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 JanuaryJuly 31, 20182023
or
¨☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to  
Commission File Number: 1-8929
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ABM INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
abmcollabicona09.jpgabmbuildingvalue.jpg
94-1369354
(State or other jurisdiction of

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

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


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

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

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

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



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



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

☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerþ☑Accelerated filer¨☐Non-accelerated filer¨☐Smaller reporting company¨☐Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes   o☐  No þ☑
Number of shares of the registrant’s common stock outstanding as of March 1, 2018: 65,700,002
September 6, 2023: 65,532,154




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
1923
Item 3. Quantitative and Qualitative Disclosures About Market Risk
3240
Item 4. Controls and Procedures
3240
PART II. OTHER INFORMATION
3240
Item 1. Legal Proceedings
3240
Item 1A. Risk Factors
3240
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
3340
Item 3. Defaults Upon Senior Securities
3341
Item 4. Mine Safety Disclosures
3341
Item 5. Other Information
3341
Item 6. Exhibits
3442
SIGNATURES
3543



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 may not realize the growth opportunities and cost synergies that are anticipated from the acquisition of GCA Services Group (“GCA”).
We have incurred a substantial amount of debt to complete the acquisition of GCA. To service•Our success depends on our debt we will require a significant amount of cash. Our ability to generate cash depends on many factors beyond our control. We also depend on the profitabilitygain profitable business despite competitive market pressures.
•Our results of our subsidiaries to satisfy our cash needs. If we cannot generate the required cash, weoperations can be adversely affected by labor shortages, turnover, and labor cost increases.
•We may not be able to make the necessary payments requiredattract and retain qualified personnel and senior management we need to servicesupport our indebtedness or we may be required to suspend certain discretionary payments, including our dividend.business.
Changes•Investments in and changes to our businesses, operating structure, financial reporting structure, or personnel relating to our ELEVATE strategy, including the implementation of our 2020Visionstrategic transformation initiative, including our move to our Enterprise Services Center,transformations, enhanced business processes, and technology initiatives, may not have the desired effects on our financial condition and results of operations.
•Our success depends on our ability to gain profitable business despite competitive pressures and to preserve long-term client relationships.relationships is essential to our continued success.
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•Negative changes in general economic conditions, such as recessionary pressures, durable and non-durable goods pricing, changes in energy prices, or changes in consumer goods pricing, as well as potential declines in our classclients’ office spaces, could reduce the demand for facility services and, representative actionsas a result, reduce our earnings and adversely affect our financial condition.
•Acquisitions, divestitures, and other lawsuits alleging various claimsstrategic transactions could cause usfail to incur substantial liabilities.achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations.
•We insuremay experience breaches of, or disruptions to, our information technology systems or those of our third-party providers or clients, or other compromises of our data that could adversely affect our business.
•We manage our insurable risks through a combination of insurancethird-party purchased policies and self-insurance, and we retain a substantial portion of the risk associated with expected losses under these programs, which exposes us to volatility associated with those risks, including the possibility that changes in estimates ofto our ultimate insurance lossesloss reserves could result in a material chargecharges against our earnings.
•Our risk management and safety programs may not have the intended effect of reducing our liability for personal injury or property loss.
Impairment of goodwill•Unfavorable developments in our class and long-lived assetsrepresentative actions and other lawsuits alleging various claims could have a material adverse effect on our financial condition and results of operations.cause us to incur substantial liabilities.
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.
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 the U.S. Tax Cuts and Jobs Act of 2017, which effected significant changes to the U.S. corporate income tax system.
•We could beare subject to cyber-security risks, information technology interruptions,extensive legal and business continuity risks.regulatory requirements, which could limit our profitability by increasing the costs of legal and regulatory compliance.
•A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities in relationshiprelation to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities, and union-organizingunion organizing drives.
•Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences could adversely affect our results of operations.
•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
1

operating results and investors’investor perceptions of our companyCompany and as a result may have a material adverse effect on the value of our common stock.
•Our business may be negatively impacted by adverse weather conditions.

•Catastrophic events, disasters, pandemics, and terrorist attacks could disrupt our services.
•Ongoing impacts of the COVID-19 pandemic may adversely affect our liquidity, capital resources, supply chain, operations, and revenue.
•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, 20172022, and in other reports (including all amendments to those reports) we file from time to time with the Securities and Exchange Commission (including all amendments to those reports)(“SEC”).
We urge readers to consider these risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

2

PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except share and per share amounts)January 31, 2018 October 31, 2017(in millions, except share and per share amounts)July 31, 2023October 31, 2022
ASSETS   ASSETS
Current assets   Current assets
Cash and cash equivalents$68.6
 $62.8
Cash and cash equivalents$97.7 $73.0 
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 $23.0 and $22.6
at July 31, 2023 and October 31, 2022, respectively
Trade accounts receivable, net of allowances of $23.0 and $22.6
at July 31, 2023 and October 31, 2022, respectively
1,331.8 1,278.7 
Costs incurred in excess of amounts billedCosts incurred in excess of amounts billed147.2 75.8 
Prepaid expenses97.4
 101.8
Prepaid expenses87.2 82.1 
Other current assets32.1
 32.8
Other current assets65.4 51.6 
Total current assets1,218.1
 1,235.5
Total current assets1,729.2 1,561.2 
Other investments18.8
 17.6
Other investments27.9 14.5 
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 $323.6 and $296.9
at July 31, 2023 and October 31, 2022, respectively
Property, plant and equipment, net of accumulated depreciation of $323.6 and $296.9
at July 31, 2023 and October 31, 2022, respectively
126.1 125.4 
Right-of-use assetsRight-of-use assets107.2 115.2 
Other intangible assets, net of accumulated amortization of $519.1 and $459.8
at July 31, 2023 and October 31, 2022, respectively
Other intangible assets, net of accumulated amortization of $519.1 and $459.8
at July 31, 2023 and October 31, 2022, respectively
321.5 378.5 
Goodwill1,871.2
 1,864.2
Goodwill2,495.6 2,485.6 
Other noncurrent assets143.1
 122.1
Other noncurrent assets162.3 188.5 
Total assets$3,797.0
 $3,812.6
Total assets$4,970.0 $4,868.9 
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 debt, netCurrent portion of debt, net$31.5 $181.5 
Trade accounts payable203.5
 230.8
Trade accounts payable304.4 315.5 
Accrued compensation143.1
 159.9
Accrued compensation212.7 246.6 
Accrued taxes—other than income62.5
 52.5
Accrued taxes — other than incomeAccrued taxes — other than income49.6 124.7 
Insurance claims114.1
 112.5
Insurance claims177.7 171.4 
Income taxes payable5.0
 13.4
Income taxes payable7.3 6.6 
Current portion of lease liabilitiesCurrent portion of lease liabilities31.7 30.3 
Other accrued liabilities164.4
 171.8
Other accrued liabilities361.6 276.5 
Total current liabilities699.6
 757.8
Total current liabilities1,176.5 1,353.2 
Long-term debt, net1,173.4
 1,161.3
Long-term debt, net1,292.7 1,086.3 
Long-term lease liabilitiesLong-term lease liabilities93.7 104.5 
Deferred income tax liability, net32.8
 57.3
Deferred income tax liability, net87.0 89.7 
Noncurrent insurance claims387.3
 382.9
Noncurrent insurance claims400.4 387.7 
Other noncurrent liabilities63.5
 61.3
Other noncurrent liabilities55.1 126.0 
Noncurrent income taxes payable23.7
 16.3
Noncurrent income taxes payable4.3 4.2 
Total liabilities2,380.2
 2,436.9
Total liabilities3,109.8 3,151.7 
Commitments and contingencies

 

Commitments and contingencies
Stockholders’ Equity   Stockholders’ Equity
Preferred stock, $0.01 par value; 500,000 shares authorized; none issued—
 —
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
Common stock, $0.01 par value; 100,000,000 shares authorized;
65,519,986 and 65,587,894 shares issued and outstanding at
July 31, 2023 and October 31, 2022, respectively
Common stock, $0.01 par value; 100,000,000 shares authorized;
65,519,986 and 65,587,894 shares issued and outstanding at
July 31, 2023 and October 31, 2022, respectively
0.7 0.7 
Additional paid-in capital677.1
 675.2
Additional paid-in capital660.7 675.5 
Accumulated other comprehensive income (loss), net of taxes2.7
 (20.3)
Accumulated other comprehensive loss, net of taxesAccumulated other comprehensive loss, net of taxes(2.2)(16.2)
Retained earnings736.2
 720.1
Retained earnings1,201.0 1,057.2 
Total stockholders’ equity1,416.8
 1,375.7
Total stockholders’ equity1,860.1 1,717.2 
Total liabilities and stockholders’ equity$3,797.0
 $3,812.6
Total liabilities and stockholders’ equity$4,970.0 $4,868.9 
See accompanying notes to unaudited consolidated financial statements.

3

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
 Three Months Ended January 31,
(in millions, except per share amounts)2018 2017
Revenues$1,588.3
 $1,326.7
Operating expenses1,429.3
 1,195.1
Selling, general and administrative expenses109.0
 97.3
Restructuring and related expenses14.3
 5.0
Amortization of intangible assets16.2
 5.5
Operating profit19.5
 23.8
Income from unconsolidated affiliates, net0.5
 1.4
Interest expense(14.3) (3.2)
Income from continuing operations before income taxes5.8
 22.0
Income tax benefit (provision)22.2
 (5.9)
Income from continuing operations28.0
 16.1
Loss from discontinued operations, net of taxes(0.1) (72.9)
Net income (loss)27.8
 (56.8)
Other comprehensive income (loss)   
Unrealized gains on interest rate swaps, net of taxes of $5.0 and $1.1, respectively13.6
 1.6
Foreign currency translation9.4
 3.3
Comprehensive income (loss)$50.9
 $(51.9)
Net income (loss) per common share — Basic   
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)
Weighted-average common and common equivalent shares outstanding   
Basic65.9
 56.0
Diluted66.3
 56.6
Dividends declared per common share$0.175
 $0.170
Three Months Ended July 31,Nine Months Ended July 31,
(in millions, except per share amounts)2023202220232022
Revenues$2,028.2 $1,961.4 $6,003.5 $5,795.5 
Operating expenses1,765.8 1,696.4 5,230.7 5,004.4 
Selling, general and administrative expenses104.3 158.6 411.5 468.5 
Amortization of intangible assets19.2 17.7 58.2 52.9 
Operating profit138.9 88.7 303.1 269.7 
Income from unconsolidated affiliates1.2 0.8 3.0 1.8 
Interest expense(20.9)(11.1)(61.8)(25.2)
Income before income taxes119.3 78.3 244.2 246.3 
Income tax provision(21.2)(21.5)(55.7)(64.8)
Net income98.1 56.8 188.5 181.6 
Other comprehensive income
Interest rate swaps12.8 (5.7)(2.7)6.2 
Foreign currency translation and other3.1 (3.7)15.9 (15.1)
Income tax (provision) benefit(3.6)1.5 0.7 (1.7)
Comprehensive income$110.4 $48.9 $202.4 $171.1 
Net income per common share
Basic$1.48 $0.85 $2.84 $2.70 
Diluted$1.47 $0.85 $2.83 $2.68 
Weighted-average common and common equivalent
   shares outstanding
Basic66.3 66.8 66.3 67.3 
Diluted66.6 67.2 66.7 67.7 
See accompanying notes to unaudited consolidated financial statements.



4

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three Months Ended July 31,Nine Months Ended July 31,
2023202220232022
(in millions, except per share amounts)SharesAmountSharesAmountSharesAmountSharesAmount
Common Stock
Balance, beginning of period66.1 $0.7 66.8 $0.7 65.6 $0.7 67.3 $0.7 
Stock issued under employee stock purchase and share-based compensation plans— — 0.1 — 0.6 — 0.6 — 
Repurchase of common stock(0.6)— (0.7)— (0.6)— (1.7)— 
Balance, end of period65.5 0.7 66.1 0.7 65.5 0.7 66.1 0.7 
Additional Paid-in Capital
Balance, beginning of period679.2 716.4 675.5 750.9 
Stock issued (taxes withheld) under employee stock purchase and share-based compensation plans, net0.9 (1.3)(10.0)(9.4)
Share-based compensation expense7.6 7.5 22.2 24.4 
Repurchase of common stock(27.1)(31.2)(27.1)(74.5)
Balance, end of period660.7 691.4 660.7 691.4 
Accumulated Other Comprehensive Loss, Net of Taxes
Balance, beginning of period(14.6)(25.2)(16.2)(22.5)
Other comprehensive income (loss)12.4 (8.1)14.1 (10.7)
Balance, end of period(2.2)(33.3)(2.2)(33.3)
Retained Earnings
Balance, beginning of period1,117.5 977.7 1,057.2 880.2 
Net income98.1 56.8 188.5 181.6 
Dividends
Common stock ($0.220 and $0.195 per share)(14.5)(12.9)(43.5)(39.0)
Stock issued under share-based compensation
    plans		(0.2)(0.2)(1.3)(1.3)
Balance, end of period1,201.0 1,021.4 1,201.0 1,021.4 
Total Stockholders’ Equity$1,860.1 $1,680.3 $1,860.1 $1,680.3 

