10q10k10q10k.net
ABM INDUSTRIES INC

ABM INDUSTRIES INCABMEarnings & Financial Report

NYSE · Industrials · Services-To Dwellings & Other Buildings

ABM Industries Inc. is a facility management provider in the United States founded in 1909 by Morris Rosenberg in San Francisco, California. ABM provides facility services in areas such as electrical, lighting, energy, facility engineering, electrification, heating, ventilation, air conditioning, mechanical, janitorial services, landscape, grounds, parking, and transportation.

What changed in ABM INDUSTRIES INC's 10-K — 2022 vs 2023

Top changes in ABM INDUSTRIES INC's 2023 10-K

242 paragraphs added · 268 removed · 191 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

93 edited+25 added−27 removed91 unchanged
Our “Think Safe” approach to safety includes establishing a safety mindset from day one of employment. This safety culture is continuously reinforced through daily moments for safety messaging, monthly relevant training topics, and unique programs and materials created for our employees.
Our “Think Safe” approach to safety includes establishing a safety mindset from day one of employment. This safety culture is continuously reinforced through daily moments for safety messaging, relevant monthly training topics, and unique programs and materials created for our employees.
For example, being highly leveraged could: require us to dedicate a substantial portion of our cash flows from operations to the payment of debt service, reducing the availability of our cash flow to fund working capital, share repurchases, capital expenditures, acquisitions, and other general corporate purposes; limit our availability to obtain additional financing in the future to enable us to react to changes in our business; and place us at a competitive disadvantage compared to businesses in our industry that have less debt.
For example, being highly leveraged could: require us to dedicate a substantial portion of our cash flows from operations to the 15 payment of debt service, reducing the availability of our cash flow to fund working capital, share repurchases, capital expenditures, acquisitions, and other general corporate purposes; limit our availability to obtain additional financing in the future to enable us to react to changes in our business; and place us at a competitive disadvantage compared to businesses in our industry that have less debt.
We may recognize additional tax expense, be subject to additional tax liabilities, or incur losses and penalties due to adverse outcomes in tax audits or changes in laws, regulations, administrative practices, principles, assessments by authorities, and interpretations related to tax laws, including tax rules in various jurisdictions, which could have an adverse effect on our operating results and financial condition.
We may recognize additional tax expense, be subject to additional tax liabilities, or incur losses and penalties due to adverse outcomes in tax audits or changes in laws, regulations, treaties, administrative practices, principles, assessments by authorities, and interpretations related to tax laws, including tax rules in various jurisdictions, which could have an adverse effect on our operating results and financial condition.
In 2017, we acquired GCA Services Group (“GCA”), a provider of integrated facility services to educational institutions and commercial facilities, for approximately $1.3 billion, the largest acquisition in ABM history. The acquisition accelerated the Company’s position as a leading facility solutions provider in the education market. In 2021, we acquired Crown Building Maintenance Co. and Crown Energy Services, Inc.
In 2017, we acquired GCA Services Group (“GCA”), a provider of integrated facility services to educational institutions and commercial facilities, for approximately $1.3 billion, representing the largest acquisition in ABM history. The acquisition accelerated the Company’s position as a leading facility solutions provider in the education market. In 2021, we acquired Crown Building Maintenance Co. and Crown Energy Services, Inc.
Our information technology systems and those of our third-party providers or clients could be the target of cyberattacks, ransomware attacks, hacking, unauthorized access, phishing, computer viruses, malware, or other intrusions, which could result in operational disruptions or information misappropriation, such as theft of intellectual property or inappropriate disclosure of confidential, proprietary, or personal information.
Our information technology systems and those of our third-party providers or clients could be the target of cyberattacks, ransomware attacks, hacking, unauthorized access, phishing, computer viruses, malware, or other 12 intrusions, which could result in operational disruptions or information misappropriation, such as theft of intellectual property or inappropriate disclosure of confidential, proprietary, or personal information.
Unless otherwise indicated, all references to years are to our fiscal year, which ends on October 31. Forward-Looking Strategic Plan Leveraging the various accomplishments achieved through 2020 Vision , in 2021, the Company embarked on the next step of our journey with a multiyear strategic plan called ELEVATE .
Unless otherwise indicated, all references to years are to our fiscal year, which ends on October 31. Forward-Looking Strategic Plan Leveraging the various accomplishments achieved through 2020 Vision , the Company embarked on the next step of its journey in 2021 with a multiyear strategic plan called ELEVATE .
If the fair value of one of our reporting units is less than its carrying value, or if as a result of a recoverability test we conclude that the projected undiscounted cash flows 16 are less than the carrying amount, we would record an impairment charge related to goodwill or long-lived assets, respectively.
If the fair value of one of our reporting units is less than its carrying value, or if as a result of a recoverability test we conclude that the projected undiscounted cash flows are less than the carrying amount, we would record an impairment charge related to goodwill or long-lived assets, respectively.
On the other hand, the absence of snow during the winter could cause us to experience reduced revenues in our B&I segment, as many of our contracts specify additional payments for snow-related services. Catastrophic events, disasters, pandemics, and terrorist attacks could disrupt our services.
On the other hand, the absence of snow during the winter could cause us to 16 experience reduced revenues in our B&I segment, as many of our contracts specify additional payments for snow-related services. Catastrophic events, disasters, pandemics, and terrorist attacks could disrupt our services.
Many of these laws and regulations may have differing or conflicting legal standards across jurisdictions, increasing the complexity and cost of compliance. When federal, state, local, or foreign minimum wage rates increase, we may have to increase the wages of both minimum wage employees and employees whose wages are above the minimum wage.
Many of these laws and regulations may have differing or conflicting legal standards or legal interpretations across jurisdictions, increasing the complexity and cost of compliance. When federal, state, local, or foreign minimum wage rates increase, we may have to increase the wages of both minimum wage employees and employees whose wages are above the minimum wage.
Any unplanned turnover in senior management or inability to attract and retain qualified personnel could have a negative effect on our results of operations. In addition, activities related to identifying, recruiting, hiring, and integrating qualified management employees may require significant time and expense.
Unplanned turnover in senior management or inability to attract and retain qualified personnel could have a negative effect on our results of operations. In addition, activities related to identifying, recruiting, hiring, and integrating qualified management employees may require significant time and expense.
In the event that a third party, such as an activist investor, proposes to change our governance policies, board of directors, or other aspects of our operations, our review and consideration of such proposals may create a significant distraction for our management and employees.
In the event that a third party, such as an activist investor, proposes to change our governance policies, board of directors, or other aspects of our operations or strategy, our review and consideration of such proposals may create a significant distraction for our management and employees.
A material change in our insurance costs due to changes in the frequency of claims, the severity of the claims, the costs of excess/umbrella premiums, or regulatory changes could have a material adverse effect on our financial position, results of operations, or cash flows.
A material change in our insurance costs due to changes in the frequency of 13 claims, the severity of the claims, the costs of excess/umbrella premiums, or regulatory changes could have a material adverse effect on our financial position, results of operations, or cash flows.
We are subject to a variety of taxes and tax collection and remittance obligations in the United States and foreign jurisdictions, primarily the UK. We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate.
We are subject to a variety of taxes and tax collection and remittance obligations in the United States and foreign jurisdictions, primarily the UK and Ireland. We compute our income tax provision based on enacted tax rates in the jurisdictions in which we operate.
As a result of these strategic changes and investments, we have strengthened our ability to offer janitorial, engineering, parking and eMobility, infrastructure, electrical, lighting and energy solutions, HVAC and mechanical services, landscaping and turf services, and mission critical solutions across aviation, education, manufacturing and distribution, and commercial business industries, on a standalone basis or in combination, and positioned ourselves as a leading integrated facilities management company.
As a result of these strategic initiatives and investments, we have strengthened our ability to offer janitorial, engineering, parking and eMobility, infrastructure, electrical, lighting and energy solutions, HVAC and mechanical services, landscaping and turf services, and mission critical solutions across aviation, education, manufacturing and distribution, and commercial business industries, on a standalone basis or in combination, and positioned ourselves as a leading integrated facilities management company.
(collectively, “Able”), a leading facilities services company headquartered in San Francisco, California, with the goal to provide additional scaling to the Company’s core businesses and key geographies and bolstering ABM’s janitorial and facilities services service lines. In addition, the acquisition of Able (“the Able Acquisition”) further expands ABM’s sustainability and energy efficiency offerings amid growing demand for environmentally responsible solutions.
(collectively, “Able”), a leading facilities services company headquartered in San Francisco, California, with the goal to provide additional scaling to the Company’s core businesses and key geographies and bolstering ABM’s janitorial and facilities services service lines. In addition, the acquisition of Able (“the Able Acquisition”) further expanded ABM’s sustainability and energy efficiency offerings amid growing demand for environmentally responsible solutions.
We maintain confidential, 13 proprietary, and personal information in our information technology systems and in systems of third-party providers relating to our current, former, and prospective employees, clients, and other third parties.
We maintain confidential, proprietary, and personal information in our information technology systems and in systems of third-party providers relating to our current, former, and prospective employees, clients, and other third parties.
A cornerstone of ABM’s comprehensive risk management and safety program is safety awareness to ensure our employees are: • educated on how to complete tasks safely; • trained in hazard identification; • made aware of emergency response procedures to immediately address challenges; and • proficient in reporting accidents, utilizing applicable procedures, to ensure appropriate loss mitigation techniques are implemented should a loss occur.
A cornerstone of ABM’s comprehensive risk management and safety program is safety awareness to confirm our employees are: • educated on how to complete tasks safely; • trained in hazard identification; • made aware of emergency response procedures to immediately address challenges; and • proficient in reporting accidents and utilizing applicable procedures to confirm appropriate loss mitigation techniques are implemented should a loss occur.
This could negatively impact our ability to execute various strategic initiatives and may require management to expend significant time and resources responding to such proposals. Such proposals may also create uncertainties with respect to our financial position and operations and may adversely affect our ability to attract and retain key employees. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 18
This could negatively impact our ability to execute various strategic initiatives and may require management to expend significant time and resources responding to such proposals. Such proposals may also create uncertainties with respect to our financial position and operations and may adversely affect our ability to attract and retain key employees. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 17
Our results of operations can be adversely affected by labor shortages, turnover, and labor cost increases. We employ approximately 127,000 persons, and our operations depend on the services of a large and diverse workforce. We must attract, train, and retain a large and growing number of qualified employees while controlling related labor costs.
Our results of operations can be adversely affected by labor shortages, turnover, and labor cost increases. We employ approximately 123,000 persons, and our operations depend on the services of a large and diverse workforce. We must attract, train, and retain a large and growing number of qualified employees while controlling related labor costs.
Rene Jacobsen 61 Executive Vice President and Chief Operating Officer of ABM since November 2020; Executive Vice President and Chief Facilities Services Officer of ABM from October 2019 to November 2020; President of ABM’s Business & Industry Group from February 2016 to October 2019; Executive Vice President of ABM’s West Region from April 2012 to February 2016; Executive Vice President and Chief Operating Officer of Temco Service Industries from November 2007 to April 2012.
Rene Jacobsen 62 Executive Vice President and Chief Operating Officer of ABM since November 2020; Executive Vice President and Chief Facilities Services Officer of ABM from October 2019 to November 2020; President of ABM’s Business & Industry Group from February 2016 to October 2019; Executive Vice President of ABM’s West Region from April 2012 to February 2016; Executive Vice President and Chief Operating Officer of Temco Service Industries from November 2007 to April 2012.
Raúl Valentin 59 Executive Vice President and Chief Human Resources Officer of ABM since September 2021; Senior Vice President, Human Resources of ABM from February 2019 to August 2021; Senior Vice President, Human Resources of Coty Inc. from 2016 to 2018; Vice President, Human Resources of Comcast Strategic & Business Development from 2015 to 2016; Vice President, Talent Acquisition of Comcast from 2011 to 2015.
Raúl Valentin 60 Executive Vice President and Chief Human Resources Officer of ABM since September 2021; Senior Vice President, Human Resources of ABM from February 2019 to August 2021; Senior Vice President, Human Resources of Coty Inc. from 2016 to 2018; Vice President, Human Resources of Comcast Strategic & Business Development from 2015 to 2016; Vice President, Talent Acquisition of Comcast from 2011 to 2015.
