ABM Industries Incorporated

on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Paul Goldberg, Senior Vice President, Investor Relations for ABM Industries. Thank you, sir. You may begin.

Good morning, everyone, and welcome to ABM's second quarter 2024 earnings call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM. With me today are Scott Salmiers, our President and Chief Executive Officer, and Earl Ellis, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our second quarter 2024 financial results. A copy of that release and an accompanying slide presentation can be found on our website, abm.com. After Scott and Earl's prepared remarks, we will host the Q&A session. But before we begin, I would like to remind you that our call and presentation today contains predictions, estimates, and other forward-looking statements. Our use of the words estimate, expect, and similar expressions are intended to identify these statements, and they represent our current judgment of what the future holds. While we believe them to be reasonable, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially. These factors are described in a slide that accompanies our presentation as well as our filings with the SEC. During the course of this call, certain non-GAAP financial information will be presented. A reconciliation of historical non-GAAP numbers to GAAP financial measures is available at the end of the presentation and on the company's website under the Investor tab. And with that, I would like to now turn the call over to Scott.

Thanks, Paul. Good morning, and thank you all for joining us today to discuss our second quarter results. We were pleased with our quarterly results, which were driven by our team's execution and highlighted by strong cash flow, adjusted EBITDA margin of 6.5%, as well as by bid single-digit organic revenue growth in our aviation, technical solutions, manufacturing and distribution, and education segments, all of which resulted in an adjusted EPS of 87 cents. We were also encouraged with BNI as the business continues to prove resilient in a still settling commercial real estate environment, benefiting from our diverse client and service mix, our leading market position, and our penetration in higher performing class A segment of the market. In fact, the results were generated in BNI are a strong validation of our strategy and of the effectiveness of our business model, all of which provide a clear path to generate shareholder value. Our service breadth, our teammates, and our focus on our customers, as well as our elevated investments in technology, have enabled us to perform extremely well in choppy markets. Going forward, we expect to further leverage our elevated investments as we scale the technology across the organization. Earl will take you through the financial details of Q2 in a few minutes. We have had so many touch points with new investors the past few months that we thought it might be a good moment to reground our business model and value creation pathway while we have a focused audience. In the broadest sense, we think of ABM as the consistent cash-generating flywheel, leveraging our capital light model, scale, and leading market positions to self-fund growth and margin expansion initiatives while at the same time consistently returning capital to shareholders, all of which drive attractive long-term shareholder returns. Going deeper on an operational level, we generate these returns by delivering a core suite of essential facility services, primarily janitorial and engineering, to a diverse group of customers in a broad set of end markets. These markets tend to be mature, and on a blended basis have low volatility through a business cycle, as we continue to demonstrate. And that helps us to provide a level of predictability to our results. So how do we do this? To put it simply, we optimize our position in these core markets by utilizing our scale, leading brand, and reputation, which has been cultivated for over a century. This allows us to attract and support top-tier clients and team members, Our clients appreciate our ability to deliver a wide range of integrated services on a local level and our capabilities to provide consistent performance at scale, which is hard for our competitors to match. At the same time, we're continuously investing in our people, processes, and solution sets to become a more valuable partner to our clients. Our Capitalite business model provides flexibility and positions us well in our core market. We can quickly scale our labor force to meet changes in demand, which leads to resilient operating results in the face of dynamic macro conditions. Recent examples of this are the current real estate market challenges and before that, the pandemic. Resilience is a hallmark and differentiating factor for AVL. In total, we believe our core facility services business should achieve 2% to 4% organic revenue growth through a cycle. We have also historically generated a strong normalized free cash flow yield, which we believe is best in class amongst our peer group. Now let me walk you through how we're building upon the strong core to enhance our growth rate and margin performance. First, we strategically aligned ourselves with key secular trends, such as electrification, the U.S. movement to onshoring manufacturing, infrastructure build-out, and the outsized demand for data centers. Our aviation, technical solutions, and manufacturing distribution segments are all positioned to benefit from these trends and have already won significant new business because of this alignment. A few examples of these wins are the large parking project we completed at Los Angeles International Airport last year a recent $180 million microgrid win with a big box retailer, as well as our growth with eight of the 10 top semiconductor manufacturers in the U.S. We expect further outsized growth resulting from our expertise in electrification and related infrastructure over the next several years as we invest behind these trends via M&A and internal initiatives. Next, we continue to see significant opportunities within our portfolio to cross-sell other services, such as our ABM performance solutions, or as we call it, APS. APS is our multi-service performance model that includes facility maintenance, cleaning, energy, sustainability, safety, resiliency, and engineering solutions. In other words, one-stop shopping for our clients. Operated under a single contract, APS improves our clients' operations and enhances the resiliency and reliability of their facilities. In turn, this creates better outcomes for our clients and stickier business for us. Finally, our Elevate Self-Help initiative will support margin enhancement over the next few years. As we have discussed, we are digitally transforming our back office operations and our go-to-market strategy as well as how we manage labor and interact with our clients. These initiatives will generate direct savings from operating efficiencies, including procurement benefits and improved labor utilization, while providing our clients with enhanced data and actionable insights. Taken together, these secular growth opportunities, which carry a attractive margin in conjunction with all the work we are doing with Olivate, will drive higher enterprise profits. The resulting cash flow will be used to enhance shareholder value by investing in additional growth via internal initiatives and strategic M&A, while at the same time growing our dividend and opportunistically repurchasing shares, consequently creating a compounding effect. As we enter the second half of the year, we're encouraged by our positioning, the resilience of our markets, and our success in winning new business. We're particularly pleased to have booked over $1 billion in new sales during the first half of the year, a record. This includes projects that will be completed over the next few years, which gives us the ability to stay close to our clients over extended periods. What's most encouraging is that we are winning this business across the portfolio, including a large B&I contract with a major technology company. Aviation also won major contracts at Boston Logan Airport and Phoenix's Sky Harbor Airport. And education won a nice-sized APS contract with Utica University. All of these new wins complement the large microgrid project we mentioned last quarter and set us up for sustained success. Given our strong start to this year and our confidence for a solid second half, we are raising our full-year guidance for adjusted EPS And now it's expected to be in the range of $3.40 to $3.50 versus our prior range of $3.30 to $3.45. This increase reflects our strong market positioning and our continued conviction in the resilience of our business. With that, let me turn it over to Earl for the financials.