See accompanying notes to unaudited consolidated financial statements.
5

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended January 31,Nine Months Ended July 31,
(in millions)2018 2017(in millions)20232022
Cash flows from operating activities   Cash flows from operating activities
Net income (loss)$27.8
 $(56.8)
Loss from discontinued operations, net of taxes0.1
 72.9
Income from continuing operations28.0
 16.1
Adjustments to reconcile income from continuing operations to net cash provided by (used in) operating activities of continuing operations   
Net incomeNet income$188.5 $181.6 
Adjustments to reconcile net income to net cash provided by operating
activities		Adjustments to reconcile net income to net cash provided by operating
activities
Depreciation and amortization29.0
 14.0
Depreciation and amortization91.3 82.4 
Deferred income taxes(30.3) 9.9
Deferred income taxes(2.0)39.7 
Share-based compensation expense3.8
 3.6
Share-based compensation expense22.2 24.4 
Provision for bad debt2.6
 0.4
Provision for/(Recovery of) bad debtProvision for/(Recovery of) bad debt0.6 (2.0)
Amortization of accumulated other comprehensive gain on interest rate swapsAmortization of accumulated other comprehensive gain on interest rate swaps— (4.3)
Discount accretion on insurance claims0.2
 0.1
Discount accretion on insurance claims0.3 — 
Gain on sale of assets(0.1) (0.1)
Income from unconsolidated affiliates, net(0.5) (1.4)
Loss/(Gain) on sale of assetsLoss/(Gain) on sale of assets0.1 (0.8)
Change in fair value of contingent considerationChange in fair value of contingent consideration(45.6)— 
Income from unconsolidated affiliatesIncome from unconsolidated affiliates(3.0)(1.8)
Distributions from unconsolidated affiliates—
 0.8
Distributions from unconsolidated affiliates1.9 1.8 
Changes in operating assets and liabilities, net of effects of acquisitions   
Trade accounts receivable15.7
 (65.4)
Changes in operating assets and liabilitiesChanges in operating assets and liabilities
Trade accounts receivable and costs incurred in excess of amounts billedTrade accounts receivable and costs incurred in excess of amounts billed(125.1)(129.4)
Prepaid expenses and other current assets1.4
 (2.4)Prepaid expenses and other current assets(22.3)(8.0)
Right-of-use assetsRight-of-use assets8.0 10.0 
Other noncurrent assets(1.7) (7.5)Other noncurrent assets25.0 (6.6)
Trade accounts payable and other accrued liabilities(33.2) 18.1
Trade accounts payable and other accrued liabilities(45.9)(178.0)
Long-term lease liabilitiesLong-term lease liabilities(10.8)(10.1)
Insurance claims5.8
 8.3
Insurance claims18.7 (18.8)
Income taxes payable10.9
 (11.0)
Income taxes payable, netIncome taxes payable, net4.4 (10.3)
Other noncurrent liabilities2.2
 6.8
Other noncurrent liabilities(2.2)(66.5)
Total adjustments5.8
 (25.8)Total adjustments(84.4)(278.3)
Net cash provided by (used in) operating activities of continuing operations33.8
 (9.7)
Net cash used in operating activities of discontinued operations(0.1) (1.4)
Net cash provided by (used in) operating activities33.7
 (11.1)Net cash provided by (used in) operating activities104.1 (96.7)
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(34.6)(37.7)
Proceeds from sale of assets0.3
 0.5
Proceeds from sale of assets2.0 4.1 
Adjustments to sale of business(1.9) —
Purchase of businesses, net of cash acquired(2.4) (18.6)Purchase of businesses, net of cash acquired— (56.7)
Investments in unconsolidated affiliates(0.6) —
Investments in equity securitiesInvestments in equity securities(12.4)(3.0)
Net cash used in investing activities(15.3) (29.1)Net cash used in investing activities(45.0)(93.3)
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(11.3)(10.7)
Repurchases of common stock—
 (7.9)Repurchases of common stock(27.1)(74.5)
Dividends paid(11.5) (9.4)Dividends paid(43.5)(39.0)
Deferred financing costs paid(0.1) —
Borrowings from credit facility304.3
 207.4
Repayment of borrowings from credit facility(303.0) (169.7)
Borrowings from debtBorrowings from debt794.0 990.1 
Repayment of borrowings from debtRepayment of borrowings from debt(738.4)(684.5)
Changes in book cash overdrafts(1.2) 5.1
Changes in book cash overdrafts(10.5)5.4 
Financing of energy savings performance contracts—
 2.6
Financing of energy savings performance contracts0.5 8.7 
Repayment of capital lease obligations(0.8) (0.1)
Repayment of finance lease obligationsRepayment of finance lease obligations(2.2)(1.2)
Net cash (used in) provided by financing activities(14.3) 27.0
Net cash (used in) provided by financing activities(38.4)194.2 
Effect of exchange rate changes on cash and cash equivalents1.7
 0.5
Effect of exchange rate changes on cash and cash equivalents3.9 (3.2)
Net increase (decrease) in cash and cash equivalents5.8
 (12.7)
Change in cash related to assets held for sale—
 (0.7)
Net increase in cash and cash equivalentsNet increase in cash and cash equivalents24.7 1.0 
Cash and cash equivalents at beginning of year62.8
 56.0
Cash and cash equivalents at beginning of year73.0 62.8 
Cash and cash equivalents at end of period$68.6
 $42.6
Cash and cash equivalents at end of period$97.7 $63.9 
See accompanying notes to unaudited consolidated financial statements.

6

ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY AND NATURE OF OPERATIONS
ABM Industries Incorporated, which operates through its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”), is a leading provider of integrated facility services with a mission to make a difference, every person, every day.day. We are organized into fivefour industry groups and one Technical Solutions segment:
fy2018industrygroups.jpgFN1.jpg
Through these groups, we offer janitorial, facilities engineering, parking, and specialized mechanical and electrical technical solutions, on a standalone basis or in combination with other services.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with (i) United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and (ii) the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of our management, our unaudited consolidated financial statements and accompanying notes (the “Financial Statements”) include all normal recurring adjustments that are necessary for the fair statement of the interim periods presented. Interim results of operations are not necessarily indicative of results for the full year. The Financial Statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) in our Annual Report on Form 10-K for the fiscal year ended October 31, 2017.2022. Unless otherwise indicated, all references to years are to our fiscal year,years, which endsend on October 31.
Acquisition of GCA Services Group
On September 1, 2017 (the “Acquisition Date”), we completed the acquisition of GCA Services Group (“GCA”). Accordingly, 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. 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. 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 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 impact on our previously reported consolidated balance sheets, statements of comprehensive income (loss), or statements of cash flows. See Note 12, “Segment Information,” for further details.

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.
Employee Retention Tax Credit
In 2020, the U.S. government enacted the Coronavirus Aid, Relief and Security Act (the “CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The CARES Act provides tax relief, along with other stimulus measures, including a provision for an Employee Retention Credit (“ERC”). ERC is a refundable tax credit for employers who kept employees on their payroll during the COVID-19 pandemic.
During the three and nine months ended July 31, 2023, we received and recorded an employee retention credit totaling $22.4 million, within the “Selling, general and administrative expenses” on the unaudited Consolidated Statements of Comprehensive Income.
Management Reimbursement Revenue by Segment
We operate certain parking facilities under managed locationmanagement reimbursement arrangements. Under these arrangements, we manage the parking facilityfacilities for a management feefees and pass through the revenuerevenues and expenses associated with the facilityfacilities to the owner.owners. These revenues and expenses are reported in equal amounts as costs reimbursed from our managed locations:locations. Management reimbursement revenue for the three and nine months ended
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 Three Months Ended January 31,
(in millions)2018 2017
Business & Industry$63.0
 $57.8
Aviation25.5
 16.5
Healthcare4.9
 4.6
Total$93.4
 $78.9
July 31, 2023, was $77.9 million and $223.8 million, respectively. Management reimbursement revenue for the three and nine months ended July 31, 2022, was $72.8 million and $204.1 million, respectively.
Recently Adopted Accounting Standards
In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides optional expedients to assist with the discontinuance of London Interbank Offered Rate (“LIBOR”). The expedients allow companies to ease the potential accounting burden when modifying contracts and hedging relationships that use LIBOR as a reference rate, if certain criteria are met. In January 2021, FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. This ASU clarifies that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions under Topic 848. Effective November 1, 2022, we applied available practical expedients under Topic 848 to account for modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes have been made to applicable debt and derivative contracts as if they were not substantial.


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3. ACQUISITIONS AND DISPOSITIONS

Acquisition of GCA during 2017
RavenVolt
On September 1, 2017,2022, we acquiredcompleted the acquisition of all of the outstanding stockequity interests of GCA,RavenVolt, Inc. (“RavenVolt”), a nationwide provider of integratedadvanced turn-key microgrid systems utilized by diversified commercial and industrial customers, national retailers, utilities, and municipalities. RavenVolt’s operations are included within our Technical Solutions segment. The transaction met the definition of a business combination. We applied the acquisition method of accounting.
The initial purchase price for the acquisition was approximately $170.0 million in cash at closing (subject to customary working capital and net debt adjustments) plus the potential of post-closing contingent consideration of up to $280.0 million. The post closing contingent consideration is payable in cash in calendar years 2024, 2025, and 2026 if RavenVolt’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the RavenVolt merger agreement, meets or exceeds certain defined targets. The maximum contingent consideration that is payable in calendar years 2024, 2025, and 2026 is $75.0 million, $75.0 million, and $130.0 million, respectively. If the EBITDA achieved for calendar years 2023–2025 cumulatively meets the defined EBITDA targets, the entire $280.0 million would be paid in calendar year 2026, minus any earn-out payments made in 2024 and 2025. The estimate of the fair value of the contingent consideration on the date of acquisition, was $59.0 million.
At July 31, 2023, the estimate of the fair value of the contingent consideration was $13.4 million. The change in fair value of $45.6 million is recognized within the “Selling, general and administrative expenses” of the unaudited Consolidated Statements of Comprehensive Income.
The assets acquired and liabilities assumed were recognized at their acquisition date fair values. The acquisition accounting is subject to change as the Company obtains additional information during the measurement period about the facts and circumstances that existed as of the acquisition date. The final acquisition accounting may include changes to intangible assets, and deferred taxes within the measurement period not to exceed one year from the acquisition date. Goodwill is not deductible for income tax purposes. As of July 31, 2023, we recorded preliminary goodwill and intangibles of $207.4 million and $16.7 million, respectively. The total assets acquired, excluding goodwill and intangibles, and liabilities assumed amounted to $49.3 million and $44.5 million, respectively.
The unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended July 31, 2023, include revenues attributable to RavenVolt of $18.2 million and $66.3 million, respectively, and operating loss of $2.3 million and $3.1 million, respectively.
Acquisition of Momentum
Effective April 7, 2022, we acquired Maybin Support Services Limited, Momentum Support Limited (UK), and Momentum Property Support Services Limited (collectively “Momentum”), a leading independent provider of facility services, to educational institutionsprimarily janitorial, across the Republic of Ireland and commercial facilities,Northern Ireland, for a purchase price of approximately $1.3 billion.$54.8 million. As described in Note 12, “Segment Information,”of April 7, 2023, we integrated GCA’s operations into our industry group model effective November 1, 2017. As a result ofhave completed the acquisition we are now a leading facilities services provider in the education market.

Consideration Transferred
(in millions, except per share data)  
Shares of ABM common stock, net of shares withheld for taxes 9.4
ABM common stock closing market price at acquisition date $44.63
Fair value of ABM common stock at closing 421.3
Cash consideration 839.9
Total consideration transferred $1,261.3

Preliminary Purchase Price Allocation

Our preliminary purchase price allocation is based on information that is currently available,accounting, and we are continuing to evaluate the underlying inputsrecorded goodwill and assumptions used in our valuations. Accordingly, considerationintangibles of $42.9 million and purchase price allocations are subject to, among other items: working capital adjustments; further analysis 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.


The following table presents our preliminary estimates of fair values of the 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.

 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 trade accounts receivable was $122.0$10.4 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 and 2 years for trade names.

(3) respectively. 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. The total assets acquired, excluding goodwill and intangibles, and liabilities assumed amounted to $20.4 million and $18.9 million, respectively. There were no material changes made to ABM’s preliminary acquisition accounting.

Disposition of Assets
Financial Information

For the three months endedOn January 31, 2018, we recorded revenue related to GCA2022, the Company sold a group 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 adjustmentscustomer contracts for the estimated amortization of intangible assets, interest expense, and the income tax impact of the pro forma adjustments at the statutory rate of 41%. These pro forma results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies. Accordingly, the pro forma information is not necessarily indicative of the results that would have been achieved if the acquisition had been effective on November 1, 2015.
 Three Months Ended
(in millions)January 31, 2017
Pro forma revenue$1,578.9
Pro forma income from continuing operations14.5

Other 2017 Acquisitions

Effective December 1, 2016, we acquired all of the outstanding stock of Mechanical Solutions, Inc. (“MSI”), a provider of specialized HVAC, chiller, and plumbing services, for a purchase price of $12.6 million. The purchase price includes up to $1.0 million of undiscounted contingent consideration that is based 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, the operations of MSI are included inhealthcare technology management within our Technical Solutions segment.segment for $8.5 million and recognized a gain of $7.6 million during the nine months ended July 31, 2022, which is included in the “Selling, general and administrative expenses” in the accompanying unaudited Consolidated Statements of Comprehensive Income.

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Effective December 1, 2016, we also acquired all

4. REVENUES
Disaggregation of Revenues
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 stockservices provided by each of OFJ Connections Ltd (“OFJ”),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 revenues and cash flows are affected by economic factors. Our reportable segments are B&I, M&D, Education, Aviation, and Technical Solutions, as described in Note 12, “Segment Information.”
Three Months Ended July 31, 2023Nine Months Ended July 31, 2023
(in millions)B&IM&DEducationAviationTechnical
Solutions		TotalB&IM&DEducationAviationTechnical
Solutions		Total
Major Service Line
Janitorial(1)
$687.5 $334.8 $218.6 $36.9 $— $1,277.8 $2,047.8 $988.6 $594.5 $109.0 $— $3,740.0 
Parking(2)
106.1 9.9 0.2 80.6 — 196.9 303.3 31.3 0.7 247.1 — 582.3 
Facility Services(3)
227.7 37.2 0.3 7.4 — 272.6 705.3 115.7 55.5 24.2 — 900.6 
Building & Energy Solutions(4)
— — — — 167.9 167.9 — — — — 483.4 483.4 
Airline Services(5)
— — — 113.0 — 113.0 — — — 297.2 — 297.2 
Total$1,021.4 $381.9 $219.1 $238.0 $167.9 $2,028.2 $3,056.4 $1,135.5 $650.7 $677.5 $483.4 $6,003.5 
Three Months Ended July 31, 2022Nine Months Ended July 31, 2022
(in millions)B&IM&DEducationAviationTechnical
Solutions		TotalB&IM&DEducationAviationTechnical
Solutions		Total
Major Service Line
Janitorial(1)
$696.2 $311.0 $178.4 $27.5 $— $1,213.1 $2,050.7 $922.3 $534.7 $83.8 $— $3,591.5 
Parking(2)
91.1 8.4 0.1 82.4 — 182.0 259.5 27.9 0.6 237.2 — 525.2 
Facility Services(3)
246.6 38.7 29.0 7.0 — 321.3 756.7 123.9 82.3 20.3 — 983.2 
Building & Energy Solutions(4)
— — — — 158.4 158.4 — — — — 447.2 447.2 
Airline Services(5)
— — — 86.6 — 86.6 — — — 248.4 — 248.4 
Total$1,033.8 $358.1 $207.5 $203.5 $158.4 $1,961.4 $3,067.0 $1,074.1 $617.6 $589.7 $447.2 $5,795.5 
(1) Janitorial arrangements provide a providerwide range of airportessential 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 Topic 853; 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 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.
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(4) Building & Energy Solutions arrangements provide custom energy solutions, including microgrid systems installation, electrical, HVAC, lighting, electric vehicle charging station installation, and other general maintenance and repair services for clients in the United Kingdom, for a purchasepublic 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.
Contract Types
We have arrangements under various contract types, as described in Note 2, “Basis of $6.3 million. As of December 1, 2016, the operations of OFJ are includedPresentation and Significant Accounting Policies,” in our Aviation segment.Annual Report on Form 10-K for the year ended October 31, 2022.