In recent years, we have strategically acquired companies in the United Kingdom (“UK”) and the island of Ireland, which expanded our janitorial and technical solutions businesses overseas. In 2015, we began a comprehensive transformational initiative (“ 2020 Vision ”) to drive long-term, profitable growth through an industry-based, go-to-market approach.
In recent years, we have strategically acquired companies in the United Kingdom (“UK”) and the Republic of Ireland (“Ireland”), which expanded our janitorial and technical solutions businesses overseas. In 2015, we began a comprehensive transformational initiative (“ 2020 Vision ”) to drive long-term, profitable growth through an industry-based, go-to-market approach.
We will continue to make significant investments, which, as previously stated, are expected to total $150 – $175 million over the life of the program and we will continue to implement 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. 3 Contract Types We generate revenues under several types of contracts, as explained below.
We will continue to make significant investments over the life of the program, which are expected to total $200 - $215 million, and we will continue to implement 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. 3 Contract Types We generate revenues under several types of contracts, as explained below.
Newborn 59 Executive Vice President, General Counsel, and Corporate Secretary of ABM since July 2017; Executive Vice President and General Counsel of TravelClick, Inc. from July 2014 to June 2017; Senior Vice President, General Counsel, and Secretary of The Reader’s Digest Association, Inc. from March 2007 to February 2014.
Newborn 60 Executive Vice President, General Counsel, and Corporate Secretary of ABM since July 2017; Executive Vice President and General Counsel of TravelClick, Inc. from July 2014 to June 2017; Senior Vice President, General Counsel, and Secretary of The Reader’s Digest Association, Inc. from March 2007 to February 2014.
We compete mainly with regional and local owner-operated companies that may have more insight into local market dynamics and significantly lower operating costs, providing them with a competitive advantage in those regards. We also compete indirectly with companies that can perform for themselves one or more of the services we provide.
We compete mainly with regional and local owner-operated companies that may have more insight into local market dynamics and significantly lower operating costs, which could provide them with a competitive advantage in those regards. We also compete indirectly with companies that can perform for themselves one or more of the services we provide.
(For example, during the second quarter of 2020, given the general deterioration in economic and market conditions arising from the Pandemic, we identified a triggering event that resulted in the impairment of goodwill and intangible assets.) The assumptions used to determine impairment require significant judgment, and the amount of the impairment could have a material adverse effect on our reported financial results for the period in which the charge is taken.
(For example, during the second quarter of 2020, given the general deterioration in economic and market conditions arising from the COVID-19 pandemic (“the Pandemic”), we identified a triggering event that resulted in the impairment of goodwill and intangible assets.) The assumptions used to determine impairment require significant judgment, and the amount of the impairment could have a material adverse effect on our reported financial results for the period in which the charge is taken.
M&D provides integrated facility services, engineering, janitorial, and other specialized services in different types of manufacturing, distribution, and data center facilities. We typically provide these services pursuant to monthly fixed-price, square-foot, cost-plus, and parking arrangements (i.e., management reimbursement, leased location, or allowance) that are obtained through a competitive bid process as well as pursuant to work orders.
We typically provide these services pursuant to monthly fixed-price, square-foot, cost-plus, and parking arrangements (i.e., management reimbursement, leased location, or allowance) that are obtained through a competitive bid process as well as pursuant to work orders. M&D provides integrated facility services, engineering, janitorial, and other specialized services to a variety of manufacturing, distribution, and data center facilities.
Feinberg 48 Executive Vice President, Chief Strategy and Transformation Officer of ABM since November 2019; Managing Director and Partner of The Boston Consulting Group from July 2014 to November 2019.
Feinberg 49 Executive Vice President, Chief Strategy and Transformation Officer of ABM since November 2019; Managing Director and Partner of The Boston Consulting Group from July 2014 to November 2019.
Sean M. Mahoney 56 Executive Vice President and President, Sales and Marketing of ABM since November 2020; Senior Vice President, Sales of ABM from August 2017 to October 2020; Vice President, Sales of Honeywell from July 2015 to July 2017. Andrea R.
Sean M. Mahoney 57 Executive Vice President and President, Sales and Marketing of ABM since November 2020; Senior Vice President, Sales of ABM from August 2017 to October 2020; Vice President, Sales of Honeywell from July 2015 to July 2017. Andrea R.
We are an Equal Opportunity and Affirmative Action employer in compliance with the requirements of the Executive Order 11246 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act. 9 Available Information Our corporate website is www.abm.com.
Additionally, we are an Equal Opportunity and Affirmative Action employer in compliance with the requirements of the Executive Order 11246 of the Rehabilitation Act of 1973 and the Vietnam Era Veterans’ Readjustment Assistance Act. 8 Available Information Our corporate website is www.abm.com.
One client accounted for approximately 16% of revenues for this segment in 2022. Technical Solutions specializes in facility infrastructure, mechanical and electrical services, including EV power design, installation and maintenance, as well as microgrid systems installation. These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.
One client accounted for approximately 18% of revenues for this segment in 2023. Technical Solutions specializes in facility infrastructure, mechanical and electrical services, including EV power design, installation and maintenance, as well as microgrid systems design and installation. These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.
Additionally, our internal culture, sustainability, diversity, equity and inclusion teams works in cross functional collaboration with departments throughout and across the enterprise to advance our ESG strategies, and regularly present to the Board of Directors’ Stakeholder and Enterprise Risk Committee.
Additionally, our internal culture, sustainability, diversity, equity and inclusion teams work 6 in cross functional collaboration with departments throughout and across the enterprise to advance our ESG strategies, and regularly present to the Board of Directors’ Stakeholder and Enterprise Risk Committee.
Earl R. Ellis 57 Executive Vice President and Chief Financial Officer of ABM since November 2020; Senior Vice President, Finance and Procurement of Best Buy Co.
Earl R. Ellis 58 Executive Vice President and Chief Financial Officer of ABM since November 2020; Senior Vice President, Finance and Procurement of Best Buy Co.
These investments in and changes to our business systems and processes may not create the growth, operational efficiencies, competitive advantage, or cost benefits that we expect and could result in unanticipated consequences, including substantial disruption to our back-office operations and service delivery.
These investments in and changes 10 to our business systems and processes may not create the growth, operational efficiencies, competitive advantage, or cost benefits that we expect and could result in unanticipated consequences, including disruptions to our back-office operations and service delivery.
Dean A. Chin 54 Treasurer of ABM since May 2021; Senior Vice President, Chief Accounting Officer, and Corporate Controller of ABM since June 2010; Interim Chief Financial Officer of ABM from July 2020 to November 2020; Vice President and Assistant Controller of ABM from June 2008 to June 2010. 10 ITEM 1A. RISK FACTORS.
Dean A. Chin 55 Treasurer of ABM since May 2021; Senior Vice President, Chief Accounting Officer, and Corporate Controller of ABM since June 2010; Interim Chief Financial Officer of ABM from July 2020 to November 2020; Vice President and Assistant Controller of ABM from June 2008 to June 2010. 9 ITEM 1A. RISK FACTORS.
Executive Officers of Registrant Executive Officers on December 21, 2022 Name Age Principal Occupations and Business Experience Scott Salmirs 60 President and Chief Executive Officer of ABM since March 2015; Executive Vice President of ABM from September 2014 to March 2015, with global responsibility for ABM’s Aviation division and all international activities; Executive Vice President of ABM’s Onsite Services division focused on the Northeast from 2003 to September 2014; Member of the Board of Directors of ABM since January 2015.
Executive Officers of Registrant Executive Officers on December 18, 2023 Name Age Principal Occupations and Business Experience Scott Salmirs 61 President and Chief Executive Officer of ABM since March 2015; Executive Vice President of ABM from September 2014 to March 2015, with global responsibility for ABM’s Aviation division and all international activities; Executive Vice President of ABM’s Onsite Services division focused on the Northeast from 2003 to September 2014; Member of the Board of Directors of ABM since January 2015.
Since that time, we have grown into a multi-segment facility solutions company, primarily through strategic acquisitions and new service offerings, increasing our revenue to more than $7.5 billion.
Since that time, we have grown into a multi-segment facility solutions company, primarily through strategic acquisitions and new service offerings, increasing our revenue to more than $8.0 billion.
The execution of this strategy is overseen at the highest levels of our organization, from our Board of Directors, our Board of Directors’ Stakeholder and Enterprise Risk Committee, and across our senior management . Business ethics Our Code of Business Conduct ensures that our core values of respect, integrity, collaboration, innovation, trust, and excellence are applied throughout our operations.
The execution of this strategy is overseen at the highest levels of our organization, from our Board of Directors, our Board of Directors’ Stakeholder and Enterprise Risk Committee, and across our senior management . Business ethics Our Code of Business Conduct drives the application of our core values of respect, integrity, collaboration, innovation, trust, and excellence throughout our operations.
Our Code of Business Conduct serves as a critical tool to help all of us recognize and report unethical conduct, while preserving and nurturing our culture of honesty and accountability. We provide a comprehensive annual training and certification program on our Code of Business Conduct for our Board of Directors and all of our staff and management employees.
Our Code of Business Conduct serves as a critical tool to help all ABM team members to recognize and report unethical conduct, while preserving and nurturing our culture of honesty and accountability. We provide comprehensive annual training and certification programs on our Code of Business Conduct for our Board of Directors and all of our staff and management employees.
A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs, such as increased overtime incurred and/or increased usage of temporary labor to meet the demands of our customers, as well as increased wage rates to attract and retain employees.
Continued labor shortages or increased turnover rates within our employee base could lead to increased costs, such as increased overtime incurred and/or increased usage of temporary labor to meet the demands of our customers, as well as increased wage rates to attract and retain employees.
A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities in relation to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities, and union organizing drives.
A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities in relation to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities, and union organizing drives. 14 We participate in various multiemployer pension plans that provide defined pension benefits to employees covered by collective bargaining agreements.
Our business is subject to a complicated set of federal, state, and local laws and regulations addressing, among other things, wage and hour standards, employment and labor relations, leave of absence, data privacy and protection, occupational health and safety, environmental matters, anti-competition, anti-corruption, and government contracting.
Our business is subject to a complicated set of federal, state, and local laws and regulations as well as stakeholder views addressing, among other things, wage and hour standards, employment and labor relations, ESG-related practices, leave of absence, cybersecurity, data privacy and protection, occupational health and safety, environmental matters, anti-competition, anti-corruption, and government contracting.
The addition of Momentum provided greater access to Momentum’s blue-chip customer base with the opportunity to cross sell ABM services to existing U.S.- and UK-based clients who also have an operational footprint in Ireland and Northern Ireland. • Alpharetta, Georgia-based RavenVolt, Inc.
The addition of Momentum provided greater access to Momentum’s blue-chip customer base as well as an opportunity to cross sell ABM services to existing U.S.- and UK-based clients who also have an operational footprint in Ireland and Northern Ireland.
Furthermore, the introduction of new, and changes to existing, enterprise resource planning (“ERP”) and financial reporting information systems create implementation and change management risks that require effective internal controls to mitigate.
Furthermore, the introduction of new, and changes to existing, ERP and financial reporting information systems create implementation and change management risks that require effective internal controls to mitigate.
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. We have business operations in jurisdictions outside of the United States, most significantly in the UK.
Our international business involves risks different from those we face in the United States that could negatively impact our results of operations and financial condition. We have business operations in jurisdictions outside of the United States, most significantly in the UK and Ireland.
The failure to make timely and accurate contributions as a result of a systems failure could have a negative impact on our financial position. 15 At October 31, 2022, approximatel y 35% of our employees were subject to various local collective bargaining agreements, some of which will expire or become subject to renegotiation during 2022.
The failure to make timely and accurate contributions as a result of a systems failure could have a negative impact on our financial position. At October 31, 2023, approximately 37% of our employees were subject to various local collective bargaining agreements, some of which will expire or become subject to renegotiation during 2024.
Increased costs of legal and regulatory compliance with this constantly evolving legal and regulatory environment could reduce our profitability.
