bad debt expense, primarily associated with higher reserves established for client receivables in the prior year due to increasing credit risk resulting from the Pandemic; and

•the absence of a $3.9 million medical and dental insurance expense as a result of an actuarial evaluation performed in the prior year.

Restructuring and Related Expenses

Restructuring and related expenses decreased by $5.0 million during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. We substantially completed the restructuring program by the end of fiscal year 2020.

Amortization of Intangible Assets

Amortization of intangible assets decreased by $3.6 million, or 14.6%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. This decrease was due to the lower 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 assets.

Impairment Loss

During the six months ended April 30, 2020, we recorded impairment charges on goodwill related to our Education, Aviation, and U.K. Technical Solutions businesses totaling $163.8 million. Additionally, we recorded impairment charges on customer relationships related to our Aviation and U.K. Technical Solutions businesses totaling $9.0 million. During the second quarter of 2020, these businesses were adversely impacted by the market and business conditions resulting from the Pandemic. We did not record any impairment charges to goodwill or intangible assets for the six months ended April 30, 2021.

Interest Expense

Interest expense decreased by $4.4 million, or 21.3%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020, primarily due to lower relative interest rates in the current year and lower outstanding borrowings under our credit facility.

Income Taxes from Continuing Operations

Our effective tax rates on income from continuing operations, for the six months ended April 30, 2021 and April 30, 2020 were 26.9% and (21.4)%, respectively, resulting in provisions for taxes of $38.9 million and $19.2 million, respectively. The effective tax rate for the six months ended April 30, 2020, excluding a nondeductible impairment loss of $163.8 million, was 25.9%.

Our effective tax rate for the six months ended April 30, 2021 was not impacted by any significant discrete items. Our effective tax rate for the six months ended April 30, 2020 was impacted by the impairment of non-deductible goodwill and a $1.5 million tax provision related to WOTC. 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.

Interest Rate Swaps

We had a gain of $2.8 million on interest rate swaps during the three months ended April 30, 2021, as compared to a loss of $9.9 million during the three months ended April 30, 2020, primarily due to underlying changes in the fair value of our interest rate swaps.

Foreign Currency Translation

We had a foreign currency translation gain of $5.2 million during the six months ended April 30, 2021, as compared to a foreign currency translation loss of $3.8 million during the six months ended April 30, 2020. This change was due to fluctuations in the exchange rate between the USD and the 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.

Segment Information

Financial Information for Each Reportable Segment


	Six Months Ended April 30,
(in millions)	2021			2020			Increase / (Decrease)
Revenues
Business & Industry	$	1,605.6		$	1,606.5		$	(0.9)	(0.1)%
Technology & Manufacturing	495.5			467.6			27.9		6.0%
Education	423.6			408.0			15.6		3.8%
Aviation	291.5			423.5			(132.0)		(31.2)%
Technical Solutions	238.8			264.3			(25.5)		(9.7)%
Elimination of inter-segment revenues	(65.2)			(61.0)			(4.2)		(6.9)%
	$	2,989.8		$	3,109.0		$	(119.2)	(3.8)%
Operating profit (loss)
Business & Industry	$	171.0		$	97.4		$	73.6	75.5%
Operating profit margin	10.6		%	6.1		%	458 bps
Technology & Manufacturing	53.8			36.3			17.5		47.9%
Operating profit margin	10.8		%	7.8		%	307 bps
Education	35.0			(74.6)			109.6		NM*
Operating margin	8.3		%	(18.3)		%	NM*
Aviation	9.0			(54.9)			63.9		NM*
Operating margin	3.1		%	(13.0)		%	NM*
Technical Solutions	16.3			(0.1)			16.4		NM*
Operating margin	6.8		%	0.0		%	684 bps
Government Services	(0.1)			—			(0.1)		NM*
Operating margin	—			—			— bps
Corporate	(123.4)			(72.8)			(50.6)		(69.4)%
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions	(0.8)			(1.8)			1.0		54.2%
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions	(0.6)			(0.4)			(0.2)		(45.9)%
	$	160.1		$	(70.8)		$	230.9	NM*