Pro FormaCertain arrangements involve variable consideration (primarily per transaction fees, reimbursable expenses, and Other Supplemental Financial Information
Except for GCA, wesales-based royalties). We do not present pro forma and other financial informationestimate the variable consideration for our other acquisitions,these arrangements; rather, we recognize these variable fees as they are earned. Some of our contracts, often related to Airline Services, may also include performance incentives based on variable performance measures that are ascertained exclusively by future performance and therefore cannot be estimated at contract inception and are recognized as revenue once known and mutually agreed upon. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not considered material business combinations individuallyoccur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current, and forecasted) that is reasonably available to us.
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.
Remaining Performance Obligations
At July 31, 2023, performance obligations that were unsatisfied for which we expect to recognize revenue totaled $283.4 million. We expect to recognize revenue on approximately 75% 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. For these contract types, we apply the practical expedient that permits exclusion of information 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
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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 recognized on a combined basis.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 recognize revenue from the satisfaction of the related performance obligation.
4. RESTRUCTURING AND RELATED COSTSThe following tables present the balances in our contract assets and contract liabilities:
GCA Restructuring
(in millions)July 31, 2023October 31, 2022
Contract assets
Billed trade receivables(1)
$1,164.5 $1,138.8 
Unbilled trade receivables(1)
190.3 162.5 
Costs incurred in excess of amounts billed(2)
147.2 75.8 
Capitalized commissions(3)
30.0 30.9 
Following(1) Included in trade accounts receivable, net, on the acquisitionunaudited Consolidated Balance Sheets. The fluctuations correlate directly to the execution of GCA, duringnew customer contracts and to invoicing and collections from customers in the first quarternormal course of 2018 we initiated a restructuring programbusiness.
(2) Fluctuation is primarily due to achieve cost synergies fromthe timing of payments on our combined operations. We expect our GCA restructuringcontracts measured using the cost-to-cost method of revenue recognition.
(3) Included in other current assets and related activities to be complete byother noncurrent assets on the second half of 2018.
2020Vision Restructuring
unaudited Consolidated Balance Sheets. During the fourth quarternine months ended July 31, 2023, we capitalized $10.3 million of 2015, our Boardnew costs and amortized $11.2 million of Directors approved a comprehensive strategy intended to have a positive transformative effectpreviously capitalized costs. There was no impairment loss recorded on ABM (the “2020Vision”). As part of the 2020Vision, we identified key priorities to differentiate ABMcosts capitalized.
(in millions)Nine Months Ended
July 31, 2023
Contract liabilities(1)
Balance at beginning of period$79.6 
Additional contract liabilities265.7 
Recognition of deferred revenue(207.6)
Balance at end of period$137.7 
(1) Included in other accrued liabilities on 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 Liabilitiesunaudited Consolidated Balance Sheets.
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(in millions) 
Balance,
October 31, 2017
 
Costs Recognized(1)
 Payments Non-Cash Items 
Balance,
January 31, 2018
Employee severance $2.7
 $8.7
 $(3.3) $—
 $8.1
External support fees 2.5
 4.0
 (2.5) —
 4.0
Lease exit 2.8
 0.5
 (0.3) 0.2
 3.2
Other project fees 0.4
 1.0
 (0.6) —
 0.8
Total $8.4
 $14.3
 $(6.7) $0.2
 $16.1
(1) We include these costs within corporate expenses.
Cumulative Restructuring and Related Charges

(in millions)
External Support Fees
Employee Severance
Other Project Fees
Lease Exit Costs
Asset Impairment
Total
GCA
$2.0

$10.5

$0.8

$—

$—

$13.3
2020 Vision

30.0

13.7

10.6

6.3

4.7

65.1
Total
$32.0

$24.2

$11.4

$6.3

$4.7

$78.4


5. NET INCOME PER COMMON SHARE
Basic and Diluted Net Income Per Common Share Calculations
Three Months Ended July 31,Nine Months Ended July 31,
(in millions, except per share amounts)2023202220232022
Net income$98.1 $56.8 $188.5 $181.6 
Weighted-average common and common
  equivalent shares outstanding — Basic
66.3 66.8 66.3 67.3 
Effect of dilutive securities
Restricted stock units0.2 0.3 0.2 0.2 
Performance shares0.1 0.1 0.1 0.1 
Weighted-average common and common
  equivalent shares outstanding — Diluted
66.6 67.2 66.7 67.7 
Net income per common share
Basic$1.48 $0.85 $2.84 $2.70 
Diluted$1.47 $0.85 $2.83 $2.68 
 Three Months Ended January 31,
(in millions, except per share amounts)2018 2017
Income from continuing operations$28.0
 $16.1
Loss from discontinued operations, net of taxes(0.1) (72.9)
Net income (loss)$27.8
 $(56.8)
    
Weighted-average common and common equivalent shares outstanding — Basic65.9
 56.0
Effect of dilutive securities   
Restricted stock units0.2
 0.3
Stock options0.1
 0.2
Performance shares0.1
 0.1
Weighted-average common and common equivalent shares outstanding — Diluted66.3
 56.6
    
Net income (loss) per common share — Basic   
Income from continuing operations$0.42
 $0.29
Loss from discontinued operations—
 (1.30)
Net income (loss)$0.42
 $(1.01)
    
Net income (loss) per common share — Diluted   
Income from continuing operations$0.42
 $0.28
Loss from discontinued operations—
 (1.28)
Net income (loss)$0.42
 $(1.00)

Anti-Dilutive Outstanding Stock Awards Issued Under Share-Based Compensation Plans
Three Months Ended July 31,Nine Months Ended July 31,
(in millions)2023202220232022
Anti-dilutive0.3 — 0.2 — 

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

—



6. 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 HierarchyJuly 31, 2023October 31, 2022
Cash and cash equivalents(1)
1$97.7 $73.0 
Insurance deposits(2)
12.6 0.9 
Assets held in funded deferred compensation plan(3)
14.3 4.1 
Debt facilities(4)
21,326.9 1,271.3 
Interest rate swap assets(5)
234.2 36.9 
Preferred equity investment(6)
315.4 3.0 
Contingent consideration(7)
313.4 59.0 
(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 8,7, “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.Amended Credit Facility. Due to variable interest rates, the carrying value of outstanding borrowings under our line of credit and term loanthese facilities approximates the fair value. See Note 9, “Credit Facility,8, “Debt,” for further information.
(5)Represents interest rate swap derivatives designated as cash flow hedges. The fair values of the interest rate swaps are estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates using observable benchmarks for LIBORthe Secured Overnight Financing Rate (“SOFR”) forward rates at the end of the period. TheseOur interest rate swapsswap assets and liabilities are included in “Other noncurrent assets” and “Other noncurrent liabilities,” respectively, on the accompanying unaudited consolidated balance sheets.Consolidated Balance Sheets. See Note 9, “Credit Facility,8, “Debt,” for further information.
(6)The fair value We purchased $12.4 million in a preferred equity investment and preferred stock warrants of investmentsa privately held company that specializes 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 withdevelopment of electric vehicle charging stations and related software during the issuer, credit enhancements associated with financial insurance guarantees, and the possibility of the security being re-financed by the issuer or having a successful auction. These amounts are includednine months ended July 31, 2023, which we include in “Other investments” on the accompanying unaudited consolidated balance sheets. See Note 7, “Auction Rate Securities,”Consolidated Balance Sheet. Our investment does not have a readily determinable fair value; therefore, we account for further information.the investment using the measurement alternative under Topic 321 and measure the investment at initial cost less impairment, if any.
(7) Certain of our acquisitions involveOur contingent consideration payable related to the payment of contingent consideration. TheRavenVolt Acquisition is remeasured at each reporting date, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. After the acquisition date and until the contingency is resolved, the fair value of these liabilitiescontingent consideration payable is adjusted each reporting period based primarily on the expected probability of achievement of certain pre-established revenue goals. Our contingent consideration liability is includedthe contingency targets, which are subject to our estimate. These changes in “Other accrued liabilities”fair value are recognized within the “Selling, general 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 anyadministrative expenses” of the above hierarchy levels.unaudited Consolidated Statements of Comprehensive Income.
Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis
WeIn addition to assets and liabilities that are measured at fair value on a recurring basis, we are also required to measure certain assetsitems at fair value on a non-recurring basis, which are subject to fair value adjustments in certain circumstances.basis. These assets can include: goodwill; intangible assets; property, plant and equipment; lease-related ROU assets; and long-lived assets that have been reduced to fair value when they are held for sale.
On November 1, 2017, we reorganized our reportable segments and goodwill reporting units. In connection with this reorganization, we performed a qualitative goodwill If certain triggering events occur, or if an annual impairment test immediately before and afteris required, then we would evaluate these non-financial assets for impairment. If an impairment were to occur, then the segment realignment. In analyzingasset would be recorded at the results of operations and business conditions of the goodwill reporting units, we determined the likelihood of a goodwill impairment did not reach the more-likely-than not threshold specified in U.S. GAAP for any of the reporting units that were evaluated. Accordingly, we concluded that goodwill related to those reporting units was not impaired and further quantitative testing was not required.estimated fair value, using primarily unobservable Level 3 inputs.

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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 and fair value of $8.0 million. These two auction rate securities are debt instruments with stated maturities in 2036 and 2050. The interest rates for these securities are designed to be reset through Dutch auctions approximately every thirty days, but auctions for these securities have not occurred since August 2007.
At January 31, 2018 and October 31, 2017, there were no unrealized gains or losses on our auction rate securities included in accumulated other comprehensive income (loss), net of taxes (“AOCI”), and the total amount of other-than-temporary impairment credit loss on our auction rate security investments included in our retained earnings was $2.0 million.
Significant Assumptions Used to Determine the Fair Values of Our Auction Rate Securities
INSURANCE
AssumptionJanuary 31, 2018October 31, 2017
Discount ratesL + 0.53% and L + 1.18%
L + 0.42% and L + 0.79%
Yields2.15%, L + 2.00%2.15%, L + 2.00%
Average expected lives4 – 10 years4 – 10 years
L – One Month LIBOR
8. INSURANCE
We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. For the majority of these insurance programs, we retain the initial $1.0 million to $1.5 million of exposure on a per-occurrence basis, either through deductibles or self-insured retentions. Beyond the retained exposures, we have varying primary policy limits ranging between $1.0 million and $5.0 million per occurrence. To cover general liability and automobile liability losses above these primary limits, we maintain commercial umbrella insurance policies that provide aggregate limits of $200.0 million. Our insurance policies generally cover workers’ compensation losses to the full extent of statutory requirements. Additionally, to cover property damage risks above our retained limits, we maintain policies that provide per occurrence limits of $75.0 million. We are also self-insured for certain employee medical and dental plans. We maintain stop-loss insurance for our self-insured medical plan under which we retain up to $0.4$0.5 million of exposure on a per-participant, per-year basis with respect to claims.
The adequacy ofWe maintain our reserves for workers’ compensation, general liability, automobile liability, and property damage insurance claims is based upon known trends and events and the actuarial estimates of required reserves considering the most recently completed actuarial reports. We use all available information to develop our best estimate of insurance claims reserves as information is obtained. The results of actuarial studiesreviews are used to estimate our insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.
Actuarial Review and Interim Update Performed During 2023
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 2018assumptions and estimates used in our reserve liability calculations, we adjust our self-insurance rates and reserves for future periods and, if appropriate, adjust our reserves for claims incurred in prior accounting periods.
During the three months ended January 31, 2018,third quarter of 2023, we performed ana comprehensive actuarial review of the majority of our casualty insurance programs that consideredto evaluate changes in claim developmentsmade to claims reserves and claimclaims payment activity for the period commencing Mayof November 1, 20172022, through April 30, 2023 (the “Actuarial Review”). The Actuarial Review was comprehensive in nature and ending October 31, 2017 for all policy years in which open claims existed.was based on loss development patterns, trend assumptions, and underlying expected loss costs during the period analyzed.
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, over the past two years there has been a decrease in claim frequency for workers’ compensation lost-time claims and general liability bodily injury claims. However, there have been unfavorable developments in ultimate losses beyond our estimates for general liability and workers’ compensation claims related to prior years, as described below.
The actuarial review indicated a continued decrease over the most recent years in the total number of reported claims 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 and subsequent developments,Actuarial Review, we increaseddecreased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with incurred but not reported claims (“IBNR claims”) by $2.0$5.3 million during the threenine months ended JanuaryJuly 31, 2018. This adjustment was $3.0 million lower than2023. During the nine months ended July 31, 2022, we decreased our total adjustmentreserves related to prior year claims of $5.0 million during the three months ended January 31, 2017.years by $36.1 million. We will continue to assess ongoing developments, which may result in further adjustments to reserves.
Insurance RelatedInsurance-Related Balances and Activity
(in millions)July 31, 2023October 31, 2022
Insurance claim reserves, excluding medical and dental$571.2 $551.0 
Medical and dental claim reserves7.0 8.1 
Insurance recoverables69.6 71.0 
(in millions)January 31, 2018 October 31, 2017
Insurance claim reserves excluding medical and dental$490.7
 $485.6
Medical and dental claim reserves10.7
 9.8
Insurance recoverables74.9
 73.1
At JanuaryJuly 31, 20182023, and October 31, 2017,2022, insurance recoverables are included in both “Other current assets” and “Other noncurrent assets” on the accompanying unaudited consolidated balance sheets.Consolidated Balance Sheets.
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Instruments Used to Collateralize Our Insurance Obligations
(in millions)July 31, 2023October 31, 2022
Standby letters of credit$53.8 $153.7 
Surety bonds and surety-backed letters of credit174.0 73.2 
Restricted insurance deposits2.6 0.9 
Total$230.4 $227.8 