Increased costs of legal and regulatory compliance with this constantly evolving legal and regulatory environment could reduce our profitability and adversely affect our financial condition.
In 2021, we successfully piloted a frontline leadership training program, which launched enterprise-wide in 2022. Through this program, we are aiming to develop the management and coaching skills of frontline supervisors to improve the employee experience, create an environment for career growth, and increase retention.
In 2021, we successfully piloted a frontline leadership training program, which was launched enterprise-wide in 2022 and expanded further in 2023. This program is designed to enhance the management and coaching skills of frontline supervisors to improve the employee experience, create an environment for career growth, and increase retention.
Energy Savings Contracts and Fixed-Price Repair and Refurbishment Under these arrangements, we agree to develop, design, engineer, and construct a project. Additionally, as part of bundled energy solutions arrangements, we guarantee the project will satisfy agreed-upon performance standards.
Energy Savings Contracts and Fixed-Price Repair and Refurbishment Under these arrangements, we agree to develop, design, engineer, and construct a project. Additionally, as part of bundled energy solutions arrangements, we guarantee the project will satisfy agreed-upon performance standards. The client agrees to pay us based on s predetermined contractual milestone schedule.
Our online training platform, ABM University, provides our staff and management employees with access to a multitude of training courses, videos, reference material, and other tools. Outside of ABM University, our frontline employees receive on-the-job training to ensure we are executing for our clients.
Our online training platform, ABM University, provides our staff and management employees with access to a multitude of training courses, videos, reference material, and other tools. Outside of ABM University, our frontline employees receive on-the-job training to enable us to execute for our clients in a safe and efficient manner.
Contracts for this segment are generally structured as energy savings, fixed-price repair, refurbishment contracts, and franchise arrangements. 5 Service Marks, Trademarks, and Trade Names We hold various service marks, trademarks, and/or trade names, such as “ABM,” “ABM Building Value,” “ABM GreenCare,” “ABM EnhancedClean,” “ABM EnhancedFacility,” “Linc Service,” “TEGG,” “ABM Connect,” “ABM Vantage,” “Momentum Support Services,” and “RavenVolt,” which we deem important to our marketing activities, to our business, and, in some cases, to the franchising activities conducted by our Technical Solutions segment.
Contracts for this segment are generally structured as electrical contracting services for energy related products such as the installation of solar solutions, battery storage, distributed generation, and other specialized electric trade.. 5 Service Marks, Trademarks, and Trade Names We hold various service marks, trademarks, and/or trade names, such as “ABM,” “ABM Building Value,” “ABM GreenCare,” “ABM EnhancedClean,” “ABM EnhancedFacility,” “Linc Service,” “TEGG,” “ABM Connect,” “ABM Vantage,” “Momentum Support Services,” and “RavenVolt,” which we deem important to our marketing activities, to our business, and, in some cases, to the franchising activities conducted by our Technical Solutions segment.
Since 2011, we have voluntarily published an ESG Impact Report on an annual basis in alignment with the Global Reporting Initiative framework and the Sustainability Accounting Standards Board to address our business, our employees, and the environment. More information about our sustainability performance, progress, and goals can be found in the corporate sustainability section of our corporate website.
Since 2011, we have voluntarily published an ESG Impact Report on an annual basis in alignment with the Global Reporting Initiative framework and the Sustainability Accounting Standards Board to address our business, our employees, and the environment.
Our ability to control labor and benefit costs is subject to numerous internal and external factors, including changes in the unemployment rate, changes in immigration policy, regulatory changes, prevailing wage rates, and competition we face from other companies for similarly qualified employees. During 2022, we continued to experience labor shortages, inflationary pressures on wages, and an increasingly competitive labor market.
Our ability to control labor and benefit costs is subject to numerous internal and external factors, including changes in the unemployment rate, changes in immigration policy, regulatory changes, prevailing wage rates, and competition we face from other companies for similarly skilled employees.
Such arrangements may involve subcontracts or joint venture relationships where we do not have direct control over the performing party. We may be exposed to liability whenever one or more of our subcontractors or joint venture partners, for whatever reason, fails to perform or allegedly negligently performs the agreed-upon services.
We may be exposed to liability whenever one or more of our subcontractors or joint venture partners, for whatever reason, fails to perform or allegedly negligently performs the agreed-upon services.
Investments in and changes to our businesses, operating structure, financial reporting structure, or personnel relating to our ELEVATE strategy, including the implementation of strategic transformations, enhanced business processes, and technology initiatives, may not have the desired effects on our financial condition and results of operations. 11 We have made and expect to continue to make significant investments in various initiatives intended to drive long-term profitable growth and increase operational efficiency.
Investments in and changes to our businesses, operating structure, or personnel relating to our ELEVATE strategy, including the implementation of strategic transformations, enhanced business processes, and technology initiatives, may not have the desired effects on our financial condition and results of operations.
Dependence on Significant Client No client accounted for more than 10% of our consolidated revenues during 2022, 2021, or 2020. Competition We believe that each aspect of our business is highly competitive and that such competition is based primarily on price, quality of service, efficiency enhancements, adapting to changing workplace conditions, and ability to anticipate and respond to industry changes.
Competition We believe that each aspect of our business is highly competitive and that such competition is based primarily on price, quality of service, efficiency, and productivity enhancements, adapting to changing workplace conditions, and ability to anticipate and respond to industry changes.
We primarily provide services pursuant to agreements that are cancelable by either party upon 30 to 90 days’ notice. As we generally incur higher initial costs on new contracts until the labor management and facilities operations normalize, our business associated with long-term client relationships is generally more profitable than short-term client relationships.
As we generally incur higher initial costs on new contracts until the labor management and facilities operations normalize, our business associated with long-term client relationships is generally more profitable than short-term client relationships.
The acquisition of OneSource in 2007 bolstered ABM as a leader in the janitorial market, while the Linc Group acquisition in 2010 established ABM as a “facility solutions” company with new service offerings, including lighting, mechanical, and electrical “technical solutions.” With demand increasing for industry-specific service providers, in 2012 we purchased Air Serv and established “aviation” as our first industry group.
The acquisitions of OneSource and Linc Group in the early 2000s established ABM as a leader in the commercial janitorial market and also enhanced our ability to be a full-service facility solutions provider with new service offerings, including lighting, mechanical, and electrical “technical solutions.” With demand increasing for industry-specific service providers, the acquisition of Air Serv established “Aviation” as our first industry group.
Assets contributed by an employer to a multiemployer pension plan are not segregated into a separate account and are not restricted to provide benefits only to employees of that contributing employer.
Because of the nature of multiemployer pension plans, there are risks to us associated with participation in these plans that differ from single-employer plans. Assets contributed by an employer to a multiemployer pension plan are not segregated into a separate account and are not restricted to provide benefits only to employees of that contributing employer.
Our ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, and other factors that are beyond our control.
Our future ability to make payments on our debt, fund our other liquidity needs, and make planned capital expenditures will depend on our ability to generate cash. Our ability to generate cash, to a certain extent, is subject to general economic, financial, competitive, and other factors that are beyond our control.
A significant portion of our growth has been generated by acquisitions, and we may continue to acquire businesses in the future as part of our growth strategy. However, we may encounter challenges identifying opportunities in a timely manner or on terms acceptable to us. Furthermore, there is no assurance that any such transaction will result in synergistic benefits.
However, we may encounter challenges identifying opportunities in a timely manner or on terms acceptable to us. Furthermore, there is no assurance that any such transaction will result in synergistic benefits.
The sales and marketing teams acquire, nurture, and manage leads through the sales buying process, as well as train personnel on product offerings, sales tools, and proposal systems, all governed by standard operating procedures.
The sales and marketing teams acquire, nurture, and manage leads through the sales buying process, as well as train personnel on product offerings, sales tools, and proposal systems, all governed by standard operating procedures. Macro-Economic Environment in Commercial Real Estate We actively monitor the economic environment and its potential impact on demand for our services and our financial condition.
In addition, to the extent centralized administrative locations are disabled for a long period of time, key business processes, such as accounts payable, information technology, payroll, and general management operations, could be interrupted. 17 Ongoing impacts of the COVID-19 pandemic may adversely affect our liquidity, capital resources, supply chain, operations, and revenue.
In addition, to the extent centralized administrative locations are disabled for a long period of time, key business processes, such as accounts payable, information technology, payroll, and general management operations, could be interrupted. Actions of activist investors could disrupt our business. Public companies have been the target of activist investors.
As of October 31, 2022, our frontline employees represented 92% of our total workforce, while staff and management employees represented the other 8%. Our human capital strategy is grounded and guided by our values and our employees. We prioritize our human capital development in order to do business in a responsible way and ensure our employees’ and clients’ success.
Our human capital strategy is grounded and guided by our values and our employees. We prioritize our human capital development in order to do business in a responsible way and enable our employees’ and clients’ success.
Compensation and employee benefits In addition to competitive wages and salaries, we provide all of our employees access to a continuum of health and wellness benefits, including medical, dental, vision, disability, and basic life and voluntary supplemental life and AD&D insurance, 401K employee savings and employee stock purchase programs, a 24/7 employee assistance program, healthcare flexible spending accounts, telemedicine options, and commuter programs.
Compensation and employee benefits In addition, we offer competitive wages and salaries in our served markets and full-time employees have access to a continuum of health and wellness benefits, including medical, dental, vision, disability, and basic life and voluntary supplemental life and AD&D insurance, 401K employee savings and employee stock purchase programs, a 24/7 employee assistance program, healthcare flexible spending accounts, telemedicine options, legal support, as well as commuter, fitness, and other discount programs. 7 Labor relations With approximately 46,000 union-represented employees, we are party to more than 250 collective bargaining agreements nationwide, with 20 major labor unions.
Slow domestic and international economic activity or other negative changes in global, national, and local economic conditions could have a negative impact on our business. These adverse economic conditions could cause a decline in our clients’ demand and ability to pay for our services, or attempts by our clients to defer payments owed to us.
These adverse economic conditions could cause a decline in our clients’ demand for our services and/or in scope of work, including work orders and our clients’ ability to pay for such services, or attempts by our clients to defer payments owed to us.
Risks Relating to Financial Matters Future increases in the level of our borrowings or in interest rates could affect our results of operations. The Federal Reserve Board significantly increased the federal funds rate in 2022 and has indicated that further rate increases may be announced in the short-term to combat rising inflation in the United States.
Risks Relating to Financial Matters Future increases in the level of our borrowings or in interest rates could affect our results of operations. The Federal Reserve Board increased interest rates in 2022 and 2023, and these increases may continue in 2024 and beyond.
One of the cornerstones of our ThinkSafe program is a collaboration with operations to help leaders identify workplace hazards and implement changes to prevent accident or injury. In our frontline leader training, participants are guided in creating a culture of safety, through leadership engagement, and participation in the safe work observations program.
One of the cornerstones of our ThinkSafe program is designed to help leaders identify workplace hazards and implement changes to prevent accident or injury. In our frontline leader training, participants are guided in creating a culture of safety and provided guidance on practices to support our employees receiving the right care at the right time to expedite their recovery.
If current legislation or policies are amended, eliminated, or not extended beyond their current expiration dates, or if funding for energy incentives is reduced or delayed, it could also adversely affect our ability to obtain new business. All of these factors could have an adverse effect on our financial position, results of operations, and cash flows.
Additionally, we depend, in part, on federal and state legislation and policies that support energy efficiency projects. If current legislation or policies are amended, eliminated, or not extended beyond their current expiration dates, or if funding for energy incentives is reduced or delayed, it could also adversely affect our ability to obtain new capital projects.
We understand the need to embed and integrate responsible and community-minded business practices into and within our operations and commit to standards to create value and support the long-term success of our business, shareholders, employees, and clients.
Environmental, Social, and Governance (“ESG”) Strategy and Oversight As a company with over 110 years of history we understand the importance of embedding and integrating responsible and community-minded business practices into our operations and commit to standards to create value and support the long-term success of our business, shareholders, employees, and clients.
In addition, when we participate in joint ventures that operate outside of the United States where we are not a controlling party, we may have limited control over the joint venture. Any improper actions by our joint venture employees, partners, or agents, including, but not limited to, failure to comply with the U.S.