*Not meaningful


Business & Industry
	Six Months Ended April 30,
($ in millions)	2021			2020			(Decrease) / Increase
Revenues	$	1,605.6		$	1,606.5		$	(0.9)	(0.1)%
Operating profit	171.0			97.4			73.6		75.5%
Operating profit margin	10.6		%	6.1		%	458 bps

B&I revenues decreased by $0.9 million, or 0.1%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. The decrease was primarily attributable to account compression resulting from Pandemic-related disruptions in certain markets within both our U.S. and U.K. businesses. The decrease was mostly offset by the targeted expansion of certain key clients, new business, and an increase in work orders (primarily as a result of the Pandemic). Management reimbursement revenues for this segment totaled $86.6 million and $135.4 million for the six months ended April 30, 2021 and 2020, respectively.

Operating profit increased by $73.6 million, or 75.5%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. Operating profit margin increased by 27458 bps to ~~2.3%~~10.6% in the ~~three~~six months ended ~~January 31, 2018~~April 30, 2021, from ~~2.0%~~6.1% in the ~~three~~six months ended ~~January 31, 2017.~~April 30, 2020. The increase in operating profit margin was primarily associated with higher margins on certain accounts in both our U.S. and U.K businesses.

Additionally, the increase in operating profit margin was impacted by an increase in work orders, which have higher margins.


Technology & Manufacturing
	Six Months Ended April 30,
($ in millions)	2021			2020			Increase
Revenues	$	495.5		$	467.6		$	27.9	6.0%
Operating profit	53.8			36.3			17.5		47.9%
Operating profit margin	10.8		%	7.8		%	307 bps

T&M revenues increased by $27.9 million, or 6.0%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. The increase was primarily attributable to an increase in work orders (primarily as a result of the Pandemic) and new business. This increase was partially offset by the compression of certain accounts, mainly resulting from Pandemic-related disruptions.

Operating profit increased by $17.5 million, or 47.9%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. Operating profit margin increased by 307 bps to 10.8% in the six months ended April 30, 2021, from 7.8% in the six months ended April 30, 2020. The increase in operating profit margin was primarily attributable to higher margins on work orders and a decrease in bad debt expense, driven by net recoveries of certain previously reserved receivables.


Education
	Six Months Ended April 30,
($ in millions)	2021			2020			Increase
Revenues	$	423.6		$	408.0		$	15.6	3.8%
Operating profit (loss)	35.0			(74.6)			109.6		NM*
Operating margin	8.3		%	(18.3)		%	NM*

*Not meaningful

Education revenues increased by $15.6 million, or 3.8%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. The increase was primarily attributable to an increase in work orders (primarily as a result of the Pandemic).

Education had an operating profit of $35.0 million during the six months ended April 30, 2021, as compared to an operating loss of $74.6 million during the six months ended April 30, 2020. Operating margin increased to 8.3% in the six months ended April 30, 2021 from (18.3)% in the six months ended April 30, 2020. The increase in operating margin was primarily attributable to the absence of prior year impairment charges of $99.3 million on goodwill due to the adverse impact of market and business conditions resulting from the Pandemic. Additionally, the increase in operating margin was impacted by an increase in work orders with higher margins as a result of the Pandemic. Operating margin was negatively impacted by increased direct labor costs in concentrated geographies due to a limited labor supply in those regions that impacted certain customer contracts.


Aviation
	Six Months Ended April 30,
($ in millions)	2021			2020			(Decrease) / Increase
Revenues	$	291.5		$	423.5		$	(132.0)	(31.2)%
Operating profit (loss)	9.0			(54.9)			63.9		NM*
Operating margin	3.1		%	(13.0)		%	NM*

*Not meaningful

Aviation revenues decreased by $132.0 million, or 31.2%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 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. The decrease was partially offset by Pandemic-related cleaning services and new parking-related services. Management

reimbursement revenues for this segment totaled $26.5 million and $46.6 million for the six months ended April 30, 2021 and 2020, respectively.

Aviation had an operating profit of $9.0 million during the six months ended April 30, 2021, as compared to an operating loss of $54.9 million during the six months ended April 30, 2020. Operating margin increased to 3.1% in the six months ended April 30, 2021, from (13.0)% in the six months ended April 30, 2020. The increase in operating margin was primarily attributable to the absence of prior year impairment charges of $55.5 million on goodwill and $5.6 million on customer relationships due to the adverse impact of market and business conditions resulting from the Pandemic. Additionally, operating margin increased due to the management of direct labor and related personnel costs during the Pandemic, higher margins on Pandemic-related cleaning services, and growth in parking and transportation contracts. These increases were partially offset by Pandemic-related volume reductions.