8. DEBT
(in millions)January 31, 2018 October 31, 2017
Standby letters of credit$136.7
 $137.6
Surety bonds77.5
 77.5
Restricted insurance deposits10.2
 11.2
Total$224.4
 $226.3
Components of Debt
9. CREDIT FACILITY    
(in millions)July 31, 2023October 31, 2022
Current portion of debt
Gross term loan$32.5 $32.5 
Unamortized deferred financing costs(1.0)(1.0)
Current portion of term loan$31.5 $31.5 
Receivables facility— 150.0 
Current portion of debt$31.5 $181.5 
Long-term debt
Gross term loan$544.4 $568.8 
Unamortized deferred financing costs(1.7)(2.4)
Total noncurrent portion of term loan542.7 566.3 
Revolving line of credit(1)(2)
750.0 520.0 
Long-term debt$1,292.7 $1,086.3 
(1) Standby letters of credit amounted to $58.4 million at July 31, 2023.
(2) At July 31, 2023, we had borrowing capacity of $485.0 million.
At July 31, 2023, and October 31, 2022, the weighted average interest rate on all outstanding borrowings, not including letters of credit and swaps, was 7.02% and 4.97%, respectively.
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 (the “Revolver”) and an $800.0 million amortizing term loan, scheduled to matureboth of which matured on September 1, 2022. The lineIn accordance with terms of credit reducesthe Credit Facility, the revolver was reduced to $800.0 million after one year. Theon September 1, 2018.
On June 28, 2021, the Company amended and restated the Credit Facility also(the “Amended Credit Facility”), extending the maturity date to June 28, 2026, and increasing the capacity of the revolving credit facility from $800.0 million to $1.3 billion and the then-remaining term loan outstanding from $620.0 million to $650.0 million. The Amended Credit Facility provides for the issuance of up to $300.0$350.0 million for standby letters of credit and the issuance of up to $75.0 million in swingline advances. The obligations under the Amended Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions.
Borrowings Additionally, we may repay amounts borrowed under the Amended Credit Facility at any time without penalty.
At November 1, 2022, we amended our Amended Credit Facility pursuant to the LIBOR Transition Amendment and the Fifth Amendment to replace the benchmark rate at which U.S.-dollar-denominated borrowings bear interest from LIBOR to the forward-looking Secured Overnight Financing Rate (“SOFR”) term rate administered by CME Group Benchmark Administration Limited. As a result of these amendments, we can borrow at a rate equal to 1-month LIBORTerm SOFR plus a credit spread that is based upon our leverage ratio. The spread ranges from 1.00%adjustment of 0.10% subject to 2.25% for Eurocurrency loans and 0.00% to 1.25% for base rate loans. At January 31, 2018, the weighted average interest rate on our outstanding borrowings was 3.74%. We also pay a commitment fee, based on our leverage ratio and payable quarterly in arrears, ranging from 0.200% to 0.350% on the average daily unused portionfloor of the 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 line of credit.zero.
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The Amended Credit Facility contains certain covenants, including a maximum total net leverage ratio of 4.755.00 to 1.0, which steps down1.00, a maximum secured net leverage ratio of 4.00 to 3.50 to 1.0 by July 2020,1.00, and a minimum fixed chargeinterest coverage ratio of 1.50 to 1.0,1.00, as well as other financial and non-financial covenants. In the event of a material acquisition, as defined in the Amended Credit Facility, we may elect to increase the maximum total net leverage ratio to 3.755.50 to 1.01.00 for a total of four fiscal quarters providedand increase the maximum secured net leverage ratio had already been reduced to 3.504.50 to 1.0.1.00 for a total of four fiscal quarters. Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At JanuaryJuly 31, 2018,2023, we were in compliance with these covenants.
The Amended Credit Facility also includes customary events of default, includingincluding: failure to pay principal, interest, or fees when due,due; failure to comply with covenants,covenants; the occurrence of certain material judgments, orjudgments; and a change in control of the Company. If an eventcertain events of default occurs,occur, including certain cross-defaults, insolvency, change in control, or violation of specific covenants, then the lenders can terminate or suspend our access to the Amended 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.
We incurred deferred financing costs of $6.4 million in conjunction with the execution of the Amended Credit Facility and carried over $6.2 million of unamortized deferred financing from initial execution and previous amendments of the Credit Facility. Total deferred financing costs related to the Credit Facility were $18.7of $12.6 million, consisting of $13.4$4.9 million related to the term loan and $5.2$7.7 million related to the line of credit, whichrevolver, are being amortized to interest expense over the term of the Amended Credit Facility.
CreditOn March 1, 2022, we entered into an uncommitted receivable repurchase facility (the “Receivables Facility”) of up to $150 million, which expired on March 30, 2023. We accounted for the sale of receivables under the Receivables Facility Informationas short-term debt and carried the receivables on the unaudited Consolidated Balance Sheets, primarily as a result of the requirement to repurchase receivables sold.
(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 million at January 31, 2018.

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


Term LoanLong-Term Debt Maturities

During the first quarter,three and nine months ended July 31, 2023, we made $20.0principal payments under the term loan of $8.1 million of principal payments.and $24.4 million, respectively. As of JanuaryJuly 31, 2018,2023, the following principal payments are required under the term loan:Amended Credit Facility:
(in millions) 2019 2020 2021 2022(in millions)20232024202520262027
Debt maturities $40.0
 $60.0
 $120.0
 $560.0
Debt maturities$8.1 $32.5 $32.5 $1,253.8 $— 
Interest Rate Swaps

We enter intoutilize interest rate swapsswap agreements to managefix the variable interest rates on portions of our debt. The purpose of using these derivatives is to reduce our exposure to the interest rate risk associated with our floating-rate, LIBOR-based borrowings under our Credit Facility.variable borrowings. Under these arrangements,agreements, we typically pay a fixed interest rate in exchange for LIBOR-baseda SOFR-based variable interest throughout the life of the agreement. We initially report the derivative’s mark-to-market gain or loss asrate on a component of AOCI 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.given notional amount. All of our interest rate swaps wereare designated and accounted for as cash flow hedges from inception. See Note 6, “Fair Valuehedges. Changes in the fair value of Financial Instruments,”these derivatives are reported as a component of other comprehensive income and are reclassified into earnings in the period or periods in which the hedged transaction affects earnings. For information regarding the valuation of our interest rate swaps.
Interest Rate Swaps Information
swaps, see Note 6, “Fair Value of Financial Instruments.”
Notional AmountFixed Interest RateEffective DateMaturity Date
Notional AmountsFixed Interest RatesEffective DatesMaturity Dates
$ 105.0 million1.05%
April 7, 2016 and
May 11, 2016
April 7, 2021 and
May 11, 2021
$ 215.0100.0 million1.65%1.72%February 9, 2022June 28, 2026
$150.0 million1.85%February 25, 2022June 28, 2026
$100.0 million2.88%May 4, 2022June 28, 2026
     $226.9 million (1)
2.83%July 7, 2022June 28, 2026
     $73.1 million (1)
2.79%July 18, 2022June 28, 2026
$170.0 million3.81%November 1, 20172022September 1, 2022
$ 285.0 million1.69%November 13, 2017September 1, 2022June 28, 2026
(1)In July 2022, we entered into interest rate swap agreements with notional values totaling $300.0 million at inception. The notional amount reduces to $250.0 million in April 2024, $175.0 million in October 2024, and $100.0 million in October 2025 before maturing on June 28, 2026.
At JanuaryJuly 31, 20182023, and October 31, 2017,2022, amounts recorded in AOCIaccumulated other comprehensive loss (“AOCL”) for interest rate swaps were $15.7a gain of $24.3 million, net of taxes of $5.8$9.8 million, and $1.7a gain of $26.8 million,
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net of taxes of $1.2$10.1 million, respectively. Additionally, at JanuaryAt July 31, 2018,2023, the total amount expected to be reclassified from AOCIAOCL to earnings during the next twelve12 months was $5.0is a gain of $8.4 million, net of taxes of $3.3 million.




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9. COMMON STOCK
Effective December 9, 2022, our Board of Directors expanded our existing share repurchase program by an additional $150.0 million. We repurchased shares under the share repurchase program during the three and nine months ended July 31, 2023, as summarized below. At July 31, 2023, authorization for $170.3 million of repurchases remained under our share repurchase program.
Repurchase Activity
(in millions, except per share amounts)Three Months Ended July 31, 2023Nine Months Ended July 31, 2023
Total number of shares purchased0.60.6
Average price paid per share$42.10 $42.10 
Total cash paid for share repurchases$27.1 $27.1 

(in millions, except per share amounts)Three Months Ended July 31, 2022Nine Months Ended July 31, 2022
Total number of shares purchased0.71.7
Average price paid per share$41.92 $42.95 
Total cash paid for share repurchases$31.2 $74.5 
10. 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 JanuaryJuly 31, 2018,2023, these letters of credit and surety bonds, and surety-backed letters of credit, totaled $145.5$58.4 million and $470.0$777.9 million, respectively.
Guarantees
In some instances, we offer clients guaranteed energy savings under certain energy savings contracts. At JanuaryJuly 31, 2018,2023, total guarantees were $164.6$230.3 million and extend through 2038.2043. We accrue forinclude the estimated costcosts of guarantees whenin the transaction price to the extent it is probable that a liability has been incurredsignificant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the amount can betransaction price are based largely on an assessment of our anticipated performance and all information (historical, current, and forecasted) that is reasonably estimated.available to us. Historically, we have not incurred any material losses in connection with these guarantees.
In connection with an unconsolidated joint venture in which one of our subsidiaries has a 33% ownership interest, that subsidiary and the other joint venture partners have each jointly and severally guaranteed the obligations of the joint venture to perform under certain contracts extending through 2019. Annual revenues relating to the underlying contracts are approximately $35 million. Should the joint venture be unable to perform under these contracts, the joint venture partners would be jointly and severally liable for any losses incurred by the client due to the failure to perform.
Sales Tax AuditsTaxes
We collect sales tax from clients and remit those collections to the applicable states. WhenIn some cases when clients fail to pay their invoices, including the amount of any sales tax that we paid on their behalf, in some cases we aremay be entitled to seek a refund of that amount of sales tax from the applicable state.
Sales tax laws and regulations enacted by the various states are subject to interpretation, and our compliance with such laws is routinely subject to audit and review by such states. Audit risk is concentrated in several states and these statesthat are conducting ongoing audits. The outcomes of ongoing and any future audits and changes in the states’ interpretation of the sales tax laws and regulations could materially adversely impact our results of operations.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
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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 JanuaryJuly 31, 2018,2023, the total amount accrued for all probable litigation losses where a reasonable estimate of the loss could be made was $10.0$29.5 million. This $10.0 million includes an accrual of $3.8 million in connection with the Hussein case discussed 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$6 million. Factors underlying this estimated range of loss may change from time to time, and actual results may vary significantly from this estimate.
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.
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, 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 CasesWe are currently not a party to any material legal proceedings, and we are not aware of Bucio and Martinez v. ABM Janitorial Services filed on April 7, 2006,filings of any pending or contemplated litigation, claims, or assessments. There can be no assurance that future legal proceedings arising in the Superior Courtordinary course of California, Countybusiness or otherwise will not have a material adverse effect on our financial position, results of San Francisco (the “Bucio case”)operations, or cash flows.

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. 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 and Hirsi v. Air Serv Corporation filed on January 20, 2016, pending in the United States District Court for the Western District 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 applicable 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. On February 7, 2017, the Isse case was filed against Air Serv on behalf of 60 individual plaintiffs (who would otherwise be members of the Hussein class), who alleged failure to comply with both the minimum wage provision and the sick and safe time provision of the Ordinance. 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 to approximately 220 individual plaintiffs.

In mediations on November 2 and 3, 2017, and without admitting liability in either matter, we agreed to settle the Hussein and Isse cases for a combined total of $8.3 million, inclusive of damages, interest, attorneys’ fees, and employer payroll taxes. Eligible employees will be able to participate in either the Hussein or Isse settlements, but cannot recover in both settlements. The settlements in both cases require court approval because 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 to the case as a named plaintiff. On October 27, 2017, plaintiffs moved for class certification seeking to represent a class of all employees who were, are, or will be employed by ABM in the State of California with the Employee Master Job Description Code “Cleaner” (hereafter referred to as “Cleaner Employees”) beginning from October 24, 2010. ABM filed its opposition to class certification on November 27, 2017. On January 26, 2018, the district court granted plaintiffs’ motion for class certification. The court rejected plaintiffs’ proposed class, instead certifying three classes that the court formulated on its own: (1) 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 punch in and out of the EPAY system and who (a) worked at an ABM facility that did not provide a biometric clock and (b) were not offered an ABM-provided cell phone 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.
Our quarterly tax code in more than 30 years. Among other provisions, the Tax Act provides for a reduction of the federal corporate incomeprovision is calculated using an estimated annual effective tax rate from 35%that is adjusted for discrete items occurring during the period 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 nine months ended July 31, 2023, we had effective tax rates of 17.7% and 22.8%, respectively, resulting in provisions for taxes of $21.2 million and $55.7 million, respectively. During the three and nine months ended July 31, 2022, we had effective tax rates of 27.5% and 26.3%, respectively, resulting in provisions for taxes of $21.5 million and $64.8 million, respectively. The difference between the estimated annual effective tax rate and statutory rate is primarily related to increase from the 2018 rate.state income taxes, non-deductible compensation, and tax credits.
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 JanuaryJuly 31, 2018. In addition, we recorded an expense2023 was impacted by discrete items related to ERC refunds received from IRS, and the non-taxable change in the fair value of $7.0the contingent consideration related to the RavenVolt Acquisition. Our effective tax rate for the three months ended July 31, 2022, was not impacted by any significant discrete items.
Our effective tax rate for the nine months ended July 31, 2023, benefited from discrete items, primarily by $1.7 million for share-based compensation, ERC refunds received from IRS, and the one-time transitionnon-taxable change in the fair value of the contingent consideration related to the RavenVolt Acquisition. Our effective tax onrate for the deemed repatriationnine months ended July 31, 2022, benefited from discrete items, primarily by $3.3 million change in tax reserves and $1.3 million for share-based compensation.
Under various payroll tax provisions included in the CARES Act, through December 2020, we deferred approximately $132 million of indefinitely reinvested earnings of our international subsidiaries. payroll tax. The deferred payroll tax has been remitted in full: $66 million was paid in December 2021 and the remaining $66 million was paid in December 2022.
We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion. Weexpansion, and we do not anticipate remitting such earnings to the United States, and whileStates. While U.S. federal tax expense has been recognized as a
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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.
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, M&D, Education, Aviation, Technology & Manufacturing (“T&M”), Education,and Technical Solutions, and Healthcare, as further described below. Refer to Note 2, “Basis of Presentation and Significant Accounting Policies,” for information related to our former Government Services business.
REPORTABLE SEGMENTS AND DESCRIPTIONS
B&IB&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parking services for commercial real estate properties and(including corporate offices for high-tech clients), 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.
M&DM&D provides integrated facility services, engineering, janitorial, and other specialized services in different types of manufacturing, distribution, and data center facilities. Manufacturing facilities include traditional motor vehicles, electric vehicles, batteries, pharmaceuticals, steel, semiconductors, chemicals, and many others. Distribution facilities include e-commerce, cold storage, logistics, general warehousing, and others.
EducationEducation delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.
AviationAviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.
T&MT&M combines our legacy Industrial & Manufacturing business, which was previously included in our B&I segment, with our legacy High Tech industry group, which was previously reported as part of our Emerging Industries Group. T&M provides janitorial, facilities engineering, and parking services.
EducationEducation delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities. This business was previously reported as part of our Emerging Industries Group.
Technical SolutionsTechnical Solutions specializes in facility infrastructure, mechanical, and electrical services.services, including power design, installation, and maintenance, as well as microgrid systems installations. These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.
HealthcareHealthcare offers janitorial, facilities management, clinical engineering, food and nutrition, laundry and linen, parking and guest services, and patient transportation services at traditional hospitals and non-acute facilities. This business was previously reported as part of our Emerging Industries Group.