The failure to comply with these laws or regulations could subject us to significant litigation, monetary damages, regulatory enforcement actions, or fines in one or more jurisdictions. In addition, when we participate in joint ventures that operate outside of the United States where we are not a controlling party, we may have limited control over the joint venture.
Additionally, the operating results of our non-U.S. subsidiaries are translated into U.S. dollars, and those translations are affected by movements in foreign currencies relative to the U.S. dollar.
Additionally, the operating results of our non-U.S. subsidiaries are translated into U.S. dollars, and those translations are affected by movements in foreign currencies relative to the U.S. dollar. There can be no assurance that the foregoing factors will not have a material adverse effect on our international operations or on our consolidated financial condition and results of operations.
It is expected that any such decrease could also have the effect of reducing our insurance costs for our casualty programs. However, incidents involving personal injury or property loss may be caused by 14 multiple potential factors, a significant number of which are beyond our control.
However, incidents involving personal injury or property loss may be caused by multiple potential factors, a significant number of which are beyond our control. Therefore, there can be no assurance that our risk management and safety programs will have the desired effect of controlling costs and liability exposure.
Potential declines in commercial real estate office space could result in a decline in demand for our services and/or in scope of work, including work orders, and depressed prices for our services, which could affect our financial position. Our energy efficiency projects are designed to reduce a client’s overall consumption of commodities, such as electricity and natural gas.
Further, potential declines in economic conditions could result in depressed prices for our services, which could affect our financial condition. We offer a portfolio of capital projects, which are designed to reduce a client’s overall consumption of commodities, such as electricity and natural gas. Downward fluctuations in commodity prices, and/or elevated interest rates, may reduce client demand for such projects.
Human resources, hiring, and training With a team of approximately 127,000 employees across the United States, UK, and other locations, we continue to make investments in our human resources (“HR”) organization and structure toward centralized and standardized hiring and training practices, including incorporating modeling and advanced analytics in our HR processes to drive improvement in the retention and engagement of our frontline employees, who constitute the majority of our workforce.
Human resources, hiring, and training With a team of approximately 123,000 employees across the United States, UK, Ireland, and other locations, we have invested in and implemented a variety of systems and tools designed to centralize and standardize hiring and training practices, including regional recruitment strategies, applicant tracking technology, and incorporating modeling and advanced analytics that provide actionable insights relative to the candidate life cycle and turnover trends in our HR processes to drive ongoing improvement in the attraction, retention, and engagement of our frontline employees, who constitute the majority of our workforce.
Franchise We franchise certain engineering services through individual and area franchises under the Linc Service and TEGG brands, which are part of ABM Technical Solutions.
Franchise We franchise certain engineering services through individual and area franchises under the Linc Service and TEGG brands, which are part of ABM Technical Solutions. Microgrid Systems Installation Under these arrangements, we provide electrical contracting services for energy related products such as the installation of solar solutions, battery storage, distributed generation, and other specialized electric trades.
Our Board of Directors also receives regular reports from meetings of its Governance Committee, which is responsible for oversight of our Company’s corporate governance practices.
Our Board of Directors receives regular reports from meetings of its Governance Committee, which is responsible for oversight of the Company’s overall ESG-related framework, as well as from meetings of its Stakeholder and Enterprise Risk Committee, which is responsible for oversight of environmental and social matters within ESG.
Risks Relating to Acquisitions, Divestitures, or Strategic Transactions Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations. In furtherance of our business strategy, we routinely evaluate opportunities and may enter into agreements for possible acquisitions, divestitures, or other strategic transactions.
All of these factors could have an adverse effect on our financial condition, results of operations, and cash flows. Risks Relating to Acquisitions, Divestitures, or Strategic Transactions Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations.
Moreover, the execution of our ELEVATE strategy may result in substantial expenses in excess of what is currently forecast. While we anticipate that certain expenses will be incurred, such expenses are difficult to estimate accurately and may exceed current estimates. Our ability to preserve long-term client relationships is essential to our continued success.
Moreover, the execution and/or benefits of our ELEVATE strategy may not be realized on the expected timeline and/or may result in expenses in excess of what is currently forecast, which could negatively affect our financial condition. Our ability to preserve long-term client relationships is essential to our continued success.
Our use of subcontractors or joint venture partners to perform work under customer contracts exposes us to liability and financial risk. We depend on subcontractors or other parties, such as joint venture partners, to perform work in situations in which we are not able to self-perform the work involved.
We depend on subcontractors or other parties, such as joint venture partners, to perform work in situations in which we are not able to self-perform the work involved. Such arrangements may involve subcontracts or joint venture relationships where we do not have direct control over the performing party.

… 65 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

83 edited+26 added−47 removed50 unchanged
The specific case reserves estimated by the third-party administrators are provided to an actuary who assists us in projecting an actuarial estimate of the overall ultimate losses for our self-insured or high deductible programs, which includes the case reserves plus an actuarial estimate of reserves required for additional developments, such as IBNR Claims.
The specific case reserves estimated by the third-party administrators are provided to the actuary who assists us in projecting an actuarial estimate of the overall ultimate losses for our self-insured or high deductible programs, which includes the case reserves plus an actuarial estimate of reserves required for additional developments, such as IBNR Claims.
ELEVATE Transformation Through our ELEVATE strategy, as described in Item 1., “Business.,” we continue to focus our efforts on: • 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.
ELEVATE Transformation Through our ELEVATE strategy, as described in Item 1., “Business.,” we continue to focus our efforts on: • 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 we expect to fundamentally change how we operate our business.
Dollar (“USD”) and the British pound sterling 26 (“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.
Dollar (“USD”) and the 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.
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.
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 31 settlements.
We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of our Financial Statements. 37 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Valuation of Long-Lived Assets We evaluate our fixed assets and amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of our Financial Statements. 34 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Valuation of Long-Lived Assets We evaluate our fixed assets and amortizable intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
In addition, certain of these matters may not require cash settlements due to the exercise of credits and net operating loss carryforwards as well as other offsets, including the indirect benefit from other taxing jurisdictions that may be available. • Contingent Consideration Payable in Connection with Our Acquisition of RavenVolt – At October 31, 2022, contingent consideration of up to $280.0 million in cash may be paid in calendar years 2024, 2025, and 2026, if the RavenVolt business achieves certain financial targets, as defined in the merger agreement, in calendar years 2023, 2024, and 2025 .
In addition, certain of these matters may not require cash settlements due to the utilization of credits and net operating loss carryforwards as well as other offsets, including the indirect benefit from other taxing jurisdictions that may be available. • Contingent Consideration Payable in Connection with Our Acquisition of RavenVolt – At October 31, 2023, contingent consideration of up to $280.0 million in cash may be paid in calendar years 2024, 2025, and 2026, if the RavenVolt business achieves certain financial targets, as defined in the merger agreement, in calendar years 2023, 2024, and 2025 .
See Note 11, “Credit Facility,” in the Financial Statements for further detail of our debt and the timing of expected future principal and interest payments. • Operating and Finance Leases – We enter into various noncancelable l ease agreements for office space, parking facilities, warehouses, vehicles, and equipment used in the normal course of business.
See Note 11, “Debt,” in the Financial Statements for further detail of our debt and the timing of expected future principal and interest payments. • Operating and Finance Leases – We enter into various noncancelable l ease agreements for office space, parking facilities, warehouses, vehicles, and equipment used in the normal course of business.
See Note 12, “Employee Benefit Plans,” in the Financial Statements for more information. • Self-Insurance Obligations – We may make payments for exposures for which we are self-insured, including workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. At October 31, 2022, our self-insurance reserves, net of recoverables, were $479.9 million.
See Note 12, “Employee Benefit Plans,” in the Financial Statements for more information. • Self-Insurance Obligations – We may make payments for exposures for which we are self-insured, including workers’ compensation, general liability, automobile liability, property damage, and other insurable risks. At October 31, 2023, our self-insurance reserves, net of recoverables, were $487.9 million.
The Year Ended October 31, 2021 Compared with the Year Ended October 31, 2020 For a comparison of our Results of Operations for the year ended October 31, 2021, to the year ended October 31, 2020, see “Part II, Item 7.
The Year Ended October 31, 2022, Compared with the Year Ended October 31, 2021 For a comparison of our Results of Operations for the year ended October 31, 2022, to the year ended October 31, 2021, see “Part II, Item 7.
The Year Ended October 31, 2021 Compared with the Year Ended October 31, 2020 For a comparison of our Segment Information for the year ended October 31, 2021, to the year ended October 31, 2020, see “Part II, Item 7.
The Year Ended October 31, 2022, Compared with the Year Ended October 31, 2021 For a comparison of our Segment Information for the year ended October 31, 2022, to the year ended October 31, 2021, see “Part II, Item 7.
Our principal operations are in the United States, and in 2022 our U.S. operations generated approximately 94% of our revenues. Strategic Growth We remain focused on long-term, profitable growth by delivering valued service offerings to both new and existing clients within our industry groups and across our many service lines.
Our principal operations are in the United States, and in 2023 our U.S. operations generated approximately 93% of our revenues. Strategic Growth We remain focused on long-term, profitable growth by delivering valued service offerings to both new and existing clients within our industry groups and across our many service lines.
After analyzing recent loss development patterns, comparing the loss development patterns against benchmarks, and applying actuarial projection methods to estimate the ultimate losses, we decreased our total reserves related to prior years known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2022 by $36.8 million.
After analyzing recent loss development patterns, comparing the loss development patterns against benchmarks, and applying actuarial projection methods to estimate the ultimate losses, we decreased our total reserves related to prior years known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2023 by $14.8 million.
We had future interest payments based on our hedged borrowings under our Amended Credit Facility of $16.3 million, which is payable within 12 months. The interest payments on our remaining borrowings under the Amended Credit Facility will be determined based upon the average outstanding balance of our borrowings and the prevailing interest rate during that time.
We have future interest payments based on our hedged borrowings under our Amended Credit Facility of $16.8 million, which is payable within 12 months. The interest payments on our remaining borrowings under the Amended Credit Facility will be determined based upon the average outstanding balance of our borrowings and the prevailing interest rate during that time.
Foreign Currency Translation and Other We had a foreign currency translation loss of $19.8 million during the year ended October 31, 2022, as compared to a foreign currency translation gain of $5.3 million during the year ended October 31, 2021. This change was due to fluctuations in the exchange rate between the U.S.
Foreign Currency Translation and Other We had a foreign currency translation gain of $7.3 million during the year ended October 31, 2023, as compared to a foreign currency translation loss of $19.8 million during the year ended October 31, 2022. This change was due to fluctuations in the exchange rate between the U.S.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended October 31, 2021, filed with the SEC on December 22, 2021. 31 Liquidity and Capital Resources Our primary sources of liquidity are operating cash flows and borrowing capacity under our credit facility.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended October 31, 2022, filed with the SEC on December 21, 2022. 29 Liquidity and Capital Resources Our primary sources of liquidity are operating cash flows and borrowing capacity under our credit facility.
We had contractual payments for these agreements of $61.4 million, with $38.8 million payable within 12 months. • Benefit Obligations – Expected future payments relating to our defined benefit, postretirement, and deferred compensation plans were $39.0 million, with $3.2 million payable in 12 months.
We had contractual payments for these agreements of $122.4 million, with $41.0 million payable within 12 months. • Benefit Obligations – Expected future payments relating to our defined benefit, postretirement, and deferred compensation plans were $38.2 million, with $3.3 million payable in 12 months.
In 2021, we decreased our total reserves related to prior years claims by $36.0 million. It is possible that actual results could differ from recorded self-insurance liabilities.
In 2022, we decreased our total reserves related to prior years claims by $36.8 million. It is possible that actual results could differ from recorded self-insurance liabilities.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended October 31, 2021, filed with the SEC on December 22, 2021. 27 Segment Information Our current reportable segments consist of B&I, M&D, Education, Aviation, and Technical Solutions.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended October 31, 2022, filed with the SEC on December 21, 2022. 25 Segment Information Our current reportable segments consist of B&I, M&D, Education, Aviation, and Technical Solutions.