Technical Solutions
	Six Months Ended April 30,
($ in millions)	2021			2020			(Decrease) / Increase
Revenues	$	238.8		$	264.3		$	(25.5)	(9.7)%
Operating profit (loss)	16.3			(0.1)			16.4		NM*
Operating margin	6.8		%	0.0		%	684 bps

*Not meaningful

Technical Solutions revenues decreased by $25.5 million, or 9.7%, during the six months ended April 30, 2021, as compared to the six months ended April 30, 2020. The 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.

We had an operating profit of $16.3 million during the six months ended April 30, 2021, as compared to an operating loss of $0.1 million during the six months ended April 30, 2020. Operating margin increased by 684 bps to 6.8% in the six months ended April 30, 2021 from 0.0% in the six months ended April 30, 2020. The increase in operating profit margin was primarily attributable to the ~~termination~~absence of ~~an unprofitable contract at~~prior year impairment charges of $9.0 million on goodwill and $3.4 million on customer relationships related to our U.K. business due to the ~~end~~adverse impact of ~~2017~~market and business conditions resulting from the Pandemic. Additionally, the increase in profit margin was positively impacted by the management of indirect operating expenses and selling ~~general and administrative~~ expenses.

Technology & Manufacturing
Three Months Ended January 31,
($ in millions) 2018 2017 Increase / (Decrease)
Revenues $ 232.0
$ 171.5
$ 60.5
35.3%
Operating profit 16.9
12.6
4.3
33.6%
Operating profit margin 7.3 % 7.4 % (9) bps

~~T&M revenues increased by $60.5 million, or 35.3%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017.~~ The ~~increase was related to incremental revenues from the GCA acquisition of $58.6 million.~~

Operating profit increased by $4.3 million, or 33.6%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. Operating profit margin decreased by 9 bps to 7.3% in the three months ended January 31, 2018 from 7.4% in the three months ended January 31, 2017. The decrease in operating profit margin was primarily attributable to higher amortization expense related to the GCA acquisition, partially offset by certain acquired higher margin contracts.

Education
Three Months Ended January 31,
($ in millions) 2018 2017 Increase / (Decrease)
Revenues $ 206.3
$ 67.0
$ 139.3
NM*
Operating profit 9.2
3.6
5.6
NM*
Operating profit margin 4.4 % 5.4 % (99) bps

*Not meaningful

Education revenues increased by $139.3 million during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. 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 profit 5.5
7.9
(2.4 ) (30.5)%
Operating profit margin 5.3 % 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 profit 2.7
2.5
0.2
10.1%
Operating profit margin 4.0 % 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.~~revenue compression resulting from Pandemic-related disruptions.

~~Operating profit~~


Corporate
	Six Months Ended April 30,
($ in millions)	2021		2020		Increase
Corporate expenses	$	(123.4)	$	(72.8)	$	50.6	69.4%

Corporate expenses increased by ~~$0.2~~$50.6 million, or ~~10.1%~~69.4%, during the ~~three~~six months ended ~~January 31, 2018,~~April 30, 2021, as compared to the ~~three~~six 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.~~April 30, 2020. The increase in corporate expenses was primarily ~~related to~~ attributable to:

•a ~~$9.3~~$32.6 million increase in legal costs and settlements, of which $30 million was attributed to the accrual of a legal reserve for the Bucio case;

•an $18.3 million increase in compensation and related expenses, primarily driven by updated assessments regarding financial performance target achievements in connection with certain performance share awards; during the six months ended April 30, 2020, we recorded a reversal of shared-based compensation expense based upon our then current assessment of probable financial achievements for such awards; and

•a $17.2 million increase in certain technology projects and other enterprise initiatives, including marketing events.

