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| Statement |
|---|
| We expect demand within our Aviation segment to remain robust |
| Now having said that, it just reminds you that when we actually did the deal model, the deal model actually checked out very, very positively even without that earnout, so we continue to feel very, very confident about it that we're getting through this acquisition |
| As we move forward, I'm confident in our ability to build value for our stakeholders as we work tirelessly towards achieving our goals and evolving ABN into the technology-driven leader of facility services |
| Our Aviation team is doing a great job of leveraging ABM's leading position in a robust travel market, winning significant new business with both airports and major airlines, which I'll speak more about later |
| Manufacturing and Distribution and Education also both generated solid revenue growth in the quarter with M&D capitalizing on positive demand trends and an effective sales strategy |
| Again, hopefully the first quarter result shows you that we have the confidence in how we guide it and what we're doing and enthusiastic about getting back on the call on Q2 and giving you an update and hope to see a bunch of you at our tour at LaGuardia to really get a tangible tactical feel of what we're doing in the field when we're self-performing in multiple services |
| I think, look, we have -- we feel even more confident in how we're going to perform and how we guide it, because as you saw for this quarter, we were flat year-over-year, but there's no question that it's realistic to expect low single-digit declines as we see some compression with our clients, but we feel really good about where we are, and we continue to see people come back to the office |
| This is a large and exciting program for us, showcasing the breadth of capabilities that ABM can now offer |
| As Scott mentioned, we are raising our full year guidance for adjusted EPS based on the flowthrough of the discrete tax benefits recognized in the first quarter and our solid Q1 operating results |
| Yes, so it's an existing client, and it's actually a client that we have across other industry groups as well, so it was just a really great win for us, and especially when you talk about installing these microgrids, which really consist of switchgear and generators across 150 different sites over multiple years, right? So we're excited about that, and it's going to have double-digit margins, right? This is -- the switchgear and generators are a higher margin profile than the projects that we did last year that were -- that actually ended up in this quarter, which were battery related projects |
| We expect ATS margin to climb higher as the year progresses |
| As a result of the recognition of certain discrete tax benefits and our solid Q1 operating results, we are raising our full year outlook for adjusted EPS which Earl will discuss in more detail |
| In this operating environment, we remain confident in B&I's resilience |
| And especially when you look at ABM where we focus on Class A properties, which, again, even in the media, it's validating that tenants and B&C properties are gravitating to A properties, right? So we feel super confident that between the asset class that we're focused on Class A and the fact that we have this flexible labor model and if a client goes from five floors to four floors, we do have the ability to release the staff on that fifth floor and maintain our margins |
| Our strategy continues to largely mitigate ongoing pressure within commercial real estate market and enhance our long-term growth opportunities |
| For example, we saw double digit revenue growth in our sports and entertainment business, driven by strong consumer demand for live sports and concerts |
| I'm so proud that the ABM team was responsible for facility services at the Super Bowl at Allegiant Field in Las Vegas last month and did an amazing job |
| Looking forward, we believe we will outperform the underlying commercial real estate markets given our flexible labor model, cost management efforts, and the diversity of our service lines and clients |
| Like, if you looked at ATS this quarter, you saw a really great growth, but on the bottom line, it wasn't really up to what you would normally expect in ATS, and that's because the mix this quarter was around the large battery projects, which again doesn't have the margin profile that the national retailer project is going to have and that's going to come back in -- that's going to really manifest itself in the second half of the year with the bulk of it being in ‘25, but it's super exciting for us and our pipeline is huge right and I think we mentioned it but if you look at the ATS segment, Tim, two-thirds of our backlog now is around microgrids and EV |
| One reason for our success is our branded ABM Clean service offering, which is gaining significant traction in the market |
| But it's pretty exciting, right? And it does speak to the fact that people are back at venues, and so it's growing, and we expect us to continue to grow double digit |
| Aviation revenue grew 18% at $249.5 million, once again driven by strong demand for leisure and business travel, and new business wins |
| Moving on to Manufacturing and Distribution, demand has remained solid reflecting a favorable industrial economy as well as our focus on expanding our service offerings and presence in fast growing markets like biopharma, semiconductor and industrial manufacturing |
| So we feel really good with the capabilities that we actually have to continue to do opportunistic share buybacks if that case weren't |
| Operating profit in B&I increased nearly 5% to $79.6 million and operating margin improved to 7.7% as positive business mix, price increases, and cost actions more than offset sluggish demand dynamics in commercial real estate |
| Moving to Education, markets remain solid and we're effectively managing labor costs |
| We feel really good about our strong cash flow |
| This well-known retailer selected ABM to enhance their energy resilience at more than 150 of their locations over the next few years |
| We were in a pretty rocky place three or four years ago and our team is phenomenal |
| Additionally, backlog for our bundled energy solutions offering improved on a sequential basis |
| Statement |
|---|
| B&I's revenue was essentially flat year-over-year, reflecting softer demand within the commercial real estate market |
| Adjusted EBITDA declined 5% to $116.7 million and adjusted EBITDA margin decreased 50 basis points to 5.9% |
| Also of note, B&I, our largest segment, declined less than 0.5% despite market headwind |
| These year-over-year changes were generally in line with our expectations, reflecting higher investments as well as adverse project mix in Technical Solutions |
| Of note, we expect B&I revenue to be down low single digits in Q2 on a year-over-year basis as certain clients transition to new suppliers as a result of our disciplined price and margin strategy |
| And I think there was like an overhang out there |
| There's been like permit delays for some of these projects |
| So it is tough |
| This is really a function of the mix of business and timing of the project so the reason that you saw a little pressure on the margin on the ATS segment was that the mix of work this quarter was such that it was a lower margin segment of the business and don't forget we still have continued pressure on our bundled energy solutions project because of interest rates so for us David there's no warning signs as it relates to ATS, RavenVolt been growing like unbelievably if you think about kind of where they were when we did the acquisition versus where they are today with their pipeline and how we believe they're going to finish the year |
| These declines were largely due to project mix |
| We've seen our overtime come down in the Aviation segment as a result of ABM Clean, and as we roll out our pilots for the same type of technology in B&I, we're seeing labor efficiency |
| And when you're doing projects, and they're weighted this way, you have weather issues to start |
| And if you look at this quarter, which Q1 is typically the lowest net cash flow quarter of the year |
| So I think this choppiness is something that until we get really big scale in this area, it's just not going to smooth out |
| So you have discussed it, but I guess I was just kind of wondering why the margins weren't just a little bit stronger this period |
| I mean, look, no question that it feels like, I guess, even to the outside world that it could be a little frustrating, right? Because what we're gravitating to on ATS is so much project-based |
| You have permitting issues to start |
| As we grow in scale over the next few years, we expect a quarter-to-quarter variability to dissipate |
| So we're going to have some lumpiness |
| Does that mean that your outlook for this segment has changed for the full year? You still kind of expecting that organic decline in the 2% to 3% range? Scott Salmirs Yes, no, yes, we are still expecting that |
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