Interest Rate Swaps We had a gain of $36.7 million on interest rate swaps during the year ended October 31, 2022, as compared to a gain of $4.5 million during the year ended October 31, 2021, primarily due to underlying changes in the fair value of our interest rate swaps.
Interest Rate Swaps We had a loss of $0.5 million on interest rate swaps during the year ended October 31, 2023, as compared to a gain of $36.7 million during the year ended October 31, 2022, primarily due to underlying changes in the fair value of our interest rate swaps.
During 2021, 2020, and 2019, contributions made to these plans were $555.1 million, $348.8 million, and $335.8 million, respectively; however, our future contributions to the multiemployer plans are dependent upon a number of factors, including the funded status of the plans, the ability of other participating companies to meet ongoing funding obligations, and the level of our ongoing participation in these plans.
During 2023, 2022, and 2021, contributions made to these plans were $574.6 million, $555.1 million, and $348.8 million, respectively; however, our future contributions to the multiemployer plans are dependent upon a number of factors, including the funded status of the plans, the ability of other participating companies to meet ongoing funding obligations, and the level of our ongoing participation in these plans.
Material Cash Requirements from Contractual and Other Obligations As of October 31, 2022, our material cash requirements for our known contractual and other obligations were as follows: • Debt Obligations and Interest Payments – Outstanding payments on our Amended Credit Facility were $1,271.3 million, with $32.5 million payable within 12 months.
Material Cash Requirements from Contractual and Other Obligations As of October 31, 2023, our material cash requirements for our known contractual and other obligations were as follows: • Debt Obligations and Interest Payments – Outstanding payments on our Amended Credit Facility were $1,313.8 million, with $32.5 million payable within 12 months.
We base our estimates on historical experience, known or expected trends, independent valuations, and various other assumptions that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.
GAAP”) requires our management to make certain estimates that affect the reported amounts. We base our estimates on historical experience, known or expected trends, independent valuations, and various other assumptions that we believe to be reasonable under the circumstances. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.
We had contractual payments for these arrangements of $66.0 million, with $17.3 million payable within 12 months. • Information Technology Service Agreement s – Information technology service agreements represent outsourced services and licensing costs pursuant to our information technology agreements.
We had contractual payments for these arrangements of $88.2 million, with $25.0 million payable within 12 months. • Information Technology Service Agreement s – Information technology service agreements represent outsourced services and licensing costs pursuant to our information technology agreements.
At October 31, 2022, we had $2.5 billion of goodwill. Our goodwill is included in the following segments: $1.1 billion — B&I $502.2 million — M&D $459.3 million — Education $68.7 million — Aviation $367.4 million — Technical Solutions A goodwill impairment analysis was performed for each of our reporting units on August 1, 2022.
At October 31, 2023, we had $2.5 billion of goodwill. Our goodwill is included in the following segments: $1.1 billion — B&I $502.2 million — M&D $459.3 million — Education $69.0 million — Aviation $368.0 million — Technical Solutions A goodwill impairment analysis was performed for each of our reporting units on August 1, 2023.
See Note 10, “Insurance,” in the Financial Statements for further detail. 35 • Unrecognized Tax Benefits – At October 31, 2022, our total liability for unrecognized tax benefits was $10.8 million.
See Note 10, “Insurance,” in the Financial Statements for further detail. • Unrecognized Tax Benefits – At October 31, 2023, our total liability for unrecognized tax benefits was $11.6 million.
Neither of these arrangements has a material current effect, or is reasonably likely to have a material future effect, on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. 36 Critical Accounting Policies and Estimates The preparation of consolidated financial statements in accordance with United States generally accepted accounting principles requires our management to make certain estimates that affect the reported amounts.
Neither of these arrangements has a material current effect, or is reasonably likely to have a material future effect, on our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources. 33 Critical Accounting Policies and Estimates The preparation of consolidated financial statements in accordance with United States generally accepted accounting principles (“U.S.
Based on the results of the actuarial reviews performed, we decreased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2022 by $36.8 million.
Furthermore, we continue to adjust our reserves consistent with known fact patterns. Based on the results of the actuarial reviews performed, we decreased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2023 by $14.8 million.
See Note 16, “Income Taxes,” in the Financial Statements for further details. In addition, our material cash requirements for other obligations, for which we cannot reasonably estimate future payments, include the following: • Multiemployer Benefit Plans – In addition to our company sponsored benefit plans, we participate in certain multiemployer pension and other postretirement plans.
In addition, our material cash requirements for other obligations, for which we cannot reasonably estimate future payments, include the following: • Multiemployer Benefit Plans – In addition to our company sponsored benefit plans, we participate in certain multiemployer pension and other postretirement plans.
Years Ended October 31, (in millions) 2022 2021 2020 Net cash provided by operating activities of continuing operations $ 20.4 $ 314.3 $ 457.4 Net cash provided by operating activities of discontinued operations — — 0.1 Net cash provided by operating activities 20.4 314.3 457.5 Net cash used in investing activities (241.5) (740.0) (27.5) Net cash provided by (used in) financing activities 235.5 92.4 (94.1) Operating Activities of Continuing Operations Net cash provided by operating activities of continuing operations decreased by $293.9 million during 2022, as compared to 2021.
Years Ended October 31, (in millions) 2023 2022 2021 Net cash provided by operating activities 243.3 20.4 314.3 Net cash used in investing activities (62.1) (241.5) (740.0) Net cash (used in) provided by financing activities (186.3) 235.5 92.4 Operating Activities Net cash provided by operating activities of continuing operations increased by $222.9 million during 2023, as compared to 2022.
On a long-term basis, we will continue to rely on our credit facility for any long-term funding not provided by operating cash flows. We believe that our operating cash flows and borrowing capacity under our credit facility are sufficient to fund our cash requirements for the next 12 months.
On a long-term basis, we will continue to rely on our credit facility for any long-term funding not provided by operating cash flows. We believe that our operating cash flows and borrowing capacity under our credit facility are sufficient to fund our cash requirements for at least a 12-month period from the issuance of these financial statements.
Investing Activities Net cash used in investing activities changed by $498.5 million during 2022, as compared to 2021. The change was primarily related to the Able Acquisition during the fourth quarter of 2021, partially offset by Momentum and RavenVolt acquisitions. Net cash used in investing activities changed by $712.5 million during 2021, as compared to 2020.
The change was primarily related to the Able Acquisition during the fourth quarter of 2021, partially offset by Momentum and RavenVolt acquisitions. Financing Activities Net cash used in financing activities was $186.3 million in 2023, as compared to net cash provided by financing activities of $235.5 million in 2022.
Manufacturing & Distribution Years Ended October 31, ($ in millions) 2022 2021 Increase Revenues $ 1,445.2 $ 1,363.1 $ 82.1 6.0% Operating profit 161.8 155.5 6.3 4.0% Operating profit margin 11.2 % 11.4 % (21) bps M&D revenues increased by $82.1 million, or 6.0%, to $1,445.2 million during 2022, as compared to 2021.
Manufacturing & Distribution Years Ended October 31, ($ in millions) 2023 2022 Increase Revenues $ 1,526.7 $ 1,445.2 $ 81.5 5.6% Operating profit 161.7 161.8 (0.1) —% Operating profit margin 10.6 % 11.2 % (60) bps M&D revenues increased by $81.5 million, or 5.6%, to $1,526.7 million during 2023, as compared to 2022.
We did not make this election for the Able Acquisition. Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At October 31, 2022, we were in compliance with these covenants and expect to be in compliance in the foreseeable future.
Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At October 31, 2023, we were in compliance with these covenants and expect to be in compliance in the foreseeable future.
We paid total annual dividends of $51.9 million, $51.0 million, and $49.3 million during 2022, 2021, and 2020, respectively.
We paid total annual dividends of $57.5 million, $51.9 million, and $51.0 million during 2023, 2022, and 2021, respectively.
The increase in operating profit margin was primarily attributable to the $7.6 million gain recognized on the sale of a group of customer contracts related to healthcare technology management services and lower bad debt expense partially offset by the contract mix.
The decrease in operating profit margin was primarily attributable to a $7.6 million gain recognized on the sale of a group of customer contracts related to healthcare technology management services recognized in the prior year, and amortization of intangible assets related to the RavenVolt Acquisition, partially offset by the contract mix.
The use of the cash received under these arrangements to pay project costs is classified as operating cash flows. Effect of Inflation The rates of inflation experienced in recent years have not had a material impact on our Financial Statements.
The use of the cash received under these arrangements to pay project costs is classified as operating cash flows. Effect of Inflation The rates of inflation experienced in recent years have not had a material impact on our Financial Statements. We attempt to recover increased costs by increasing prices for our services to the extent permitted by contracts and competition.
Our effective tax rate for 2022 was impacted by the following items: a $8.1 million benefit for expiring statutes of limitations; a $1.4 million benefit for share-based compensation; and a $1.3 million provision for true-ups.
Our effective tax rate for 2022 was impacted by the following items: an $8.1 million benefit for uncertain tax positions with expiring statutes; a $1.4 million benefit for share-based compensation; and a $1.3 million return to provision adjustments.
In 2021, we decreased our total reserves related to prior year claims by $36.0 million. 23 Key Financial Highlights • Revenues increased by $1,578.0 million, or 25.3%, to $7,806.6 million during 2022, as compared to 2021. Revenue growth was comprised of acquisition growth of 18.0% and organic growth of 7.3%.
In 2022, we decreased our total reserves related to prior year claims by $36.8 million. 22 Key Financial Highlights • Revenues increased by $289.8 million, or 3.7%, to $8,096.4 million during 2023, as compared to 2022. Revenue growth was comprised of organic growth of 2.4% and acquisition growth of 1.3%.
We attempt to recover increased costs by increasing prices for our services to the extent permitted by contracts and competition. 33 Regulatory Environment Our operations are subject to various federal, state, and/or local laws, rules, and regulations regulating among other things, labor, wages, and health and safety matters, as well as laws and regulations relating to the discharge of materials into the environment or otherwise relating to the protection of the environment.
Regulatory Environment Our operations are subject to various federal, state, and/or local laws, rules, and regulations regulating among other things, labor, wages, and health and safety matters, as well as laws and regulations relating to the discharge of materials into the environment or otherwise relating to the protection of the environment.
Dividends On December 5, 2022, we announced a quarterly cash dividend of $0.22 per share on our common stock, payable on February 6, 2023. We declared a quarterly cash dividend on our common stock every quarter during 34 2022, 2021, and 2020.
Dividends On December 13, 2023, we announced a quarterly cash dividend of $0.225 per share on our common stock, payable on February 5, 2024, to shareholders of record on January 4, 2024. We declared a quarterly cash dividend on our common stock every quarter during 2023, 2022, and 2021.
Share Repurchases Effective December 18, 2019, our Board of Directors replaced our then-existing share repurchase program with a new share repurchase program under which we may repurchase up to $150.0 million of our common stock. We repurchased shares under the Share Repurchase Program during 2022, as summarized below.
Share Repurchases Effective December 18, 2019, our Board of Directors replaced our then-existing share repurchase program with a new share repurchase program under which we may repurchase up to $150.0 million of our common stock. Effective December 9, 2022, and December 13, 2023, our Board of Directors expanded the Share Repurchase Program by $150.0 millionand $150.0 million, respectively.
Education Years Ended October 31, ($ in millions) 2022 2021 Increase / (Decrease) Revenues $ 834.7 $ 830.8 $ 3.9 0.5% Operating profit 47.1 61.5 (14.4) (23.4)% Operating profit margin 5.6 % 7.4 % (176) bps Education revenues increased by $3.9 million, or 0.5%, to $834.7 million during 2022, as compared to 2021.
Education Years Ended October 31, ($ in millions) 2023 2022 Increase Revenues $ 880.4 $ 834.7 $ 45.7 5.5% Operating profit 49.7 47.1 2.6 5.5% Operating profit margin 5.6 % 5.6 % — bps Education revenues increased by $45.7 million, or 5.5%, to $880.4 million during 2023, as compared to 2022.