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Financial Information by Reportable Segment
Three Months Ended July 31,Nine Months Ended July 31,
(in millions)2023202220232022
Revenues
Business & Industry$1,021.4 $1,033.8 $3,056.4 $3,067.0 
Manufacturing & Distribution381.9 358.1 1,135.5 1,074.1 
Education219.1 207.5 650.7 617.6 
Aviation238.0 203.5 677.5 589.7 
Technical Solutions167.9 158.4 483.4 447.2 
$2,028.2 $1,961.4 $6,003.5 $5,795.5 
Operating profit
Business & Industry$78.9 $82.4 $231.1 $242.4 
Manufacturing & Distribution38.1 38.0 119.7 120.6 
Education15.9 14.5 39.5 38.8 
Aviation11.7 9.5 43.6 28.0 
Technical Solutions(1)
11.4 15.4 28.8 42.8 
Government Services— 0.1 — (0.3)
Corporate(2)
(15.9)(70.3)(156.7)(200.6)
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions(1.2)(0.8)(3.0)(1.8)
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions— (0.1)(0.1)(0.3)
138.9 88.7 303.1 269.7 
Income from unconsolidated affiliates1.2 0.8 3.0 1.8 
Interest expense(20.9)(11.1)(61.8)(25.2)
Income before income taxes$119.3 $78.3 $244.2 $246.3 
 Three Months Ended January 31,
(in millions)2018 2017
Revenues   
Business & Industry$722.1
 $655.6
Aviation256.2
 231.9
Technology & Manufacturing232.0
 171.5
Education206.3
 67.0
Technical Solutions104.0
 107.7
Healthcare67.7
 61.7
Government Services—
 31.4
 $1,588.3
 $1,326.7
Operating profit (loss)   
Business & Industry$28.5
 $27.1
Aviation5.8
 4.6
Technology & Manufacturing16.9
 12.6
Education9.2
 3.6
Technical Solutions5.5
 7.9
Healthcare2.7
 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, net0.5
 1.4
Interest expense(14.3) (3.2)
Income from continuing operations before income taxes$5.8
 $22.0
(1) Reflects a $7.6 million gain on the sale of assets during the nine months ended July 31, 2022.
(2) Reflects adjustments to the fair value of the contingent consideration payable related to the RavenVolt Acquisition, and an employee retention credit totaling $22.4 million during the three and nine months ended July 31, 2023.
The accounting policies for our segments are the same as those disclosed within our significant accounting policies in Note 2, “Basis of Presentation and Significant Accounting Policies.” Our management evaluates the performance of each reportable segment based on its respective operating profit results, which include the allocation of certain centrally incurred costs. Corporate expenses not allocated to segments include certain CEO and other finance and human resource departmental expenses, certain information technology costs, share-based compensation, certain legal costs and settlements, restructuring and related costs, certain actuarial adjustments resulting from actuarial developments ofto self-insurance reserves, acquisition and direct acquisition costs.integration costs, and changes in fair values of contingent consideration. Management does not review asset information by segment, therefore we do not present assets in this note.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to facilitate an understanding of the results of operations and financial condition of ABM Industries Incorporated and its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”).ABM. This MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements and the accompanying notes (“Financial Statements”)Statements and our Annual Report on Form 10-K for the year ended October 31, 2017 (“Annual Report”),2022, which has been filed with the Securities and Exchange Commission (“SEC”).SEC. This MD&A contains forward-looking statements about our business, operations, and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, and intentions. Our future results and financial condition may be materially different from those we currently anticipate. See “Forward-Looking Statements” for more information.
Throughout the MD&A, amounts and percentages may not recalculate due to rounding. Unless otherwise indicated, all information in the MD&A and references to years are based on our fiscal year,years, which endsend on October 31.
Business Overview
ABM is a leading provider of integrated facility services,solutions, customized by industry, with a mission to make a difference, every person, every day.day.
2020Vision
ELEVATE Strategy
In September 2015,December 2021, we announced a comprehensive transformation initiative (“2020Vision”) intendedour multiyear strategic plan called ELEVATE. The ELEVATE strategy is designed to drive long-term profitable growthstrengthen our industry leadership position through an industry-based go-to-market approach. Our 2020Vision involves three phases: During Phase 1, completedend-market repositioning and build on November 1, 2016, we realigned our organization; in Phase 2,core services, which is continuing today, we are focused on improvements to our operational framework to promote efficiencies and process enhancements; and in Phase 3, on the foundation of benefits realized from Phases 1 and 2, we anticipate accelerating growth with our industry-based, go-to-market service model.
2020Vision Developments in 2018
During 2018, we expect will drive significant long-term value for our stakeholders.
We will continue to continue focusing on certain aspectsmake significant investments, which, as previously stated, are expected to total $150 – $180 million over the life of our business practices to further build the foundation upon which we deliver leading industry-based facility services. We anticipate thatprogram, and we will continue to roll out enterprise-wide standard operating proceduresimplement various measures with the aim to ELEVATE:
•the client experience, by serving as a trusted advisor who can provide innovative multiservice solutions and consistent service delivery;
•the team member experience, by investing in workforce management, training, developing the next generation of ABM leaders, and building on our inclusive culture; and
•our use of technology and data to power client and employee experiences with cutting-edge data and analytics, processes, and tools that will fundamentally change how we operate our business.
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 third quarter of 2023, 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 November 1, 2022, through April 30, 2023 (the “ABMWay”“Actuarial Review”). The Actuarial Review was comprehensive in nature and improve our account planning, laborwas based on loss development patterns, trend assumptions, and underlying expected loss costs during the period analyzed.
The claims management manager development,strategies and safety initiatives. To achieve this, we are focusing on long term, profitable growth relating to both existing clients and targeted opportunities, andprograms that we have launched a “Tag Pricer” tool that will help us capture work orders more efficiently. In addition, we continue consolidating our procurement activities and investingimplemented have resulted in technology platforms to help drive and sustain 2020Vision performance.
Developments and Trends
United States Tax Reform
The Tax Cuts and Jobs Act (the “Tax Act”), which was enactedimprovements. Based on December 22, 2017, represents the most significant overhaulresults of the U.S. tax code in more than 30 years. Among other provisions, the Tax Act providesActuarial Review, we decreased our total reserves related to prior years 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 compensationknown claims as well as anti-deferral provisions on Global Intangible Low-Taxed Income (“GILTI”). As a result, in 2019 we expect our effective tax rate to increase from the 2018 rate. The estimated impact of the Tax Act, as summarized below for the three months ended January 31, 2018, is further described in Note 11, “Income Taxes,” in the Financial Statements.
 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 to the complexities of implementing the provisions of the Tax Act, the staff of the U.S. Securities and Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”), which provides guidance on accounting for tax effects of the Tax Act and permits a measurement period not to exceed one year from the enactment date for companies to complete the required analyses and accounting. 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 assetsloss amounts associated with IBNR claims by $5.3 million during the nine months ended July 31, 2023. The favorable review was primarily attributable to reduced claim frequency and liabilities,severity development within the workers’ compensation program. During the nine months ended July 31, 2022, we
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decreased our total reserves related to prior years’ claims by $36.1 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 & Manufacturing58.6
Business & Industry40.7
Healthcare7.5
Aviation4.3
Total$251.6
Following this acquisition, during 2018 we initiated a restructuring program to achieve cost synergies from our combined operations. We include these costs within corporate expenses. We do not expect to incur significant severance expenses related to GCA restructuring in the future.

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


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, M&D, Education, Aviation, Technology & Manufacturing (“T&M”), Education,and Technical Solutions, and Healthcare, as further described below.
REPORTABLE SEGMENTS AND DESCRIPTIONS
fy18bni.jpgbi2019.jpg
B&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parking services for commercial real estate properties and(including corporate offices for high tech clients), sports and entertainment venues.venues, and traditional hospitals and non-acute healthcare facilities. B&I also provides vehicle maintenance and other services to rental car providers (“Vehicle Services Contracts”).providers.
fy18aviationa01.jpgABM-Icon-Manufacturing-Distribution-3.2.22.jpg
M&D provides integrated facility services, engineering, janitorial, and other specialized services in different types of manufacturing, distribution, and data center facilities. Manufacturing facilities include traditional motor vehicles, electric vehicles, batteries, pharmaceuticals, steel, semiconductors, chemicals, and many others. Distribution facilities include e-commerce, cold storage, logistics, general warehousing, and others.
education2019.jpg
Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.
aviation2019.jpg
Aviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.
fy18tnm.jpg
T&M combines our legacy Industrial & Manufacturing business, which was previously included in our B&I segment, with our legacy High Tech industry group, which was previously reported as part of our Emerging Industries Group. T&M provides janitorial, facilities engineering, and parking services.
fy18educationa01.jpg
Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities. This business was previously reported as part of our Emerging Industries Group.
fy18technicalsolutions.jpgtechnicalsolutions2019.jpg
Technical Solutions specializes in facility infrastructure, mechanical and electrical services.services, including power design, installation and maintenance, as well as microgrid systems installations. These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.
fy18healthcare.jpg
Healthcare offers janitorial, facilities management, clinical engineering, food and nutrition, laundry and linen, parking and guest services, and patient transportation services at traditional hospitals and non-acute facilities. This business was previously reported as part of our Emerging Industries Group.


Prior Year Reclassifications


Effective with the reorganization of our reportable segments, we have revised our prior period segment information
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Key Financial Highlights
•Revenues increased by $66.8 million, or 3.4%, to conform with our fiscal 2018 presentation. These changes had no impact on our previously reported consolidated balance sheets, statements of comprehensive income (loss), 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$2,028.2 million during the three months ended JanuaryJuly 31, 2018. This adjustment was $3.0 million lower than2023, as compared to the total adjustment related to prior year claimsperiod. Revenue growth was comprised of $5.0organic growth of 2.5% and acquisition growth of 0.9%. Acquisition growth was driven by an $18.2 million revenue increase from the RavenVolt Acquisition, which was completed in September 2022. Organic growth was primarily driven by the net new business and expansion of business with existing customers within M&D and Education and the recovery in volume of our business in Aviation. The increase in revenues was partially offset by a decrease in work orders primarily in B&I, M&D, and Education.
•We had an increase in operating profit of $50.2 million to $138.9 million during the three months ended JanuaryJuly 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, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. The increase was primarily attributed to:
Operating profit decreased by $4.3 million, or 18.2%, during ◦the three months ended January 31, 2018, as compareddecrease in the fair value of the contingent consideration related to the three months ended January 31, 2017. RavenVolt Acquisition; and
◦the ERC refunds received.
The decrease in 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 decreaseincrease was partially offset byby:
◦a decrease in work orders, which have higher operating profit in our Educationmargins; and T&M segments associated with
◦amortization of intangibles related to the GCA acquisition.RavenVolt Acquisition of $3.2 million.
•Interest expense increased by $11.1$9.8 million, to $20.9 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017, primarily related to increased indebtedness incurred to fund the GCA acquisitionprior year period, and was driven by higher relative interest rates underon our credit facility.debt borrowings.
•Our effective tax rate on income taxes from continuing operations was 17.7% for the three months ended JanuaryJuly 31, 2018 were favorably2023, as compared to 27.5% for the three months ended July 31, 2022. Our effective tax rate for the three months ended July 31, 2023, was impacted by a net discrete tax benefititems related to ERC refunds received from IRS, and the non-taxable change in the fair value of $21.7 millionthe contingent consideration related to the Tax Act.RavenVolt Acquisition. Our effective tax rate for the three months ended July 31, 2022, was not impacted by any significant discrete items.
•Net cash provided by operating activities was $33.7$104.1 million during the nine months ended July 31, 2023. Our total net cash provided by operating cash flows was higher compared to the prior year period, primarily due to the timing of working capital requirements, which included a $143.8 million payment for the Bucio case during the nine months ended July 31, 2022.
•Dividends of $43.5 million were paid to shareholders, and dividends totaling $0.660 per common share were declared during the nine months ended July 31, 2023.
•At July 31, 2023, total outstanding borrowings under our Amended Credit Facility were $1.3 billion. At July 31, 2023, we had up to $485.0 million of borrowing capacity.
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Results of Operations
Three Months Ended July 31, 2023, Compared with the Three Months Ended July 31, 2022
Consolidated
Three Months Ended July 31,
(in millions, except per share amounts)20232022Increase / (Decrease)
Revenues$2,028.2 $1,961.4 $66.8 3.4%
Operating expenses1,765.8 1,696.4 69.4 4.1%
Gross margin12.9 %13.5 %(57) bps
Selling, general and administrative expenses104.3 158.6 (54.3)(34.3)%
Amortization of intangible assets19.2 17.7 1.5 8.5%
Operating profit138.9 88.7 50.2 56.7%
Income from unconsolidated affiliates1.2 0.8 0.4 52.2%
Interest expense(20.9)(11.1)(9.8)(87.6)%
Income before income taxes119.3 78.3 41.0 52.3%
Income tax provision(21.2)(21.5)0.3 1.7%
Net income98.1 56.8 41.3 72.7%
Other comprehensive income
Interest rate swaps12.8 (5.7)18.5 NM*
Foreign currency translation and other3.1 (3.7)6.8 NM*
Income tax benefit (provision)(3.6)1.5 (5.1)NM*
Comprehensive income$110.4 $48.9 $61.5 125.6%
*Not meaningful
Revenues
Revenues increased by $66.8 million, or 3.4%, to $2,028.2 million during the three months ended JanuaryJuly 31, 2018.
Dividends of $11.5 million were paid to shareholders, and dividends totaling $0.175 per common share were declared during the three months ended January 31, 2018.
At January 31, 2018, total outstanding borrowings under our credit facility were $1.2 billion, and we had up to $330.5 million of borrowing capacity under our credit facility; however, covenant restrictions limited our actual borrowing capacity to $245.5 million.