This increase was partially offset by:

•a $5.0 million decrease in restructuring and related ~~costs as~~ expenses due to the completion of our restructuring program in fiscal year 2020;

•a ~~result of the GCA acquisition and a $3.7~~$4.8 million ~~increase~~decrease in ~~costs primarily associated with~~ ~~2020Vision~~ ~~technology investments. This~~ ~~increase~~ ~~was partially offset by a $3.0 million lower~~ self-insurance ~~adjustment~~reserve adjustments related to prior year claims as a result of an actuarial ~~review~~evaluations completed in the ~~three~~six months ended ~~January 31, 2018~~.April 30, 2021;

•the absence of a $3.9 million medical and dental insurance expense as a result of an actuarial evaluation performed in the prior year; and

•the absence of a $1.3 million reserve established for an outstanding client receivable that was being litigated in the prior year and deemed to be uncollectible.

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 ~~will~~may also include strategic ~~acquisitions~~acquisitions. 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 facility~~Credit 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-term~~new 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 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 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 April 30, 2021, we were in compliance with these covenants and expect to be in compliance in the foreseeable future.

During the three and six months ended April 30, 2021, we made principal payments of $30.0 million and $60.0 million, respectively, under the term loan. At April 30, 2021, the total outstanding borrowings under our Credit

Facility in the form of cash borrowings and standby letters of credit were $645.1 million. At April 30, 2021, we had up to $622.1 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 on~~monitor 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 capital~~foreign earnings to fund future non-U.S. growth and ~~long-term funding~~expansion, 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 ~~management~~Tax 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~~

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 ~~authorized~~replaced 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. Purchases~~stock (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 program~~2019 Share Repurchase Program may be suspended or discontinued at any time without prior notice. ~~There were no share~~Due 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,~~April 30, 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 was $33.7 million during the three months ended January 31, 2018. We expect operating activities of continuing operations to provide positive cash flows for 2018. 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,							Six Months Ended April 30,
(in millions)	2018			2017			(in millions)	2021		2020
Net cash provided by (used in) operating activities	$	33.7		$	(11.1	)
Net cash provided by operating activities							Net cash provided by operating activities	$	171.2	$	128.0
Net cash used in investing activities	(15.3		)	(29.1		)	Net cash used in investing activities	(13.4)		(9.3)
Net cash (used in) provided by financing activities	(14.3		)	27.0			Net cash (used in) provided by financing activities	(118.5)		376.8

Operating Activities

Net cash provided by operating activities ~~was $33.7~~increased by $43.2 million during the ~~three~~six months ended ~~January 31, 2018,~~April 30, 2021, as compared to ~~net cash used in operating activities of $11.1 million during~~ the ~~three~~six months ended ~~January 31, 2017, a change of $44.8 million.~~April 30, 2020. This ~~change~~increase was primarily related to the timing of

vendor payments and client receivable collections ~~but was partially offset by~~and the ~~timing~~deferred remittance of ~~vendor payments.~~payroll taxes under the CARES Act.

Investing Activities

Net cash used in investing activities ~~decreased~~increased by ~~$13.8~~$4.1 million during the ~~three~~six months ended ~~January 31, 2018,~~April 30, 2021, as compared to the ~~three~~six months ended ~~January 31, 2017. The decrease~~April 30, 2020. This increase was primarily related to the absence of proceeds from the redemption of an ~~$16.2 million year-over-year decrease~~auction 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~~$118.5 million during the ~~three~~six months ended ~~January 31, 2018,~~April 30, 2021, as compared ~~with~~to net cash provided by financing activities of ~~$27.0~~$376.8 million during the ~~three~~six months ended ~~January 31, 2017, a change of $41.3 million. The change was related~~April 30, 2020. During the six months ended April 30, 2020, we borrowed approximately $300 million under our Credit Facility in response to ~~lower~~uncertainty resulting from the Pandemic. During the six months ended April 30, 2021, we had net repayments on borrowings from our Credit Facility of ~~$36.4~~$80.2 million.

Contingencies

For disclosures on ~~behalf of a class or purported class of employees.~~

~~At January 31, 2018, the total amount accrued for all probable litigation losses where a reasonable estimate of the loss could be made was $10.0 million.~~

~~For additional information about our~~ contingencies, see Note ~~10,~~8, “Commitments and Contingencies,” of the Notes to Consolidated Financial Statements included in ~~the Financial Statements.~~Part I, Item 1 of this Form 10-Q.

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.