As a result of our Acquisition of RavenVolt, we added “Contingent Consideration” to our critical accounting policies and estimates in 2022. We removed “Customer Relationships” and “Contingencies and Litigation”. There have been no other significant changes to our critical accounting policies and estimates for the year ended October 31, 2022.
We removed “Contingent Consideration” from our critical accounting policies and estimates in 2023. There have been no other significant changes to our critical accounting policies and estimates for the year ended October 31, 2023.
Corporate Years Ended October 31, ($ in millions) 2022 2021 Decrease Corporate expenses $ (284.5) $ (374.6) $ (90.1) 24.0% Corporate expenses decreased by $90.1 million, or 24.0%, to $284.5 million during 2022, as compared to 2021.
Corporate Years Ended October 31, ($ in millions) 2023 2022 Decrease Corporate expenses $ (226.6) $ (284.5) $ (57.9) 20.3% Corporate expenses decreased by $57.9 million, or 20.3%, to $226.6 million during 2023, as compared to 2022.
Financial Information for Each Reportable Segment Years Ended October 31, 2022 vs. 2021 ($ in millions) 2022 2021 2020 Increase / (Decrease) Revenues Business & Industry $ 4,095.9 $ 2,853.8 $ 2,856.4 $ 1,242.1 43.5% Manufacturing & Distribution 1,445.2 1,363.1 1,151.4 82.1 6.0% Education 834.7 830.8 805.1 3.9 0.5% Aviation 804.0 651.1 670.7 152.9 23.5% Technical Solutions 626.8 529.8 504.0 97.0 18.3% $ 7,806.6 $ 6,228.6 $ 5,987.6 $ 1,578.0 25.3% Operating profit (loss) Business & Industry $ 334.9 $ 285.9 $ 229.2 $ 49.0 17.1% Operating profit margin 8.2 % 10.0 % 8.0 % (184) bps Manufacturing & Distribution 161.8 155.5 108.0 6.3 4.0% Operating profit margin 11.2 % 11.4 % 9.4 % (21) bps Education 47.1 61.5 (39.9) (14.4) (23.4)% Operating profit margin 5.6 % 7.4 % (5.0 %) (176) bps Aviation 29.3 32.1 (60.1) (2.8) (8.6)% Operating profit margin 3.6 % 4.9 % (9.0 %) (128) bps Technical Solutions 63.8 49.4 9.7 14.4 29.2% Operating profit margin 10.2 % 9.3 % 1.9 % 86 bps Government Services (0.3) (0.2) (0.1) (0.1) (72.4)% Operating profit margin NM* NM* NM* NM* Corporate (284.5) (374.6) (146.9) (90.1) 24.0% Adjustment for income from unconsolidated affiliates, included in Aviation (2.4) (2.1) (2.2) (0.3) (16.5)% Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions (0.9) (1.2) (2.1) 0.3 27.7% $ 348.8 $ 206.3 $ 95.7 $ 142.5 69.1% *Not meaningful 28 The Year Ended October 31, 2022 Compared with the Year Ended October 31, 2021 Business & Industry Years Ended October 31, ($ in millions) 2022 2021 Increase Revenues $ 4,095.9 $ 2,853.8 $ 1,242.1 43.5% Operating profit 334.9 285.9 49.0 17.1% Operating profit margin 8.2 % 10.0 % (184) bps B&I revenues increased by $1,242.1 million, or 43.5%, to $4,095.9 million during 2022, as compared to 2021.
Financial Information for Each Reportable Segment Years Ended October 31, 2023 vs. 2022 ($ in millions) 2023 2022 2021 Increase / (Decrease) Revenues Business & Industry $ 4,089.4 $ 4,095.9 $ 2,853.8 $ (6.5) (0.2)% Manufacturing & Distribution 1,526.7 1,445.2 1,363.1 81.5 5.6% Education 880.4 834.7 830.8 45.7 5.5% Aviation 925.7 804.0 651.1 121.7 15.1% Technical Solutions 674.2 626.8 529.8 47.4 7.6% $ 8,096.4 $ 7,806.6 $ 6,228.6 $ 289.8 3.7% Operating profit (loss) Business & Industry $ 315.6 $ 334.9 $ 285.9 $ (19.3) (5.7)% Operating profit margin 7.7 % 8.2 % 10.0 % (46) bps Manufacturing & Distribution 161.7 161.8 155.5 (0.1) —% Operating profit margin 10.6 % 11.2 % 11.4 % (60) bps Education 49.7 47.1 61.5 2.6 5.5% Operating profit margin 5.6 % 5.6 % 7.4 % — bps Aviation 60.0 29.3 32.1 30.7 NM* Operating profit margin 6.5 % 3.6 % 4.9 % 283 bps Technical Solutions 53.2 63.8 49.4 (10.6) (16.5)% Operating profit margin 7.9 % 10.2 % 9.3 % (228) bps Government Services — (0.3) (0.2) 0.3 NM* Operating profit margin NM* NM* NM* NM* Corporate (226.6) (284.5) (374.6) (57.9) 20.3% Adjustment for income from unconsolidated affiliates, included in Aviation (3.9) (2.4) (2.1) (1.5) (60.1)% Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions (0.3) (0.9) (1.2) 0.6 66.8% $ 409.5 $ 348.8 $ 206.3 $ 60.7 17.4% *Not meaningful 26 The Year Ended October 31, 2023, Compared with the Year Ended October 31, 2022 Business & Industry Years Ended October 31, ($ in millions) 2023 2022 Increase Revenues $ 4,089.4 $ 4,095.9 $ (6.5) (0.2)% Operating profit 315.6 334.9 (19.3) (5.7)% Operating profit margin 7.7 % 8.2 % (46) bps B&I revenues decreased by $6.5 million, or 0.2%, to $4,089.4 million during 2023, as compared to 2022.
The increase was primarily attributable to the expansion of business with existing customers led by distribution clients, partially offset by a decrease in work orders for pandemic-related demands. Operating profit increased by $6.3 million, or 4.0%, to $161.8 million during 2022, as compared to 2021. Operating profit margin decreased by 21 bps to 11.2% in 2022 from 11.4% in 2021.
The increase was primarily attributable to the net new business wins and the expansion of business with existing customers, partially offset by a decrease in work orders. Operating profit decreased by $0.1 million, to $161.7 million during 2023, as compared to 2022. Operating profit margin decreased by 60 bps to 10.6% in 2023 from 11.2% in 2022.
Technical Solutions Years Ended October 31, ($ in millions) 2022 2021 Increase Revenues $ 626.8 $ 529.8 $ 97.0 18.3% Operating profit 63.8 49.4 14.4 29.2% Operating profit margin 10.2 % 9.3 % 86 bps Technical Solutions revenues increased by $97.0 million, or 18.3%, to $626.8 million during 2022, as compared to 2021.
Technical Solutions Years Ended October 31, ($ in millions) 2023 2022 Increase / (Decrease) Revenues $ 674.2 $ 626.8 $ 47.4 7.6% Operating profit 53.2 63.8 (10.6) (16.5)% Operating profit margin 7.9 % 10.2 % (228) bps Technical Solutions revenues increased by $47.4 million, or 7.6%, to $674.2 million during 2023, as compared to 2022.
Amortization of Intangible Assets Amortization of intangible assets increased by $27.1 million, or 60.2%, to $72.1 million during 2022, as compared to 2021. This increase was primarily due to the amortization of intangibles acquired as part of the Able Acquisition.
Amortization of Intangible Assets Amortization of intangible assets increased by $4.4 million, or 6.1%, to $76.5 million during 2023, as compared to 2022. This increase was primarily due to the amortization of intangibles acquired as part of the RavenVolt and Momentum acquisitions.
As a result of the qualitative analysis, we concluded that there were no further impairments. 38 39 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Insurance Reserves We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks.
The impairment charge reduced the carrying value to zero for those components. 35 36 Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions Insurance Reserves We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks.
Years Ended October 31, (in millions, except per share amounts) 2022 2021 Total number of shares purchased 2.3 — Average price paid per share $ 42.15 N/A Total cash paid for share repurchases $ 97.5 $ — Proceeds from Federal Energy Savings Performance Contracts As part of our Technical Solutions business, we enter into energy savings performance contracts (“ESPC”) with the federal government pursuant to which we agree to develop, design, engineer, and construct a project and guarantee that the project will satisfy agreed-upon performance standards.
Proceeds from Federal Energy Savings Performance Contracts As part of our Technical Solutions business, we enter into energy savings performance contracts (“ESPC”) with the federal government pursuant to which we agree to develop, design, engineer, and construct a project and guarantee that the project will satisfy agreed-upon performance standards.
Operating and finance lease obligations were $161.1 million, with $38.4 million payable within 12 months.
Operating 32 and finance lease obligations were $168.0 million, with $42.2 million payable within 12 months.
During the third quarter of 2021, we recognized a non-cash impairment charge totaling $9.1 million in our Corporate segment for previously capitalized internal-use software related to our ERP system implementation. The Company determined that certain components that were previously developed would no longer be integrated into the new ERP system.
A 10% decrease in the estimated fair value of any of our reporting units would not have resulted in a different conclusion. We concluded there were no indicators of impairment. During the third quarter of 2021, we recognized a non-cash impairment charge totaling $9.1 million in our Corporate segment for previously capitalized internal-use software related to our ERP system implementation.
We believe that our technology and data investments will enable: the development and deployment of client-facing technology to improve service delivery to our clients; the use of advanced data analytics for sales targeting, employee retention, and recruiting; and the upgrade of our Enterprise Resource Planning and payroll systems. 22 Developments and Trends COVID-19 Pandemic The COVID-19 Pandemic has led to an increased demand for our services, including higher margin work orders and our EnhancedClean services.
We believe that our technology and data investments will enable: the development and deployment of client-facing technology to improve service delivery to our clients; the use of advanced data analytics for sales targeting, employee retention, and recruiting; and the upgrade of our Enterprise Resource Planning and payroll systems. 21 Developments and Trends Macro-Economic Environment in Commercial Real Estate and Other We actively monitor the economic environment and its potential impact on demand for our services and our financial condition.
These amounts are based on expected future service and were calculated using the same assumptions used to measure our benefit obligation at October 31, 2022. • CARES Act Tax Obligations – We deferred approximately $66 million of payroll tax provisions under the CARES Act, which we paid in December 2022.
These amounts are based on expected future service and were calculated using the same assumptions used to measure our benefit obligation at October 31, 2023.
Off-Balance Sheet Arrangements We have no off-balance sheet arrangements other than unrecorded standby letters of credit and surety bonds. We use letters of credit and surety bonds in the ordinary course of business to ensure the performance of contractual obligations and to collateralize self-insurance obligations in the event we are unable to meet our claim payment obligations.
We use letters of credit and surety bonds in the ordinary course of business to ensure the performance of contractual obligations and to collateralize self-insurance obligations in the event we are unable to meet our claim payment obligations. As we already have reserves on our books for the claims costs, these do not represent additional liabilities.
Our total operating cash flows were lower, primarily due to the timing of certain working capital requirements, which included a $143.8 million payment for the Bucio case and a $66 million payment for deferred payroll taxes under the CARES Act in the current fiscal year. • Dividends of $51.9 million were paid to shareholders, and dividends totaling $0.78 per common share were declared during 2022. • At October 31, 2022, total outstanding borrowings under our Amended Credit Facility and Receivables Facility were $1,271.3 million, and we had up to $612.9 million of borrowing capacity. 24 Results of Operations Consolidated Years Ended October 31, 2022 vs. 2021 ($ in millions) 2022 2021 2020 Increase / (Decrease) Revenues $ 7,806.6 $ 6,228.6 $ 5,987.6 $ 1,578.0 25.3% Operating expenses 6,757.5 5,258.2 5,157.0 1,499.3 28.5% Gross margin 13.4 % 15.6 % 13.9 % (214) bps Selling, general and administrative expenses 628.3 719.2 506.1 (90.9) (12.6)% Restructuring and related expenses — — 7.6 — NM* Amortization of intangible assets 72.1 45.0 48.4 27.1 60.2% Impairment loss of goodwill and other intangibles — — 172.8 — NM* Operating profit 348.8 206.3 95.7 142.5 69.1% Income from unconsolidated affiliates 2.4 2.1 2.2 0.3 16.5% Interest expense (41.1) (28.6) (44.6) 12.5 (43.9)% Income from continuing operations before income taxes 310.0 179.8 53.3 130.2 72.4% Income tax provision (79.6) (53.5) (53.1) 26.1 (48.9)% Income from continuing operations 230.4 126.3 0.2 104.1 82.4% Income (loss) from discontinued operations, net of taxes — — 0.1 — NM* Net income 230.4 126.3 0.3 104.1 82.4% Other comprehensive income (loss) Interest rate swaps 36.7 4.5 (7.6) 32.2 NM* Foreign currency translation and other (19.8) 5.3 (1.8) (25.1) NM* Income tax (provision) benefit (10.5) (1.5) 2.4 (9.0) NM* Comprehensive income (loss) $ 236.9 $ 134.5 $ (6.6) $ 102.4 76.1% *Not meaningful The Year Ended October 31, 2022 Compared with the Year Ended October 31, 2021 Revenues Revenues increased by $1,578.0 million, or 25.3%, to $7,806.6 million during 2022, as compared to 2021.