Results of Operations

Three Months Ended January 31, 2018 Compared with the Three Months Ended January 31, 2017
Consolidated
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$1,588.3
 $1,326.7
 $261.6
 19.7%
Operating expenses1,429.3
 1,195.1
 234.2
 19.6%
Gross margin10.0% 9.9% 9 bps  
Selling, general and administrative expenses109.0
 97.3
 11.7
 12.1%
Restructuring and related expenses14.3
 5.0
 9.3
 NM*
Amortization of intangible assets16.2
 5.5
 10.7
 NM*
Operating profit19.5
 23.8
 (4.3) (18.2)%
Income from unconsolidated affiliates, net0.5
 1.4
 (0.9) (61.0)%
Interest expense(14.3) (3.2) (11.1) NM*
Income from continuing operations before income taxes5.8
 22.0
 (16.2) (73.8)%
Income tax benefit (provision)22.2
 (5.9) 28.1
 NM*
Income from continuing operations28.0
 16.1
 11.9
 74.1%
Loss from discontinued operations, net of taxes(0.1) (72.9) 72.8
 (99.8)%
Net income (loss)27.8
 (56.8) 84.6
 NM*
Other comprehensive income (loss)       
Unrealized gains on interest rate swaps, net of taxes of $5.0 and $1.1, respectively13.6
 1.6
 12.0
 NM*
Foreign currency translation9.4
 3.3
 6.1
 NM*
Comprehensive income (loss)$50.9
 $(51.9) $102.8
 NM*
*Not meaningful
Revenues
Revenues increased by $261.6 million, or 19.7%, during the three months ended January 31, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. Revenue growth was comprised of organic growth of 2.5% and acquisition growth of 0.9%. Acquisition growth was driven by an $18.2 million revenue increase from the RavenVolt Acquisition, which was completed in September 2022. Organic growth was primarily driven by the net new business and expansion of business with existing customers within M&D and Education and the recovery in volume of our business in Aviation. The increase in revenues was partially offset by a decrease in work orders primarily attributable to $253.9 million of incremental revenues from acquisitions, including GCA, and organic growth in B&I, M&D, and Aviation. This increase was partially offset by lower project revenues in our Technical Solutions business and the sale of our Government Services business on May 31, 2017.Education.
Operating Expenses
Operating expenses increased by $234.2$69.4 million, or 19.6%4.1%, to $1,765.8 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. Gross margin increased slightlydecreased by 957 bps duringto 12.9% in the three months ended JanuaryJuly 31, 2018.2023, from 13.5% in the prior year period. The increasedecrease in gross margin was primarily associated withdriven by the change in contact mix as well as a lowerdecrease in favorable self-insurance adjustmentadjustments related to prior year claims and favorable margins on certain U.S. Technical Solutions projects. This increase was partially offset by lower profit margins on certain B&I accounts andas the lossresult of certain high margin contracts in our U.K. Technical Solutions business.actuarial evaluations completed.
Selling, General and Administrative Expenses
Selling, general and administrative expenses increaseddecreased by $11.7$54.3 million or 12.1%,to $104.3 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. The increasedecrease in selling, general and administrative expenses was primarily related to $10.1attributable to:
•a $37.2 million decrease in the fair value of incremental expensescontingent consideration related to the GCA acquisitionRavenVolt Acquisition; and
•a $3.7$22.4 million benefit from ERC refunds received.

26

This decrease was partially offset by:
•a $3.5 million increase in legal costs primarily associated with 2020Vision technology investments. This increase was partially offset byand settlements due to a $1.0 million decrease in sales tax reserve.

Restructuring and Related Expenses
Restructuring and related expenses increased by $9.3 millionreversal of an accrual during the three months ended JanuaryJuly 31, 2018, as compared to the three months ended January 31, 2017, as a result of restructuring related to the GCA acquisition.2022.
Amortization of Intangible Assets
Amortization of intangible assets increased by $10.7$1.5 million, or 8.5%, to $19.2 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017, as a result ofprior year period. The increase was primarily due to the amortization of intangibles acquired intangible assets associated withas part of the GCA acquisition.RavenVolt Acquisition.
Interest Expense
Interest expense increased by $11.1$9.8 million, to $20.9 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017, primarily related to increased indebtedness incurred to fund the GCA acquisitionprior year period, and was driven by higher relative interest rates underon our credit facility.debt borrowings.
Income Taxes from Continuing Operations
DuringOur effective tax rates from income on operations for the three months ended JanuaryJuly 31, 2018, we had an income2023, and July 31, 2022, were 17.7% and 27.5%, respectively, resulting in provisions for taxes of $21.2 million and $21.5 million, respectively.
Our effective tax benefit on incomerate for the three months ended July 31, 2023 was impacted by discrete items related to ERC refunds received from continuing operationsIRS, and the non-taxable change in the fair value of $22.2 million, primarily due to a net discrete tax benefit of $21.7 millionthe contingent consideration related to the Tax Act.RavenVolt Acquisition. Our effective tax rate for the three months ended July 31, 2022, was not impacted by any significant discrete items.
Loss from Discontinued Operations, NetInterest Rate Swaps
We had a gain of Taxes
Loss from discontinued operations, net of taxes, decreased by $72.8$12.8 million on interest rate swaps during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017, in which a legal reserve was established in connection with certain legal settlement agreements.
Unrealized Gains on Interest Rate Swaps
Unrealized gains on interest rate swaps increased by $12.0loss of $5.7 million during the three months ended JanuaryJuly 31, 2018, as compared to the three months ended January 31, 2017. The increase was2022, primarily due to an increaseunderlying changes in the notional amountfair value of our interest rate swaps and to changing interest rates. In November 2017, we entered into three additional interest rate swaps with a combined notional amount of $500.0 million and fixed interest rates of 1.65% and 1.69%.swaps.
Foreign Currency Translation
ForeignWe had a foreign currency translation gain increased by $6.1of $3.1 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to a foreign currency translation loss of $3.7 million during the three months ended JanuaryJuly 31, 2017.2022. This increasechange was relateddue to fluctuations in the weakening ofexchange rate between the U.S. Dollar (“USD”) againstand the Great Britain Pound during the three months ended January 31, 2018.British pound sterling (“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.

27



Segment Information
Financial Information for Each Reportable Segment
Three Months Ended July 31,
Three Months Ended January 31,   
($ in millions)2018 2017 Increase / (Decrease)
(in millions)(in millions)20232022Increase / (Decrease)
Revenues      Revenues
Business & Industry$722.1
 $655.6
 $66.5
 10.1%Business & Industry$1,021.4 $1,033.8 $(12.4)(1.2)%
Manufacturing & DistributionManufacturing & Distribution381.9 358.1 23.8 6.6%
EducationEducation219.1 207.5 11.6 5.6%
Aviation256.2
 231.9
 24.3
 10.5%Aviation238.0 203.5 34.5 16.9%
Technology & Manufacturing232.0
 171.5
 60.5
 35.3%
Technical SolutionsTechnical Solutions167.9 158.4 9.5 6.0%
$2,028.2 $1,961.4 $66.8 3.4%
Operating profitOperating profit
Business & IndustryBusiness & Industry$78.9 $82.4 $(3.5)(4.2)%
Operating profit marginOperating profit margin7.7 %8.0 %(24) bps
Manufacturing & DistributionManufacturing & Distribution38.1 38.0 — 0.1%
Operating profit marginOperating profit margin10.0 %10.6 %(65) bps
Education206.3
 67.0
 139.3
 NM*Education15.9 14.5 1.4 10.1%
Technical Solutions104.0
 107.7
 (3.7) (3.4)%
Healthcare67.7
 61.7
 6.0
 9.8%
Government Services—
 31.4
 (31.4) NM*
$1,588.3
 $1,326.7
 $261.6
 19.7%
Operating profit (loss)      
Business & Industry$28.5
 $27.1
 $1.4
 5.1%
Operating profit margin3.9% 4.1% (19) bps
 
Operating profit margin7.3 %7.0 %30 bps
Aviation5.8
 4.6
 1.2
 25.5%Aviation11.7 9.5 2.2 23.1%
Operating profit margin2.3% 2.0% 27 bps
 Operating profit margin4.9 %4.7 %25 bps
Technology & Manufacturing16.9
 12.6
 4.3
 33.6%
Operating profit margin7.3% 7.4% (9) bps
 
Education9.2
 3.6
 5.6
 NM*
Operating profit margin4.4% 5.4% (99) bps
 
Technical Solutions5.5
 7.9
 (2.4) (30.5)%Technical Solutions11.4 15.4 (4.0)(25.7)%
Operating profit margin5.3% 7.3% (205) bps
 Operating profit margin6.8 %9.7 %(291) bps
Healthcare2.7
 2.5
 0.2
 10.1%
Operating profit margin4.0% 4.0% 1 bps
 
Government Services(0.7) 1.9
 (2.6) NM*Government Services— 0.1 (0.1)NM*
Operating profit marginNM*
 6.0% NM*
 
Operating marginOperating marginNM*NM*NM*
Corporate(47.4) (34.6) (12.8) 36.9%Corporate(15.9)(70.3)54.4 77.4%
Adjustment for income from unconsolidated affiliates, net, included in Aviation and Government Services(0.6) (1.3) 0.7
 53.3%
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical SolutionsAdjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions(1.2)(0.8)(0.4)52.2%
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— (0.1)0.1 NM*
$19.5
 $23.8
 $(4.3) (18.2)%$138.9 $88.7 $50.2 56.7%
*Not meaningful
Business & Industry      Business & Industry
Three Months Ended January 31,    Three Months Ended July 31,
($ in millions)2018 2017 Increase / (Decrease)($ in millions)20232022Decrease
Revenues$722.1
 $655.6
 $66.5
 10.1%Revenues$1,021.4 $1,033.8 $(12.4)(1.2)%
Operating profit28.5
 27.1
 1.4
 5.1%Operating profit78.9 82.4 (3.5)(4.2)%
Operating profit margin3.9% 4.1% (19) bps
 Operating profit margin7.7 %8.0 %(24) bps
B&I revenues increaseddecreased by $66.5$12.4 million, or 10.1%1.2%, to $1,021.4 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. The increaserevenue decrease was primarily attributable to incremental revenues fromdriven by the GCA acquisitiondecline in work orders and expected attrition of $40.7 million and to net new janitorial business, including new contract wins in the U.K., expansion of existing accounts, and additional tag revenue.certain engineering clients. Management reimbursement revenues for this segment totaled $63.0$70.1 million and $57.8$58.6 million for the three months ended JanuaryJuly 31, 20182023 and 2017,2022, respectively.
Operating profit decreased by $3.5 million, or 4.2%, to $78.9 million during the three months ended July 31, 2023, as compared to the prior year period. Operating profit margin decreased by 24 bps to 7.7% in the three months ended July 31, 2023, from 8.0% in the prior year period. The decrease in operating profit margin was primarily driven by the decrease in work orders, which have higher margins, and the change in contract and service mix, partially offset by an absence of bad debt expense.
28

Manufacturing & Distribution
 Three Months Ended July 31,
($ in millions)20232022Increase / (Decrease)
Revenues$381.9 $358.1 $23.8 6.6%
Operating profit38.1 38.0 — 0.1%
Operating profit margin10.0 %10.6 %(65) bps
M&D revenues increased by $23.8 million, or 6.6%, to $381.9 million during the three months ended July 31, 2023, as compared to the prior year period. The increase was primarily attributable to net new business and the expansion of business with existing customers, partially offset by a decrease in work orders.
Operating profit increased by 0.1% to $38.1 million during the three months ended July 31, 2023, as compared to the prior year period. Operating profit margin decreased by 65 bps to 10.0% in the three months ended July 31, 2023, from 10.6% in the prior year period. The decrease in operating profit margin was primarily attributable to the change in contract mix.
Education
Three Months Ended July 31,
($ in millions)20232022Increase
Revenues$219.1 $207.5 $11.6 5.6%
Operating profit15.9 14.5 1.4 10.1%
Operating profit margin7.3 %7.0 %30 bps
Education revenues increased by $11.6 million, or 5.6%, to $219.1 million during the three months ended July 31, 2023, as compared to the prior year period. The increase was primarily attributable to net new business, partially offset by a decrease in work orders for disinfection-related demands.
Operating profit increased by $1.4 million, or 5.1%10.1%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. Operating profit margin decreased by 19 bps to 3.9% in the

three months ended January 31, 2018 from 4.1% in the three months ended January 31, 2017. The decrease in operating profit margin was primarily associated with lower margins on certain janitorial accounts and Vehicle Services Contracts and with higher amortization expense related to the GCA acquisition. The decrease was partially offset by the management of selling, general and administrative expenses.
Aviation       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase
Revenues$256.2
 $231.9
 $24.3
 10.5%
Operating profit5.8
 4.6
 1.2
 25.5%
Operating profit margin2.3% 2.0% 27 bps
 
Aviation revenues increased by $24.3 million, or 10.5%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. The increase was primarily attributable to organic growth in parking, cabin cleaning, and catering logistics and to incremental revenues of $5.9 million primarily from the GCA acquisition. Management reimbursement revenues for this segment totaled $25.5 million and $16.5$15.9 million for the three months ended JanuaryJuly 31, 2018 and 2017, respectively.
Operating profit increased by $1.2 million, or 25.5%, during the three months ended January 31, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. Operating profit margin increased by 2730 bps to 2.3%7.3% in the three months ended JanuaryJuly 31, 20182023, from 2.0%7.0% in the three months ended January 31, 2017.prior year period. The increase in operating profit margin was primarily attributable to labor efficiencies and lower amortization of intangible assets. Operating profit margin was negatively impacted by the termination of an unprofitable contract at the end of 2017 and the management of selling, general and administrative expenses.decrease in work orders, which have higher margins.
Aviation
 Three Months Ended July 31,
($ in millions)20232022Increase
Revenues$238.0 $203.5 $34.5 16.9%
Operating profit11.7 9.5 2.2 6.0%
Operating profit margin4.9 %4.7 %25 bps
Technology & Manufacturing       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$232.0
 $171.5
 $60.5
 35.3%
Operating profit16.9
 12.6
 4.3
 33.6%
Operating profit margin7.3% 7.4% (9) bps
  
T&MAviation revenues increased by $60.5$34.5 million, or 35.3%16.9%, to $238.0 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the prior year period. The increase was primarily attributable to a recovery in consumer and business travel (both domestic and international). Management reimbursement revenues for this segment totaled $7.7 million and $14.2 million for the three months ended JanuaryJuly 31, 2017. The increase was related to incremental revenues from the GCA acquisition of $58.6 million.2023 and 2022, respectively.
Operating profit increased by $4.3$2.2 million, or 33.6%,to $11.7 million during the three months ended JanuaryJuly 31, 2018,2023, as compared to the prior year period. Operating profit margin increased by 25 bps to 4.9% in the three months ended JanuaryJuly 31, 2017.2023, from 4.7% in the three months ended July 31, 2022. The increase was primarily attributable to increased volume and certain price increases. The increase was partially offset by an increase in direct labor and related costs due to increased wages and headcount as travel continues to recover.
29

