ABM Industries Incorporated

Greetings and welcome to the ABM Industries second quarter 2026 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Paul Goldberg, Senior Vice President of Investor Relations. Please go ahead.

Good morning, everyone, and welcome to ABM's second quarter 2026 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 David Orr, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our second quarter 2026 financial results and outlook. A copy of that release and an accompanying slide presentation can be found on our website, abn.com. After Scott and David'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 contain predictions, estimates, and other forward-looking statements. Our words of these 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.

Good morning, everyone, and thank you for joining us to discuss ABM's second quarter fiscal 2026 results. We had a strong quarter. Organic revenue growth came in at 6.1%, and I'm especially pleased to report that our first half new sales bookings reached $1.2 billion, a new record for ABM. Organic growth was especially strong in technical solutions and aviation, while in M&D, we saw healthy underlying organic demands complemented by the WGN Star acquisition, which is performing well and adding meaningfully to the segment's results right out of the gate. Education continued to post steady growth, and B&I was flat organically. B&I was impacted by the exit of a large UK client during the second quarter and by our decisions to exit several other clients, especially on the West Coast, where commercial real estate markets have yet to fully recover, creating pressure in the market. Stepping back from the top line for a moment, we also executed well operationally. Margins improved sequentially, and free cash flow was up significantly in the first half compared to last year, which I'm very pleased with. As we look ahead to the second half, the setup is compelling. We expect volume to ramp meaningfully in both ATS and MND, and service mix within ATS in particular should improve as the project pipeline matures and our backlog execution ramps sequentially. Layered on top of that are cost discipline and price escalation actions are gaining traction. Taken together, we expect these drivers to produce a significant step up in both earnings and margin as we move through the back half of the year. While the near-term macroeconomic environment remains dynamic, ABM operates in markets that offer a compelling combination of secular growth opportunities in areas like energy infrastructure, semiconductors, and airport modernization, alongside the steady, predictable revenue streams that have always been ABM's foundation. When taken together with the strong operating culture we have in place, ABM is well positioned to capture the long-term growth opportunities ahead. So let me share more. Within business and industry, the prime office recovery continues to gain traction, although, as mentioned, the market is still experiencing some softness on the West Coast. U.S. office leasing is approaching 2019 levels. Net absorption turned significantly positive in the first quarter, the strongest since 2020, and prime vacancy rates continue to tighten. New supply remains extremely limited, with the construction pipeline nearly 90% below its 2020 peak. The flight to quality dynamic continues to favor exactly the types of prime assets where ABM is concentrated, and we expect to see positive spillover into the next tier of high-quality buildings. This dynamic is translating into real wins. Last year, we were selected to serve as the new headquarters of the nation's largest bank here in New York City, and we recently followed that with a significant new facilities contract with another of the nation's leading commercial banks. These wins reflect both the strength of the office recovery and the confidence that world-class clients are placing in ABM. Turning to M&D. The semiconductor build-out may turn out to be one of the most compelling growth stories in American manufacturing in 21st century. Over $645 billion in private investment has been announced across 140-plus projects since 2020, with major commitments from companies such as TSMC, Micron, Intel, Samsung, and Texas Instruments. The WGM Star acquisition has significantly strengthened our presence in semiconductor fabrication environments and the benefits are already becoming evident. During the second quarter, we secured tens of millions of dollars in new business and delivered high double-digit organic revenue growth across our semiconductor market. Beyond semiconductors, e-commerce growth and U.S. manufacturing reshoring continue to support healthily demand across the segment, which will continue to benefit us. In aviation, the fundamentals remain strong. TSA throughput is running close to 3 million passengers per day, and leisure demand remains robust. Airport infrastructure investment is at elevated levels as aging terminals drive a sustained modernization pipeline, and our recent wins at Orlando International, Miami International, and LaGuardia Terminal B reflect the strength of that pipeline. While rising fuel costs will likely create some near-term challenges for our airline clients, the long-term trajectory of this business is positive, and our pipeline of new opportunities continues to evolve. In education, the numbers tell a compelling story. K-12 schools in this country average 49 years in age. There is an $85 billion annual funding gap for repair and modernization. And higher education construction spending in that area continues at near record levels. These dynamics should create durable long-term demand for ABM services. Our strong retention rates and ABM Performance Solutions offering position us to capture an increasing share of this opportunity, and our recently awarded $25 million Detroit Public Schools contract is a tangible demonstration of that. And in technical solutions, the tailwinds are as strong as we have seen. Nationwide battery storage installations were up 52% in 2025, AI is accelerating data center construction at double-digit pace globally, and microgrids are becoming essential infrastructure for the modern electric grid. This is precisely where ATS is most differentiated, sitting at the intersection of energy resiliency, electrification, and AI infrastructure. Another recent microgrid win with a major big box retailer along with a variety of other energy storage and infrastructure projects booked this quarter are proof points of what we believe will be a multiyear growth cycle for this segment. Now looking specifically at the remainder of the year, we expect strong results in technical solutions driven by higher volume and improved mix. M&D is also expected to deliver robust results as new business continues to come online and WGM Star ramps up. Education will continue to be solid. B&I revenue will likely moderate in the back half of the year due to client exits, including the large UK client I previously discussed. And in aviation, while air travel demand remains robust, we are watching the potential impact of rising fuel costs on our airline clients. Overall, though, our end markets remain largely constructive, and we continue to closely monitor the evolving macroeconomic environment. We remain focused on reducing leverage to below three times, maintaining a disciplined approach to capital allocation, and executing against our full-year outlook as we operate with focus and financial discipline. With that, I'll turn it over to David.