Additionally, we repurchased 3.3 million of shares for $138.1 million, including excise taxes during 2023. • At October 31, 2023, total outstanding borrowings under our Amended Credit Facility were $1,313.8 million, and we had up to $483.0 million of borrowing capacity. 23 Results of Operations Consolidated Years Ended October 31, 2023 vs. 2022 ($ in millions) 2023 2022 2021 Increase / (Decrease) Revenues $ 8,096.4 $ 7,806.6 $ 6,228.6 $ 289.8 3.7% Operating expenses 7,037.6 6,757.5 5,258.2 280.1 4.1% Gross margin 13.1 % 13.4 % 15.6 % (36) bps Selling, general and administrative expenses 572.8 628.3 719.2 (55.5) (8.8)% Amortization of intangible assets 76.5 72.1 45.0 4.4 6.1% Operating profit 409.5 348.8 206.3 60.7 17.4% Income from unconsolidated affiliates 3.9 2.4 2.1 1.5 60.1% Interest expense (82.3) (41.1) (28.6) (41.2) (99.9)% Income before income taxes 331.1 310.0 179.8 21.1 6.8% Income tax provision (79.7) (79.6) (53.5) (0.1) (0.2)% Net income 251.3 230.4 126.3 20.9 9.1% Other comprehensive income Interest rate swaps (0.5) 36.7 4.5 (37.2) NM* Foreign currency translation and other 7.3 (19.8) 5.3 27.1 NM* Income tax provision 0.1 (10.5) (1.5) 10.6 NM* Comprehensive income $ 258.1 $ 236.9 $ 134.5 $ 21.2 9.0% *Not meaningful The Year Ended October 31, 2023, Compared with the Year Ended October 31, 2022 Revenues Revenues increased by $289.8 million, or 3.7%, to $8,096.4 million during 2023, as compared to 2022.
This decrease was partially offset by: • a $46.1 million increase in compensation and related expenses primarily attributable to talent acquisition activities; • a $31.4 million increase in certain technology projects primarily attributable to discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics; • a $16.9 million increase related to the Able Acquisition; and • a $6.7 million decrease in favorable self-insurance adjustments related to prior year claims as the result of actuarial evaluations completed on our medical and dental self-insurance plans.
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; • a $24.0 million benefit from ERC refunds received; and 24 • a $6.6 million decrease in certain technology projects primarily attributable to discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics; This decrease was partially offset by: • a $10.8 million increase in bad debt, of which $7.7 million relates to a favorable adjustment in the prior year; • an absence of a $7.6 million gain on the sale of a group of customer contracts related to healthcare technology management services within Technical Solutions during 2022; and • a $4.6 million increase in unfavorable self-insurance adjustment related to prior year claims as the result of actuarial evaluations completed on our medical and dental self-insurance plans.
The decrease in operating profit margin was primarily driven by an increase in direct labor and related costs due to a limited labor supply in certain non-union markets; a decrease in pandemic-related cleaning services, which have higher margins; and changes in contract mix as a result of the Able Acquisition, partially offset by lower bad debt expense.
The decrease in operating profit margin was primarily driven by a decrease in work orders, which are generally more profitable than contracted service, the change in contract mix, and an increase in direct labor and related costs due to a limited labor supply in certain non-union markets. The decrease was partially offset by lower amortization of intangible assets.
As we already have reserves on our books for the claims costs, these do not represent additional liabilities. The surety bonds typically remain in force for one to five years and may include optional renewal periods. As of October 31, 2022, these letters of credit and surety bonds totaled $158.3 million and $618.6 million, respectively.
The surety bonds typically remain in force for one to five years and may include optional renewal periods. As of October 31, 2023, these letters of credit totaled $58.2 million, and surety bonds and surety-backed letters of credit totaled $776.2 million, respectively.
Net cash provided by financing activities was $92.4 million in 2021, as compared to net cash used in financing activities of $94.1 million in 2020, primarily due to higher net borrowings to partially fund the purchase price of the Able Acquisition.
Net cash provided by financing activities was $235.5 million in 2022, as compared to $92.4 million in 2021, primarily due to higher net borrowings to fund acquisitions and working capital requirements.
On March 1, 2022, we entered into a new uncommitted receivable repurchase facility (the “Receivables Facility”) of up to $150 million, which expires on February 28, 2023.
On March 1, 2022, we entered into a new 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.
Revenue growth was comprised of acquisition growth of 18.0% and organic growth of 7.3%. Acquisition growth was primarily driven by an $1,064.4 million revenue increase due to the Able Acquisition, completed in the fourth quarter of 2021.
Revenue growth was comprised of organic growth of 2.4% and acquisition growth of 1.3%. Acquisition growth of $104.4 million was driven by the RavenVolt and Momentum acquisitions, completed in the fourth and second quarter of 2022, respectively.
The change was primarily related to the Able Acquisition during the fourth quarter of 2021. Financing Activities Net cash provided by financing activities was $235.5 million in 2022, as compared to net cash used in financing activities of $92.4 million in 2021.
Investing Activities Net cash used in investing activities changed by $179.5 million during 2023, as compared to 2022. The change was primarily related to the Momentum and RavenVolt acquisitions, completed in 2022. Net cash used in investing activities changed by $498.5 million during 2022, as compared to 2021.
The change was primarily related to an increase in net borrowings from our Amended Credit Facility and Receivable Facility to fund acquisitions and working capital requirements.
The change was primarily related to a decrease in net borrowings from our Amended Credit Facility, as in 2022 we had higher borrowings to fund Momentum and RavenVolt acquisitions, and higher share repurchases in 2023.
Operating margin was positively impacted by lower amortization of intangible assets. 29 Aviation Years Ended October 31, ($ in millions) 2022 2021 Increase / (Decrease) Revenues $ 804.0 $ 651.1 $ 152.9 23.5% Operating profit 29.3 32.1 (2.8) (8.6)% Operating profit margin 3.6 % 4.9 % (128) bps Aviation revenues increased by $152.9 million, or 23.5% to $804.0 million, during 2022, as compared to 2021.
The operating profit margin was positively impacted by labor efficiencies and lower amortization of intangible assets, offset by an increase in start-up supplies to support new business growth and the decrease in work orders, which are generally more profitable than contracted service. 27 Aviation Years Ended October 31, ($ in millions) 2023 2022 Increase Revenues $ 925.7 $ 804.0 $ 121.7 15.1% Operating profit 60.0 29.3 30.7 NM* Operating profit margin 6.5 % 3.6 % 283 bps Aviation revenues increased by $121.7 million, or 15.1% to $925.7 million, during 2023, as compared to 2022.
Refer to “Consolidated Results of Operations” and “Results of Operations by Segment” for additional information related to the impact of the Pandemic on our financial results. Insurance Reserves We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks.
While we still expect to retain a large portion of this business, we expect M&D’s financial results to be impacted in the near-term. Insurance Reserves We use a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other insurable risks.
The increase in revenues was partially offset by a decrease in work orders for pandemic-related demands (primarily in M&D and B&I) and the loss of certain accounts within Education in the third quarter of 2021. • Operating profit increased by $142.5 million to $348.8 million during 2022, as compared to 2021.
The increase in revenues was partially offset by a decrease in the overall volume of work orders, lower project revenues within Technical Solutions, and soft commercial office market conditions in B&I. • Operating profit increased by $60.7 million to $409.5 million during 2023, as compared to 2022.
The decrease in operating profit margin was primarily attributable to the decrease in pandemic-related work orders, which have higher margins.
The decrease in operating profit margin was primarily attributable to the change in contract mix and decrease in work orders, which are generally more profitable than contracted service.
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 $52.6 million and $54.5 million during 2022 and 2021, respectively. Operating profit decreased by $2.8 million, or 8.6%, to $29.3 million during 2022, as compared to 2021.
Management reimbursement revenues for this segment totaled $270.1 million and $227.8 million during 2023 and 2022, respectively. Operating profit decreased by $19.3 million, or 5.7%, to $315.6 million during 2023, as compared to 2022. Operating profit margin decreased by 46 bps to 7.7% in 2023 from 8.2% in 2022.
We transitioned the outstanding debt from a LIBOR-based interest rate to a term SOFR-based interest rate, which is set to take effect on November 1, 2022. Reinvestment of Foreign Earnings We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion, and we do not anticipate remitting such earnings to the United States.
At October 31, 2023, we had up to $483.0 million of borrowing capacity. 30 Reinvestment of Foreign Earnings We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion, and we do not anticipate remitting such earnings to the United States.
Net cash provided by operating activities of continuing operations decreased by $143.1 million during 2021, as compared to 2020. The decrease was primarily related to the timing of client receivable collections and deferred remittance of payroll taxes under the CARES Act in 2021, partially offset by the timing of vendor payments.
The increase was primarily driven by a $143.8 million payments made for the Bucio settlement in 2022, and the related income tax benefit . Net cash provided by operating activities of continuing operations decreased by $293.9 million during 2022, as compared to 2021.
Operating profit increased by $49.0 million, or 17.1%, to $334.9 million during 2022, as compared to 2021. Operating profit margin decreased by 184 bps to 8.2% in 2022 from 10.0% in 2021.
Operating profit margin decreased by 228 bps to 7.9% in 2023 from 10.2% in 2022.
The increase in revenues was partially offset by a decrease in work orders for pandemic-related demands (primarily in M&D and B&I) and the loss of certain accounts within Education in the third quarter of 2021. Operating Expenses Operating expenses increased by $1,499.3 million, or 28.5%, to $348.8 million during 2022, as compared to 2021.
The increase in revenues was partially offset by a decrease in the overall volume of work orders, lower project revenues within Technical Solutions, and soft commercial office market conditions in B&I. Operating Expenses Operating expenses increased by $280.1 million, or 4.1%, to $7,037.6 million during 2023, as compared to 2022.
Organic growth was primarily driven by the recovery in volume of our business as pandemic disruptions eased (primarily in B&I and Aviation) and new business within M&D, Technical Solutions, and Education.
Organic growth was primarily driven by the strong leisure and business travel markets served by Aviation, expansion of new business and growth with current customers in M&D, and net new business wins in Education.
Based on these studies, the implied fair value of each of our reporting units was substantially in excess of its carrying value. Therefore, we concluded there were no indicators of impairment. A 10% decrease in the estimated fair value of any of our reporting units would not have resulted in a different conclusion.
Based on these studies, the implied fair value of each of our reporting units was substantially in excess of its carrying value, with the exception of the Education reporting unit, where the excess of the fair value over its carrying value was less than 20%.
Operating margin decreased to 5.6% in 2022 from 7.4% in 2021. The decrease in operating margin was primarily attributable to an increase in direct labor and related costs due to the return to in-person learning and a limited labor supply in certain geographies.
Operating profit margin increased to 6.5% during 2023, from 3.6% during 2022. The increase in operating profit margin was primarily attributable to the $11.4 million in revenue from an Aviation parking project. Operating profit margin was negatively impacted by an increase in direct labor and related costs due to increased headcounts as travel continues to recover.
