Scott Salmirs: Yeah. No change in philosophy as we mentioned. When we look at capital allocation, first and foremost we want to ensure that we’re actually investing in our organic growth. And we feel that we actually have sufficient investments there with ELEVATE and other key investments. When you look at the fact that, after looking at organic growth M&A opportunities, we actually have excess cash, we look at how’s the best way to deploy that back to shareholders. And after Q3, with the compression that we saw in the share price, we thought that it was prudent to actually take actions. But going forward, we’ll actually take a balanced approach. We manage our leverage. Currently, right now it’s 2.3 times, and we anticipate that’s going to be consistent going to the next year. So we’ll continue to look at opportunities and allocate accordingly.
Josh Chan: Great. Thank you, Earl, and thank you both for your time.
Earl Ellis: Thank you.
Operator: Thank you. Our next questions come from the line of Sam Kusswurm with William Blair. Please proceed with your questions.
Sam Kusswurm: Thanks, Scott and Earl, I hope you both are doing well. Yeah, I guess to start here, you mentioned last quarter that B&I could be down 2% to 3% in 2024. And today’s outlook commentary calls for a challenging B&I market. I guess I want to see, first is down 2% to 3% is the right way to think about this business for next year still? And then I would also like to get your thoughts on how long this type of challenging environment could last? I think you just mentioned that maybe into 2025 where it goes to, but is there a chance that it goes beyond that? Just trying to get your broad kind of commentary there.
Earl Ellis: Sure. So I think you’re kind of spot on, on how you’re thinking about ’24 from that revenue perspective on the growth side. So I think you hit that. And yeah, we do think it’s going to go into ’25 and the reason we’re more optimistic about ’26 and beyond. So just from pure statistics standpoint, I think they’re saying that 50% of all leases are coming due in ’24 and ’25. So you’re going to see that volatility with some of the compression bringing up, because opportunistically, when your lease comes up, you have a chance to kind of narrow your density a bit. So that’s why we think it’s going to be more of a two-year problem than extended. But more importantly than that, I have to tell you, and I think you’re probably seeing it, and everybody on the call is seeing it too, like the sentiment out there is really becoming stronger and stronger on return to work.
I could tell you in my CEO peer networks, all we’re talking about is getting people back to the office for collaboration. There’s all these studies now that are being released on the effectiveness of organizations by having people on site and collaborating. And the macroeconomic environment, frankly, are giving employers more power over saying you have to come into the office versus where we were a year or two ago when the labor situation was different, right. So there’s a bit of a power shift going on right now in favor of employers who want to bring people back. So I think it’s episodic. I think it’s ’24 and ’25. I suspect ’25 won’t even be as difficult as ’24, and that’s our feeling and it seems to be the general sentiment.
Sam Kusswurm: Awesome. Very helpful color. Maybe sticking with B&I then, maybe you could break out the growth rates between commercial cleaning and engineering services. I guess I’d just be curious how each of those are doing within the broader portfolio.
Earl Ellis: Yeah, we don’t really guide to revenue or anything like that. But I will tell you, I could give you some high level color, right. Engineering is just a lot more stable, right. You do not see variability on the downside. Because, again, if you have an office building and it requires 12 engineers to take care of the equipment between the day shift, the night shift, and the weekend shift, that equipment has to be taken care of and it doesn’t matter what the occupancy is, right. Because you have to run that equipment. You’re still delivering air conditioning to the building, you’re still doing electrical and mechanical work. Pumps are still breaking that have to be fixed. So this stuff all happens. And that’s why when you look at it being like 25% of B&I, you have that stability. It’s the janitorial side that ends up being more, I guess, flexible, if you will, having more variability.
Sam Kusswurm: Got you. Makes sense. Maybe the final one related more to M&D. Maybe you could characterize the growth across the end markets, parsing out the e-commerce logistics, biopharma and semiconductor. I’m not asking for any actual numbers here, just more curious how you’d rank these in terms of performance or maybe growth opportunities as you head into 2024?
Scott Salmirs: Yeah. So look, we’ve done a really good job on the e-commerce side, and we’ll see some good growth there, but probably more normalized. But it’s really, you know, where we’re focusing now, like semiconductors, biopharm, or some of the manufacturing stuff that we’re doing, we think those will be higher growth areas. Listen, I have to tell you, we’ll have this little impediment in ’24 because of the rebalancing of one big client. But we have every confidence in the outer years after that that this is going to be a high-single digit grower, one of our fastest growing in all of ABM. So really enthusiastic about the Manufacturing and Distribution industry segment.
Sam Kusswurm: Awesome. Thanks guys. Appreciate it.
Scott Salmirs: Thank you.
Operator: Thank you. Our next questions come from the line of David Silver with CL King. Please proceed with your questions.