Technical Solutions
 Three Months Ended July 31,
($ in millions)20232022Increase / (Decrease)
Revenues$167.9 $158.4 $9.5 6.0%
Operating profit11.4 15.4 (4.0)(25.7)%
Operating profit margin6.8 %9.7 %(291) bps
Technical Solutions revenues increased by $9.5 million, or 6.0%, to $167.9 million during the three months ended July 31, 2023, as compared to the prior year period. Revenue growth was comprised of acquisition growth of 11.5%, which was partially offset by an organic decrease of 5.5%. Acquisition growth was driven by an $18.2 million revenue increase from the RavenVolt Acquisition, which was completed in 2022. The organic revenue decrease was primarily driven by lower project revenues due to the timing of completions of certain bundled energy solutions projects, partially offset by increase in electric vehicle charging station installation sales.
Operating profit decreased $4.0 million, or 25.7%, to $11.4 million during the three months ended July 31, 2023, as compared to the prior year period. Operating profit margin decreased by 9291 bps to 7.3%6.8% in the three months ended JanuaryJuly 31, 20182023, from 7.4%9.7% in the three months ended January 31, 2017.prior year period. The decrease in operating profit margin was primarily attributable to higherthe contract mix and a $3.2 million amortization expenseof intangible assets related to RavenVolt.
Corporate
 Three Months Ended July 31,
($ in millions)20232022Decrease
Corporate expenses$(15.9)$(70.3)$54.4 77.4%
Corporate expenses decreased by $54.4 million, or 77.4%, to $15.9 million during the three months ended July 31, 2023, as compared to the prior year period. The decrease in corporate expenses was primarily attributable to:
•a $37.2 million decrease in the fair value of contingent consideration related to the GCARavenVolt Acquisition; and
•a $22.4 million benefit from ERC refunds received.
30

Results of Operations
Nine Months Ended July 31, 2023,Compared with the Nine Months Ended July 31, 2022
Consolidated
Nine Months Ended July 31,
(in millions)20232022Increase / (Decrease)
Revenues$6,003.5 $5,795.5 $208.0 3.6%
Operating expenses5,230.7 5,004.4 226.3 4.5%
Gross margin12.9 %13.7 %(78) bps
Selling, general and administrative expenses411.5 468.5 (57.0)(12.2)%
Amortization of intangible assets58.2 52.9 5.3 10.1%
Operating profit303.1 269.7 33.4 12.4%
Income from unconsolidated affiliates3.0 1.8 1.2 60.1%
Interest expense(61.8)(25.2)(36.6)NM*
Income before income taxes244.2 246.3 (2.1)(0.9)%
Income tax provision(55.7)(64.8)9.1 14.0%
Net income188.5 181.6 6.9 3.8%
Other comprehensive income (loss)
Interest rate swaps(2.7)6.2 (8.9)NM*
Foreign currency translation and other15.9 (15.1)31.0 NM*
Income tax (provision) benefit0.7 (1.7)2.4 NM*
Comprehensive income$202.4 $171.1 $31.3 18.3%
*Not meaningful
Revenues
Revenues increased by $208.0 million, or 3.6%, to $6,003.5 million during the nine months ended July 31, 2023, as compared to the prior year period. Revenue growth was comprised of organic growth of 1.9% and acquisition growth of 1.7%. Acquisition growth was primarily driven by a $98.4 million revenue increase from the Momentum and RavenVolt acquisitions, which were completed in 2022. Organic growth was primarily driven by the net new business and expansion of business with existing customers within M&D and Education and recovery in volume of our business in Aviation. In addition, we recognized $11.4 million in revenue from an Aviation parking project, whereby all the direct labor and related costs were recognized in the prior periods. The related revenue was not recognized in the prior periods since the criteria for revenue recognition was not met until February 2023. The increase in revenues was partially offset by certain acquired higher margin contracts.a decrease in work orders primarily in B&I, M&D, and Education.
Education       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase / (Decrease)
Revenues$206.3
 $67.0
 $139.3
 NM*
Operating profit9.2
 3.6
 5.6
 NM*
Operating profit margin4.4% 5.4% (99) bps
 
Operating Expenses
*Not meaningful
Education revenuesOperating expenses increased by $139.3$226.3 million, or 4.5%, to $5,230.7 million during the nine months ended July 31, 2023, as compared to the prior year period. Gross margin decreased by 78 bps to 12.9% in the nine months ended July 31, 2023, from 13.7% in the nine months ended July 31, 2022. The decrease in gross margin was primarily driven by the decrease in favorable self-insurance adjustments related to prior year claims as the result of actuarial evaluations completed on our workers’ compensation, general liability, automobile liability, and property damage insurance plans. In addition, there was a decrease in work orders (primarily in B&I, M&D, and Education), which have higher margins. The decrease in gross margin was partially offset by the revenue recognized for the Aviation parking project.
31

Selling, General and Administrative Expenses
    Selling, general and administrative expenses decreased by $57.0 million, or 12.2%, to $411.5 million during the nine months ended July 31, 2023, as compared to the nine months ended July 31, 2022. The decrease in selling, general and administrative expenses was primarily attributable to:
•a $45.6 million decrease in the fair value of contingent consideration related to the RavenVolt Acquisition; and
•a $22.4 million benefit from ERC refunds received.
This decrease was partially offset by:
•the absence of a $7.7 million gain on the sale of a group of customer contracts related to healthcare technology management services within Technical Solutions during the three months ended January 31, 2018,2022; and
•a $4.6 million unfavorable self-insurance adjustment related to prior year claims as the result of actuarial evaluations completed on our medical and dental self-insurance plans.
Amortization of Intangible Assets
Amortization of intangible assets increased by $5.3 million, or 10.1%, to $58.2 million during the nine months ended July 31, 2023, as compared to the threenine months ended JanuaryJuly 31, 2017. The2022. This increase was attributableprimarily due to incremental revenues from the GCA acquisitionamortization of $140.5 million.intangibles acquired as part of the RavenVolt Acquisition.
Operating profitInterest Expense
Interest expense increased by $5.6$36.6 million, to $61.8 million during the threenine months ended JanuaryJuly 31, 2018,2023, as compared to the threenine months ended JanuaryJuly 31, 2017.2022. The increase was driven by higher interest rates on our debt borrowings.
Income Taxes from Operations
Our effective tax rates on income from operations for the nine months ended July 31, 2023, and July 31, 2022, were 22.8% and 26.3%, respectively, resulting in provisions for taxes of $55.7 million and $64.8 million, respectively.
Our effective tax rate for the nine months ended July 31, 2023, benefited from discrete items, primarily by $1.7 million for share-based compensation, ERC refunds received from IRS, and the non-taxable change in the fair value of the contingent consideration related to the RavenVolt Acquisition. Our effective tax rate for the nine months ended July 31, 2022, benefited from discrete items, primarily by $3.3 million change in tax reserves and $1.3 million for share-based compensation.
Interest Rate Swaps
We had a loss of $2.7 million during the nine months ended July 31, 2023, as compared to a gain of $6.2 million during the nine months ended July 31, 2022, 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 $15.9 million during the nine months ended July 31, 2023, as compared to a foreign currency translation loss of $15.1 million during the nine months ended July 31, 2022. 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.
32

Segment Information
Financial Information for Each Reportable Segment
 Nine Months Ended July 31,
(in millions)20232022Increase / (Decrease)
Revenues
Business & Industry$3,056.4 $3,067.0 $(10.6)(0.3)%
Manufacturing & Distribution1,135.5 1,074.1 61.4 5.7%
Education650.7 617.6 33.1 5.4%
Aviation677.5 589.7 87.8 14.9%
Technical Solutions483.4 447.2 36.2 8.1%
$6,003.5 $5,795.5 $208.0 3.6%
Operating profit
Business & Industry$231.1 $242.4 $(11.3)(4.7)%
Operating profit margin7.6 %7.9 %(34) bps
Manufacturing & Distribution119.7 120.6 (0.9)(0.7)%
Operating profit margin10.5 %11.2 %(68) bps
Education39.5 38.8 0.7 1.8%
Operating profit margin6.1 %6.3 %(21) bps
Aviation43.6 28.0 15.6 55.7%
Operating profit margin6.4 %4.8 %169 bps
Technical Solutions28.8 42.8 (14.0)(32.7)%
Operating profit margin6.0 %9.6 %(362) bps
Government Services— (0.3)0.3 NM*
Operating marginNM*NM*— bps
Corporate(156.7)(200.6)44.0 21.9%
Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions(3.0)(1.8)(1.1)(60.1)%
Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions(0.1)(0.3)0.1 50.2%
$303.1 $269.7 $33.4 12.4%
*Not meaningful
Business & Industry
 Nine Months Ended July 31,
($ in millions)20232022Decrease
Revenues$3,056.4 $3,067.0 $(10.6)(0.3)%
Operating profit231.1 242.4 (11.3)(4.7)%
Operating profit margin7.6 %7.9 %(34) bps
B&I revenues decreased by $10.6 million, or 0.3%, to $3,056.4 million during the nine months ended July 31, 2023, as compared to the prior year period. Revenue growth was comprised of acquisition growth of 1.0% and organic decrease of 1.3%. Acquisition growth was primarily driven by a $32.1 million revenue increase from the Momentum Acquisition, which was completed in the second quarter of 2022. The organic revenue decrease was primarily driven by the decline in work orders, including disinfection-related work orders, and expected attrition of certain engineering clients. Management reimbursement revenues for this segment totaled $200.2 million and $165.0 million for the nine months ended July 31, 2023 and 2022, respectively.
Operating profit decreased by $11.3 million, or 4.7%, to $231.1 million during the nine months ended July 31, 2023, as compared to the prior year period. Operating profit margin decreased by 9934 bps to 4.4%7.6% in the threenine months

ended JanuaryJuly 31, 20182023, from 5.4%7.9% in the threenine months ended JanuaryJuly 31, 2017.2022. The decrease in operating
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profit margin was primarily associated withdriven by the decrease in work orders, which have higher amortization expense related to the GCA acquisition,margins, and contract and service mix, partially offset by certain acquired higher margin contracts.lower amortization of intangible assets.
Manufacturing & Distribution
 Nine Months Ended July 31,
($ in millions)20232022Increase / (Decrease)
Revenues$1,135.5 $1,074.1 $61.4 5.7%
Operating profit119.7 120.6 (0.9)(0.7)%
Operating profit margin10.5 %11.2 %(68) bps
Technical Solutions       
 Three Months Ended January 31,    
($ in millions)2018 2017 Decrease
Revenues$104.0
 $107.7
 $(3.7) (3.4)%
Operating profit5.5
 7.9
 (2.4) (30.5)%
Operating profit margin5.3% 7.3% (205) bps
  
Technical SolutionsM&D revenues decreasedincreased by $3.7$61.4 million, or 3.4%5.7%, to $1,135.5 million during the threenine months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017. This decreaseprior year period. The increase was primarily attributable to the timing ofnet new project bookingsbusiness and the completionexpansion of certain bundled energy solutions projects.business with existing customers, partially offset by a decrease in work orders.
Operating profit decreased by $2.4$0.9 million, or 30.5%0.7%, to $119.7 million during the threenine months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017.prior year period. Operating profit margin decreased by 20568 bps to 5.3%10.5% in the threenine months ended JanuaryJuly 31, 20182023, from 7.3%11.2% in the threenine months ended JanuaryJuly 31, 2017.2022. The decrease in operating profit margin was primarily attributable to the decrease in work orders, which have higher margins, and change in contract mix.

Education
 Nine Months Ended July 31,
($ in millions)20232022Increase / (Decrease)
Revenues$650.7 $617.6 $33.1 5.4%
Operating profit39.5 38.8 0.7 1.8%
Operating profit margin6.1 %6.3 %(21) bps
Education revenues increased by $33.1 million, or 5.4%, to $650.7 million during the nine months ended July 31, 2023, as compared to the prior year period. The increase was primarily attributable to net new business, partially offset by a decrease in work orders for disinfection-related demands.
Operating profit increased by $0.7 million, or 1.8%, during the nine months ended July 31, 2023, as compared to the prior year period. Operating profit margin decreased by 21 bps to 6.1% in the nine months ended July 31, 2023, from 6.3% in the nine months ended July 31, 2022. The decrease in operating profit margin was primarily attributable to an increase in start-up supplies to support new business growth and the decrease in disinfection-related work orders, which have higher margins. Operating profit margin was positively impacted by lower depreciation and amortization expense.
Aviation
 Nine Months Ended July 31,
($ in millions)20232022Increase
Revenues$677.5 $589.7 $87.8 14.9%
Operating profit43.6 28.0 15.6 55.7%
Operating profit margin6.4 %4.8 %169 bps
Aviation revenues increased by $87.8 million, or 14.9%, to $677.5 million during the nine months ended July 31, 2023, as compared to the prior year period. The increase was primarily attributable to a recovery in consumer and business travel (both domestic and international) and new parking-related services. Management reimbursement revenues for this segment totaled $23.3 million and $39.0 million for the nine months ended July 31, 2023 and 2022, respectively.
Operating profit increased by $15.6 million, or 55.7%, to $43.6 million during the nine months ended July 31, 2023, as compared to the prior year period. Operating profit margin increased by 169 bps to 6.4% in the nine months ended July 31, 2023, from 4.8% in the nine months ended July 31, 2022. The increase was primarily
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attributable to $11.4 million in revenue from an Aviation parking project, whereby all the direct labor and related costs were recognized in the prior periods. The related revenue was not recognized in the prior periods since the criteria for revenue recognition was not met until February 2023. Operating profit margin was negatively impacted by an increase in direct labor and related costs due to increased headcounts as travel continues to recover.
Technical Solutions
 Nine Months Ended July 31,
($ in millions)20232022Increase / (Decrease)
Revenues$483.4 $447.2 $36.2 8.1%
Operating profit28.8 42.8 (14.0)(32.7)%
Operating profit margin6.0 %9.6 %(362) bps
Technical Solutions revenues increased by $36.2 million, or 8.1%, to $483.4 million during the nine months ended July 31, 2023, as compared to the prior year period. Revenue growth was comprised of acquisition growth of 14.8%, which was partially offset by an organic decrease of 6.7%. Acquisition growth was driven by $66.3 million revenue increase from the RavenVolt Acquisition, which was completed in 2022. The organic revenue decrease was primarily driven by the decline in electric vehicle charging station installation sales, lower project revenues due to the timing of completions of certain bundled energy solutions projects, as well as the sale of a group of customer contracts related to healthcare technology management services in the first quarter of 2022.
Operating profit decreased by $14.0 million, or 32.7%, to $28.8 million during the nine months ended July 31, 2023, as compared to the prior year period. Operating profit margin decreased by 362 bps to 6.0% in the nine months ended July 31, 2023, from 9.6% in the nine months ended July 31, 2022. The decrease in operating profit margin was primarily attributable to the $7.6 million gain recognized on the sale of a group of customer contracts in the first quarter of 2022 and a $9.5 million amortization of intangible assets related to RavenVolt.
Corporate
 Nine Months Ended July 31,
($ in millions)20232022Decrease
Corporate expenses$(156.7)$(200.6)$44.0 21.9%
Corporate expenses decreased by $44.0 million, or 21.9%, to $156.7 million during the nine months ended July 31, 2023, as compared to the prior year period. The decrease in corporate expenses was primarily attributable to:
•a $45.6 million decrease in the fair value of contingent consideration related to the RavenVolt Acquisition;
•a $22.4 million benefit from ERC refunds received; and
•a $6.2 million decrease in compensation and related expenses primarily due to investment in sales personnelyear-end compensation true-up for certain incentive plans and the loss of certain high margin contracts in our U.K. business. lower share-based compensation expense.
This decrease was partially offset byby:
•a $30.8 million decrease in favorable margins on certain projects in our U.S. business.
Healthcare       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase
Revenues$67.7
 $61.7
 $6.0
 9.8%
Operating profit2.7
 2.5
 0.2
 10.1%
Operating profit margin4.0% 4.0% 1 bps
  
Healthcare revenues increased by $6.0 million, or 9.8%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. This increase was primarily attributable to incremental revenues from the GCA acquisition of $7.5 million, the expansion of existing janitorial accounts, and new business. This increase was partially offset by the loss of a large facilities management contract.
Operating profit increased by $0.2 million or 10.1% during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. Operating profit margin remained flat at 4.0% in the three months ended January 31, 2018 and 2017.
Corporate       
 Three Months Ended January 31,    
($ in millions)2018 2017 Increase
Corporate expenses$47.4
 $34.6
 $12.8
 36.9%
Corporate expenses increased by $12.8 million, or 36.9%, during the three months ended January 31, 2018, as compared to the three months ended January 31, 2017. The increase in corporate expenses was primarily related to a $9.3 million increase in restructuring and related costs as a result of the GCA acquisition and a $3.7 million increase in costs primarily associated with 2020Vision technology investments. This increase was partially offset by a $3.0 million lower self-insurance adjustmentadjustments related to prior year claims as athe result of an actuarial reviewevaluations completed in the three months ended January 31, 2018.on our workers’ compensation, general liability, automobile liability, and property damage insurance plans.