Revenue growth was comprised of acquisition growth of 38.5% and organic growth of 5.0%. Acquisition growth was primarily driven by a $1,058.9 million revenue increase due to the Able Acquisition, completed in the fourth quarter of 2021.
Revenue growth included acquisition growth of 11.5%, which was partially offset by an organic decrease of 3.9%. Acquisition growth of $72.3 million was driven by the RavenVolt Acquisition, which was completed in the fourth quarter of 2022.
The increase was primarily attributable to new business and recovery in the volume of our business as schools reopened to full capacity. The increase was partially offset by a loss of certain accounts in the third quarter of 2021. Operating profit decreased by $14.4 million, or 23.4% to $47.1 million during 2022, as compared to 2021.
The increase was primarily attributable to net new business wins, partially offset by a decrease in work orders. Operating profit increased by $2.6 million, or 5.5% to $49.7 million during 2023, as compared to 2022. Operating profit margin of 5.6% in 2023 was consistent with 2022.
Interest Expense Interest expense increased by $12.5 million, or 43.9%, to $41.1 million during 2022, as compared to 2021, primarily driven by the indebtedness to fund acquisitions and working capital requirements and an increase in the reference rates on our debt borrowings beginning the second quarter of 2022.
Interest Expense Interest expense increased by $41.2 million, or 99.9%, to $82.3 million during 2023, as compared to 2022, primarily driven by higher interest rates on our debt borrowings. Income Taxes During 2023 and 2022, we had effective tax rates of 24.1% and 25.7%, respectively, resulting in a provision for tax of $79.7 million and $79.6 million, respectively. .
Revenue growth was comprised of acquisition growth of 2.8% and organic growth of 15.5%. The organic revenue growth was primarily driven by the growth in electric vehicle charging station installation sales. Acquisition growth was primarily driven by a $14.7 million revenue increase due to the RavenVolt Acquisition, completed in the fourth quarter of 2022.
The organic revenue decrease was primarily driven by the decline in electric vehicle charging station installation sales and lower project revenues due to the timing of completions of certain bundled energy solutions projects. Operating profit decreased by $10.6 million, or 16.5%, to $53.2 million during 2023, as compared to 2022.

… 76 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed2 unchanged
Principal Properties as of October 31, 2022 Location Character of Office Approximate Square Feet Lease Expiration Date, Unless Owned Segment Dallas, Texas Warehouse and Operations Support 27,500 9/30/2028 ATS, B&I, Aviation, Corporate, and M&D Atlanta, Georgia Operations Support 37,000 10/31/2027 All Cleveland, Ohio Legacy GCA Headquarters 32,400 1/31/2024 Education, M&D, and Corporate New York, New York Corporate Headquarters 44,000 1/3/2032 Corporate and B&I Sugar Land, Texas Enterprise Services 62,500 3/31/2028 All Tustin, California Operations Support 40,000 7/31/2029 B&I and Technical Solutions In addition to the above properties, we have other offices, warehouses, and parking facilities in various locations, primarily in the United States.
Principal Properties as of October 31, 2023 Location Character of Office Approximate Square Feet Lease Expiration Date, Unless Owned Segment Dallas, Texas Warehouse and Operations Support 27,500 9/30/2028 Technical Solutions, B&I, Aviation, Corporate, and M&D Atlanta, Georgia Operations Support 37,000 10/31/2027 All New York, New York Corporate Headquarters 44,000 1/3/2032 Corporate and B&I Sugar Land, Texas Enterprise Services 62,500 3/31/2028 All Tustin, California Operations Support 40,000 7/31/2029 B&I and Technical Solutions San Francisco, California Operations Support 21,324 6/30/2029 B&I and Corporate Cummings, Georgia Operations Support 57,637 1/31/2034 Technical Solutions In addition to the above properties, we have other offices, warehouses, and parking facilities in various locations, primarily in the United States.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed0 unchanged
ITEM 3. LEGAL PROCEEDINGS. Certain Legal Proceedings Information with respect to certain legal proceedings is set forth in Note 13, “Commitments and Contingencies,” in the Notes to consolidated financial statements (included in Part II., Item 8 of this Form 10-K) and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 19 PART II
ITEM 3. LEGAL PROCEEDINGS. Information with respect to legal matters is set forth in Note 13, “Commitments and Contingencies,” in the Notes to consolidated financial statements (included in Part II., Item 8 of this Form 10-K) and is incorporated herein by reference. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. 18 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−3 removed3 unchanged
The comparisons in the performance graph are based on historical data and are not indicative of, or intended to forecast, the possible future performance of our common stock. 21 ITEM 6. [RESERVED]
The comparisons in the performance graph are based on historical data and are not indicative of, or intended to forecast, the possible future performance of our common stock. 20 ITEM 6. [RESERVED]
Future dividends will be determined based on our earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors. At December 20, 2022, there were 3,004 registered holders of our common stock.
Future dividends will be determined based on our earnings, capital requirements, financial condition, and other factors considered relevant by our Board of Directors. At December 15, 2023, there were 2,945 registered holders of our common stock.
Issuer Purchases of Equity Securities (in millions, except per share amounts) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan Period 8/1/2022 – 8/31/2022 — — — $ 70.4 9/1/2022 – 9/30/2022 0.3 $ 39.12 0.3 $ 57.2 10/1/2022 – 10/31/2022 0.2 $ 40.50 0.2 $ 47.4 Total 0.6 $ 39.69 0.6 $ 47.4 20 Performance Graph The following graph compares the five-year cumulative total return for our common stock against the Standard & Poor’s 500 Index (“S&P 500”) and the Standard & Poor’s SmallCap 600 Index (“S&P 600”).
Issuer Purchases of Equity Securities (in millions, except per share amounts) Total Number of Shares Purchased Average Price Paid per Share (1) Total Number of Shares Purchased as Part of Publicly Announced Plan Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plan Period 8/1/2023 – 8/31/2023 — — $ — $ 170.3 9/1/2023 – 9/30/2023 $ 1.4 $ 40.24 $ 1.4 $ 115.3 10/1/2023 – 10/31/2023 1.3 $ 41.41 1.3 $ 60.3 Total 2.7 $ 40.82 2.7 (1) Average price paid per share does not include any excise tax for stock repurchases as part of the Inflation Reduction Act of 2022. 19 Performance Graph The following graph compares the five-year cumulative total return for our common stock against the Standard & Poor’s 500 Index (“S&P 500”) and the Standard & Poor’s SmallCap 600 Index (“S&P 600”).
INDEXED RETURNS Years Ended October 31, Company / Index 2017 2018 2019 2020 2021 2022 ABM Industries Incorporated $ 100 $ 74.8 $ 90.5 $ 88.2 $ 113.7 $ 117.1 S&P 500 Index 100 107.4 122.7 134.6 192.4 164.3 S&P SmallCap 600 Index 100 105.6 109.0 100.6 159.9 141.0 This performance graph shall not be deemed to be “soliciting material” or “filed” with the SEC, or subject to Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
INDEXED RETURNS Years Ended October 31, Company / Index 2018 2019 2020 2021 2022 2023 ABM Industries Incorporated $ 100.0 $ 121.0 $ 117.8 $ 151.9 $ 156.5 $ 141.2 S&P 500 Index $ 100.0 114.3 125.4 179.3 153.1 168.6 S&P SmallCap 600 Index $ 100.0 103.2 95.3 151.4 133.5 123.3 This performance graph shall not be deemed to be “soliciting material” or “filed” with the SEC, or subject to Regulation 14A or 14C, or subject to the liabilities of Section 18 of the Securities Exchange Act of 1934, as amended.
The timing of repurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share price, and share availability. 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.
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 other factors. Repurchased shares are retired and returned to an authorized but unissued status. At October 31, 2023, authorization for $60.3 million of repurchases remained under the Share Repurchase Program.
Repurchases of our common stock 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.
Effective December 9, 2022, and December 13, 2023, our Board of Directors expanded the Share Repurchase Program by $150.0 million and $150.0 million, respectively. 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.
Removed
These purchases may take place on the open market or otherwise, and all or part of the repurchases may be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions. The timing of repurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share price, share availability, and other factors.
Removed
Repurchased shares are retired and returned to an authorized but unissued status. At October 31, 2022, authorization for $47.4 million of repurchases remained under the Share Repurchase Program. Effective December 9, 2022, our Board of Directors expanded the Share Repurchase Program by an additional $150.0 million.
Removed
At December 9, 2022, authorization for $197.4 million of repurchases remained under the Share Repurchase Program.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed1 unchanged
Interest Rate Risk We are primarily exposed to interest rate risk through our variable rate borrowings under our Amended Credit Facility, as further described in Note 11 , “Debt,” in the Financial Statements. Under the Amended Credit Facility, the term loan and U.S.-dollar-denominated borrowings under the revolver bear interest at a rate equal to one-month LIBOR plus a spread.
Interest Rate Risk We are primarily exposed to interest rate risk through our variable rate borrowings under our Amended Credit Facility, as further described in Note 11 , “Debt,” in the Financial Statements. Under the Amended Credit Facility, the term loan and U.S.-dollar-denominated borrowings under the revolver bear interest at a rate equal to one-month SOFR plus a spread.
If we change our intent with respect to such international investment, we would expect to implement strategies designed to manage those risks in an effort to mitigate the effect of foreign currency fluctuations on our earnings and cash flows. 43
If we change our intent with respect to such international investment, we would expect to implement strategies designed to manage those risks in an effort to mitigate the effect of foreign currency fluctuations on our earnings and cash flows. 39
Foreign Currency Exchange Rate Risk We are primarily exposed to the impact of foreign exchange rate risk through our UK operations where the functional currency is the British pound sterling (“GBP”). As we intend to remain permanently invested in these foreign operations, we do not utilize hedging instruments to mitigate foreign currency exchange risks.
Foreign Currency Exchange Rate Risk We are primarily exposed to the impact of foreign exchange rate risk through our UK and Ireland operations where the functional currency is the British pound sterling (“GBP”) and Euro (“EUR”), respectively. As we intend to remain permanently invested in these foreign operations, we do not utilize hedging instruments to mitigate foreign currency exchange risks.
As actual interest rate movements over time are uncertain, our interest rate swaps pose potential interest rate risks if interest rates decrease. As of October 31, 2022, the fair value of our interest rate swap agreements was an asset of $36.9 million.
As actual interest rate movements over time are uncertain, our interest rate swaps pose potential interest rate risks if interest rates decrease. As of October 31, 2023, the fair value of our interest rate swap agreements was an asset of $36.4 million.
Euro- and sterling-denominated borrowings under the revolver bear at rate equal to the EURIBOR and SONIA reference rates, respectively, plus a spread. At October 31, 2022, we had total outstanding borrowings of $1,271.3 million.
Euro- and sterling-denominated borrowings under the revolver bear at rate equal to the EURIBOR and SONIA reference rates, respectively, plus a spread. At October 31, 2023, we had total outstanding borrowings of $1,313.8 million.
Based on our average borrowings, interest rates, and interest rate swaps in effect at October 31, 2022 and 2021, a 100 basis point increase in LIBOR, EURIBOR, and SONIA would decrease our future earnings and cash flows by $5.2 million and $7.1 million, respectively.
Based on our average borrowings, interest rates, and interest rate swaps in effect at October 31, 2023 and 2022, a 100 basis point increase in SOFR, EURIBOR, and SONIA would decrease our future earnings and cash flows by $5.4 million and $5.2 million, respectively.
To limit exposure to upward movements in interest rates associated with our floating-rate, LIBOR-based borrowings, we entered into interest rate swap agreements to fix the interest rates on a portion of our outstanding borrowings. At October 31, 2022, we had interest rate swaps with an underlying notional amount of $650.0 million and fixed interest rates ranging from 1.78% to 2.98%.
To limit exposure to upward movements in interest rates associated with our floating-rate, SOFR-based borrowings, we entered into interest rate swap agreements to fix the interest rates on a portion of our outstanding borrowings. At October 31, 2023, we had interest rate swaps with an underlying notional amount of $820.1 million and fixed interest rates ranging from 1.72% to 3.81%.

Other ABM 10-K year-over-year comparisons