~~Recent~~Recently Issued Accounting Pronouncements

Accounting Standard Update(s)

~~Description~~Topic

Summary

Effective 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 Income~~2021-01

Reference Rate Reform (Topic ~~220)~~848): ~~Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.~~Scope

This ASU, ~~permits an entity to reclassify~~issued 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 through 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 aligns~~issued in March 2020, provides optional expedients to assist with the discontinuance of LIBOR. The expedients allow companies to ease the potential accounting ~~rules with~~burden 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, we~~reference 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 ASU was effective upon issuance and can be applied prospectively to contract modifications made and hedging relationships entered into or evaluated through December 31, 2022.

~~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 815

This ASU, ~~introduces~~issued in January 2020, clarifies the interaction between Topic 321, Topic 323, and Topic 815. The guidance, among other things, states that a ~~new principles-based framework~~company should consider observable transactions that require it to either apply or discontinue the equity method of accounting for ~~revenue recognition and disclosure. The core principle~~the purposes of applying the ~~standard is when an entity transfers goods~~fair value measurement alternative immediately before applying or ~~services~~upon 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 ~~standard~~update will be applied ~~as a full retrospective~~prospectively.

2019-12

Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

This 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.

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 completed~~To support the ~~acquisition~~growth 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 to~~standardize our ~~control over~~ financial ~~reporting. Additionally,~~systems, we continue to ~~migrate many~~update several key platforms, including our human resources information systems, enterprise resource planning 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~~second quarter of ~~2018~~2021 identified in connection with the evaluation required by ~~Rule~~Rules 13a-15(d) and 15d-15(d) of the Exchange Act that ~~has~~have 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 second 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 ~~authorized~~replaced 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. ~~During~~These purchases may take place on the ~~three months ended January 31, 2018, there were no~~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 ~~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,~~April 30, 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.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS.

(a) Exhibits



Exhibit No.		Exhibit Description
~~10.1*‡~~10.1†		Statement of Terms and Conditions Applicable to Awards Granted to Employees Pursuant to the 2021 Equity and Incentive Compensation Plan
10.2†		Statement of Terms and Conditions Applicable to Awards Granted to Non-Employee Directors Pursuant to the 2021 Equity and Incentive Compensation Plan
10.3†		Change in Control Agreement, dated as of April 1, 20 1 1, by and between ABM Industries Incorporated and Dean A. Chin
10.4†		Change in Control Agreement, dated as of February 8, 2020, by and between ABM Industries Incorporated and Joshua H. Feinberg
10.5†		Amendment to Executive Employment Agreement, dated as of November 1 ~~2017,~~, 2020 , by and between ABM Industries Incorporated and Scott ~~Giacobbe.~~Giacobbe
~~10.2*‡~~10.6†		Executive Employment Agreement, dated as of November 1 , 2020, by and between ABM Industries Incorporated and Earl R. Ellis
10.7†		Change in Control Agreement, dated as of November ~~1, 2017,~~30, 2020, by and between ABM Industries Incorporated and Earl R. Ellis
10.8†		Release Agreement, dated as of May 27, 2021, by and between ABM Industries Incorporated and Scott ~~Giacobbe.~~Giacobbe
~~10.3*‡~~31.1†		~~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.INS~~101.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.SCH~~101.SCH†		Inline XBRL Taxonomy Extension Schema Document
~~101.CAL~~101.CAL†		Inline XBRL Taxonomy Calculation Linkbase Document
~~101.DEF~~101.DEF†		Inline XBRL Taxonomy Extension Definition Linkbase Document
~~101.LAB~~101.LAB†		Inline XBRL Taxonomy Label Linkbase Document
~~101.PRE~~101.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

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, 2018~~June 9, 2021						/s/ ~~D. Anthony Scaglione~~Earl R. Ellis
						~~D. Anthony Scaglione~~ Earl R. Ellis Executive Vice President and Chief Financial Officer (Duly Authorized Officer)



~~March 7, 2018~~June 9, 2021						/s/ Dean A. Chin
						Dean A. Chin Senior Vice President, Controller and Chief Accounting Officer ~~and Corporate Controller~~ (Principal Accounting Officer)

3547



(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



	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



	Three Months Ended
(in millions)	January 31, 2017
Pro forma revenue	$	1,578.9
Pro forma income from continuing operations	14.5



(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