Liquidity and Capital Resources

Our primary sources of liquidity are operating cash flows and borrowing capacity under our credit facility.Amended 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.

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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, mandatory loan repayments, and integration costs related to the GCA acquisition.systems and technology transformation initiatives under our ELEVATE strategy. We anticipate long-term cash uses willmay also include strategic acquisitions and share repurchases.

acquisitions. On a long-term basis, we will continue to rely on our Amended Credit Facility for any long-term funding not provided by operating cash flows.
We believe that our operating cash flows and borrowing capacity under our credit facilityAmended Credit Facility are sufficient to fund our cash requirements for the next twelve12 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.

Debt
On a long-term basis,September 1, 2017, we will continue to rely onrefinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-year syndicated credit facility, consisting of a $900.0 million revolver and an $800.0 million amortizing term loan, both of which were scheduled to mature on September 1, 2022. In accordance with terms of the Credit Facility, the revolver was reduced to $800.0 million on September 1, 2018.
On June 28, 2021, the Company amended and restated the Credit Facility, extending the maturity date to June 28, 2026, and increasing the capacity of the revolving credit facility from $800.0 million to $1.3 billion and the then-remaining term loan outstanding from $620.0 million to $650.0 million. The Amended Credit Facility provides for working capitalthe issuance of up to $350.0 million for standby letters of credit and long-term fundingthe issuance of up to $75.0 million in swingline advances. The obligations under the Amended Credit Facility are secured on a first-priority basis by a lien on substantially all of our assets and properties, subject to certain exceptions. Additionally, we may repay amounts borrowed under the Amended Credit Facility at any time without penalty.
At November 1, 2022, we amended our Amended Credit Facility pursuant to the LIBOR Transition Amendment and the Fifth Amendment to replace the benchmark rate at which U.S.-dollar-denominated borrowings bear interest from LIBOR to the forward-looking SOFR term rate administered by CME Group Benchmark Administration Limited. As a result of these amendments, we can borrow at Term SOFR plus a credit spread adjustment of 0.10% subject to a floor of zero.
The Amended Credit Facility contains certain covenants, including a maximum total net leverage ratio of 5.00 to 1.00, a maximum secured net leverage ratio of 4.00 to 1.00, and a minimum interest coverage ratio of 1.50 to 1.00, as well as other financial and non-financial covenants. In the event of a material acquisition, as defined in the Amended Credit Facility, we may elect to increase the maximum total net leverage ratio to 5.50 to 1.00 for a total of four fiscal quarters and increase the maximum secured net leverage ratio to 4.50 to 1.00 for a total of four fiscal quarters. Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At July 31, 2023, we were in compliance with these covenants.
On March 1, 2022, we entered into an uncommitted receivable repurchase facility (the “Receivables Facility”) of up to $150 million, which expired on March 30, 2023. This facility was considered a secured borrowing and provided the buyer with customary rights of termination upon the occurrence of certain events of default. We guaranteed all of the sellers’ obligations under the facility.
During the three and nine months ended July 31, 2023, we made principal payments of $8.1 million and $24.4 million, respectively, under the term loan. At July 31, 2023, the total outstanding borrowings under our Amended Credit Facility in the form of cash borrowings and standby letters of credit were $1.3 billion and $58.4 million, respectively, and our weighted average interest rate on all outstanding borrowings, excluding letters of credit, was 7.02%. At July 31, 2023, we had up to $485.0 million of borrowing capacity.
Reinvestment of Foreign Earnings
We plan to reinvest our foreign earnings to fund future non-U.S. growth and 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
36

result of the managementTax Cuts and Jobs Act of costs through consolidated procurement.2017, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.

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


Share Repurchases
On September 2, 2015,We repurchased shares under our Board of Directors authorized ashare repurchase program to repurchase up to $200.0 million shares of our common stock. Purchasesduring the three and nine months ended July 31, 2023, as summarized below. Share repurchases 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. Repurchased shares are retired and returned to an authorized but unissued status. The share repurchase program may be suspended or discontinued at any time without prior notice. There were no share repurchases during the three months ended JanuaryAt July 31, 2018. At January 31, 2018,2023, authorization for $134.1$170.3 million of repurchases remained under our share repurchase program. We do not anticipate additional repurchases in the near future.program.
(in millions, except per share amounts)Three Months Ended July 31, 2023Nine Months Ended July 31, 2023
Total number of shares purchased0.60.6
Average price paid per share$42.10 $42.10 
Total cash paid for share repurchases$27.1 $27.1 
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, Nine Months Ended July 31,
(in millions)2018 2017(in millions)20232022
Net cash provided by (used in) operating activities$33.7
 $(11.1)Net cash provided by (used in) operating activities$104.1 $(96.7)
Net cash used in investing activities(15.3) (29.1)Net cash used in investing activities(45.0)(93.3)
Net cash (used in) provided by financing activities(14.3) 27.0
Net cash (used in) provided by financing activities(38.4)194.2 
Operating Activities
Net cash provided by operating activities was $33.7$104.1 million during the threenine months ended JanuaryJuly 31, 2018,2023, as compared to net cash used inby operating activities of $11.1$96.7 million during the three months ended January 31, 2017, a change of $44.8 million. Thisprior year period. The change was primarily related to the timing of client receivable collections, but was partially offsetdriven by the timing of vendor payments.working capital requirements, which included a $143.8 million payment for the Bucio case during the nine months ended July 31, 2022.
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Investing Activities
Net cash used in investing activities decreased by $13.8$48.4 million during the threenine months ended JanuaryJuly 31, 2018,2023, as compared to the three months ended January 31, 2017. Theprior year period. This decrease was primarily related to an $16.2 million year-over-year decreasethe Momentum Acquisition in cash paid, net of cash acquired, for acquisitions.prior year.
Financing Activities
Net cash used in financing activities was $14.3$38.4 million during the threenine months ended JanuaryJuly 31, 2018,2023, as compared withto net cash provided by financing activities of $27.0$194.2 million during the three months ended January 31, 2017, a change of $41.3 million.prior year period. The change was primarily related to lowera decrease in net borrowings from our Amended Credit Facility of $36.4 million.Facility.


Contingencies
We are a party to a number of lawsuits, claims, and proceedings incident to the operation of our business, including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may be brought as class actions
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.
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.
For additional information about our contingencies, see Note 10, “Commitments and Contingencies,” of the Notes to unaudited Consolidated Financial Statements included in the Financial Statements.Part I, Item 1 of this Form 10-Q.

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Critical Accounting Policies and Estimates
Our accompanying Financial Statements are prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”),GAAP, which require us to make certain estimates in the application of our accounting policies based on the best assumptions, judgments, and opinions of our management. There have been no significant changes to our critical accounting policies and estimates. For a description of our critical accounting policies, see Item 7., “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report.Report on Form 10-K for the year ended October 31, 2022.
RecentRecently Issued Accounting Pronouncements    
Accounting Standard Update(s)DescriptionTopicSummaryEffective Date/
Method of Adoption		Effect on the Financial Statements
In February 2018, the Financial2022-04
Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program ObligationsThis Accounting Standards Board (“FASB”) issued Accounting StandardsStandard Update (“ASU”) 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income.This ASU permits an entity, issued in September 2022, is designed to reclassify the income tax effectsenhance transparency around supplier finance programs by requiring new disclosures that would allow a user of the Tax Act on items within accumulated other comprehensive income into retained earnings.This standard will be applied either infinancial statements to understand the program’s nature, activity during the period, of adoption or retrospectivelychanges from period to each period, in which the effect of the change in the tax laws or rates were recognized.
Weand potential magnitude.

While we are currently evaluating the impact of implementing this guidance on our consolidated financial statements.
In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvementsstatements, we do not expect adoption to Accounting for Hedging Activities.
This ASU better aligns accounting rules with 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).
impact.
This ASU improves transparency and comparability among organizations by requiring lessees to recognize lease assets and lease liabilitiesis effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on the balance sheet and to disclose keyrollforward information, about leasing arrangements.November 1, 2019

When transitioning to the new standard, we are required to recognize and measure leases at thewhich is effective for fiscal years beginning of the earliest period presented using a modified retrospective approach.		We are currently evaluating the impact of implementing this guidance on our consolidated financial statements.
In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606).
This ASU introduces a new principles-based framework for revenue recognition and disclosure. The core principle of the standardafter December 15, 2023. Early adoption is when an entity transfers goods or services 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.November 1, 2018

This standard will be applied as a full retrospective adoption to all periods presented or 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.

permitted.



39

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, 2017.2022.
ITEM 4. CONTROLS AND PROCEDURES.
a.Disclosure Controls and Procedures.
As of the end of the period covered by this report, our Principal Executive Officer and Principal Financial Officer evaluated our disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is (1) recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission,SEC and (2) accumulated and communicated to our management, including our Principal Executive Officer and Principal Financial Officer, to allow timely decisions regarding required disclosure.
b. Changes in Internal Control Over Financial Reporting.
During 2017, we completedTo support the acquisitiongrowth of GCA, as described elsewhere in this report. We continue to integrate policies, processes, personnel, technology,our financial shared service capabilities and operations relating to this transaction and will continue to evaluate the impact of any related changes tostandardize our control over financial reporting. Additionally,systems, we continue to migrate manyupdate several key platforms, including our enterprise resource planning (“ERP”) system. The implementation of our financial reporting and other processes to our Enterprise Services Center as partseveral key platforms involves changes in the systems that include internal controls. During the third quarter of our 2020Vision strategic transformation initiative.
There were no other changes2023, we had a change in our internal control over financial reporting duringas a result of our implementation of a new ERP for the first quarter of 2018 identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange ActEducation industry group that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. The new ERP system for the Education industry group replaced our legacy system in which a significant portion of our business transactions originate, are processed, and recorded. The rest of our industry groups will transition to our new ERP system over the next several years. Our new ERP system is intended to provide us with enhanced transactional processing and management tools compared with our legacy system and is intended to enhance internal controls over financial reporting. We believe our new ERP system will facilitate better transactional reporting and oversight, enhance our internal control over financial reporting, and function as an important component of our disclosure controls and procedures.
Other than the change of our ERP system for the Education industry group, there have been no other changes in our internal control over financial reporting during the third quarter of 2023 identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that have materially affected, or are reasonably likely to materially affect, our internal control 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, “Commitments and Contingencies,” to the unaudited Consolidated 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, 2017,2022, 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,The following table sets forth, for the months indicated, our purchases of common stock in the second quarter of fiscal year 2023:
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(in millions, except per share amounts)Total Number of Shares PurchasedAverage Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Plan(1)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan
Period
5/1/2023 – 5/31/2023— — — 197.4 
6/1/2023 – 6/30/20230.1 41.58 0.1 191.2 
7/1/2023 – 7/31/20230.5 42.25 0.5 170.3 
Total0.6$42.10 0.6170.3 
(1) Effective December 9, 2022, our Board of Directors authorized aexpanded our existing share repurchase program to repurchase up to $200.0by an additional $150.0 million shares of our common stock. DuringUnder the three months ended January 31, 2018, there were no share repurchases. At January 31, 2018, authorization for $134.1 million of repurchases remained under our share repurchase program.program, we may repurchase shares on the open market, through solicited or unsolicited privately negotiated transactions, or otherwise, from time to time based on market conditions and other factors.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.

Trading Arrangements
During the three months ended July 31, 2023, certain of our “officers,” as defined in Rule 16a-1(f) of the Exchange Act, and directors adopted, modified, or terminated a “Rule 10b5-1 trading arrangement” or a “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408 of Regulation S-K, as follows:
Trading Arrangements
Name and TitleActionDate of Action
Rule 10b5-1 Trading Arrangement1
Non-Rule 10b5-1 Trading ArrangementAggregate Number of Securities to be SoldAggregate Number of Securities to be PurchasedDuration
Rene Jacobsen, Executive Vice President and Chief Operating OfficerAdoptionJuly 14, 2023X-18,245 shares of common stock-From October 13, 2023, until the earlier of (i) the date when all shares under plan are sold and (ii) July 24, 2024
Andrea Newborn, Executive Vice President, General Counsel and Corporate SecretaryAdoptionJuly 11, 2023X-9,766 shares of common stock-From October 10, 2023, until the earlier of (i) the date when all shares under plan are sold and (ii) April 9, 2024

(1)Intended to satisfy the affirmative defense conditions of Rule 10b5-1(c).
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ITEM 6. EXHIBITS.
(a) Exhibits
Exhibit No.Exhibit Description
10.1*‡31.1†
10.2*‡
Change in Control Agreement, dated as of November 1, 2017, by and between ABM Industries Incorporated and Scott Giacobbe.

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

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

42



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



MarchSeptember 7, 20182023/s/ D. Anthony ScaglioneEarl R. Ellis
D. Anthony Scaglione
Earl R. Ellis
Executive Vice President and Chief Financial Officer

(Duly Authorized Officer)





MarchSeptember 7, 20182023/s/ Dean A. Chin
Dean A. Chin

Senior Vice President, Chief Accounting Officer,
and Corporate Controller
and Treasurer
(Principal Accounting Officer)








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