ABM Industries Incorporated (NYSE:ABM) Q1 2024 Earnings Call Transcript

Andrew Wittmann: Okay. That’s helpful perspective. Thank you for that. So then I guess, Earl, for you, I just wanted to make sure that I understood and we all understood a little bit about the guidance here and what changed. It feels like the discrete tax item for $4.4 million or $0.07 in the quarter was really the preponderance of the change given that the adjusted EBITDA number didn’t change and all the other assumptions. So I just wanted to confirm that’s really correct. And then if you could talk to us a little bit about, I mean, there’s always some level of discrete tax items in your results from the various tax credits and other things that you get. And so I was just wondering maybe if you could comment on, I know it’s hard to guide on, but what a realistic range or what we should be thinking about for fiscal year ‘24 could be for those now that we have this extra one here in the first quarter.

Earl Ellis : Yes, no, you’re absolutely right, Tim. So when we look at the guide, sorry, Andrew, when we look at the guide, it really was the flow through of two discrete tax items that generated about $0.07. And as a result, you can see that our midpoint in the guide has actually gone up $0.07. In addition to that, we felt confident actually rolling that through just based on the Q1 performance in the underlying business and the confidence that we actually have in our performance for the balance of the business. So that really is the story around the guide. As far as tax, these two discrete items came about by our normal kind of quarterly review of our tax provisions across a multiple number of jurisdictions. And as we look towards the full year, we don’t anticipate any sizable discrete items outside of the ones that were actually accrued for in the quarter.

Andrew Wittmann: Great. That’s also helpful. I’m going to ask one more here because I’m feeling like there’s probably not that many questioners in the queue. And I guess I just wanted a little perspective on your sports and entertainment business. I guess in the past, I haven’t asked a lot about this business, but I’ve seen over the last few years, you’ve been picking up more sites here, so I think maybe it’s time to talk about it a little bit. Can you help us understand the size of the sports and entertainment business inside of the B&I segment. And maybe if you could talk about, it feels like it was an unusually good quarter. Obviously, saying Super Bowl, that seems splashy and interesting. But one event doesn’t make a quarter. I’m just wondering if there’s any other way to talk about how just attendance or the calendar, if you would, benefited the quarter just so that we have an understanding of what it could mean a year from now when we have this as the comp.

Earl Ellis : Yes, that’s good. To give you context, look, it’s probably like $100 million odd in revenue. But why we get so excited about it is it’s been having double-digit growth. And if you look at all the major stadiums that have opened in the last few years, I think we’ve gotten all or 90% of them because of how good we do in this. And I think the Super Bowl is in New Orleans next year, and we have that as well. So it’s going to be, I think, we’re four for four in the last four Super Bowls of taking care of it. So we just get a lot of pride around that. So it’s not from a revenue standpoint across our $8 billion in revenue. It’s not earth shattering. But it’s pretty exciting, right? And it does speak to the fact that people are back at venues, and so it’s growing, and we expect us to continue to grow double digit. So, yes.

Operator: Our next question comes from the line of Faiza Alwy with Deutsche Bank.

Faiza Alwy: Yes, hi, thank and good morning. So I wanted to talk about the aviation business first. It looks like you’ve had very strong growth for the last few quarters. And the tech-enabled solutions that you talked about, Scott, sound very interesting. I’m curious how we should think about that business from here. Obviously, you have some new wins. And also, are there other, I know you’ve been spending on technology for some time investing behind some of these new solutions. So talk about maybe other areas where you’re developing solutions that might be helpful and interesting going forward.

Scott Salmirs: Sure. So look, we are super excited about our Aviation segment. We were in a pretty rocky place three or four years ago and our team is phenomenal. We’ve been getting double digit growth over the last couple of years and we continue, a lot of our press releases are on these big wins that we’re getting and we think there’s more to come. So it’s a really exciting space for us and we’ve also talked about the fact that we’re shifting more towards airports than airlines which are a little bit more stable. And so we’re really excited about this. The technology is clearly providing us, it’s baked into our numbers, it’s developed and we’ll always continue to enhance it but it’s super cool to think that our people in the airport are getting signals from beacons telling them where the activity is, where to go and it’s game changing.

And I mentioned in my comments, we’re already in 10 sites and a lot of demand for more of this. So it proves out that if you can add technology to your kind of, your value proposition around the fact that we’re good at execution, we’re good at relationships and now to add technology, we think it’s game changing and this is all part of our Elevate initiative and parallel to what we’re doing in aviation, we’re piloting now in B&I and M&D the same type of concept that’s just emerging and I guess the last comment I’ll have about this, what we haven’t yet seen on scale yet is what this is going to do from a workforce management standpoint in terms of labor efficiency and directing people where to go to be more efficient. And as that happens over the next one, two, three years from now, as this develops, again, which you’re going to start seeing in our labor percentages and how it gravitates to the bottom line, we think it’s going to be compelling.

So we feel like ABM Clean is one of the first steps towards our path on Elevate.