What changed in this filing

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Item 1. Business

2020-12-17 compared with 2019-12-20 · 74 added, 58 removed, 71 unchanged (65% of the section changed)

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In 1994, we changed our name to ABM Industries Incorporated.

Over the past twelve years, we have grown into a multi-segment facility solutions company, primarily through strategic acquisitions and new service offerings, increasing our revenue from $3 billion to more than $6 billion.

Over the past thirteen years, we have grown into a multi-segment facility solutions company, primarily through strategic acquisitions and new service offerings, increasing our revenue from $3 billion to more than $6 billion.

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 our first industry group, “aviation.” In recent years, we have strategically acquired companies in the United Kingdom, particularly with the GBM and Westway acquisitions, which expanded our janitorial and technical solutions businesses overseas.

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See Note 2, “Basis of Presentation and Significant Accounting Policies,” in the Notes to consolidated financial statements for additional information regarding the contract types that are most common in each of our service lines.

Contract Type

Monthly Fixed-Price

These arrangements are contracts in which the client agrees to pay a fixed fee every month over a specified contract term.

Monthly square-foot arrangements are contracts in which the client agrees to pay a fixed fee every month based on the actual square footage serviced over a specified contract term.

These arrangements are contracts in which the clients reimburse us for the agreed-upon amount of wages and benefits, payroll taxes, insurance charges, and other expenses associated with the contracted work, plus a profit margin.

Tag services (work orders) generally consist of supplemental services requested by clients outside of the standard service specification and includes cleanup after tenant moves, construction cleanup, flood cleanup, and snow removal.

Transaction-Price

These are arrangements in which customers are billed a fixed price for each transaction performed on a monthly basis (e.g., wheelchair passengers served or airplane cabins cleaned).

In hourly arrangements, the client is billed a fixed hourly rate for each labor hour provided.

Management Reimbursement

Under these parking arrangements, we manage a parking facility for a management fee and pass through the revenue and expenses associated with the facility to the owner.

Leased Location

Under these parking arrangements, we pay a fixed amount of rent plus a percentage of revenues derived from monthly and transient parkers to the property owner.

Contract Type Description

Monthly Fixed-Price These arrangements are contracts in which the client agrees to pay a fixed fee every month over a specified contract term.

Square-Foot Square-foot arrangements are contracts in which the client agrees to pay a fixed fee every month based on the actual square footage serviced over a specified contract term.

Cost-Plus These arrangements are contracts in which the clients reimburse us for the agreed-upon amount of wages and benefits, payroll taxes, insurance charges, and other expenses associated with the contracted work, plus a profit margin.

Work Orders Work orders generally consist of supplemental services requested by clients outside of the standard service specification and include cleanup after tenant moves, construction cleanup, flood cleanup, snow removal, and high touchpoint disinfecting services.

Transaction-Price These are arrangements in which customers are billed a fixed price for each transaction performed on a monthly basis (e.g., wheelchair passengers served or airplane cabins cleaned).

Hourly In hourly arrangements, the client is billed a fixed hourly rate for each labor hour provided.

Management Reimbursement Under these parking arrangements, we manage a parking facility for a management fee and pass through the revenue and expenses associated with the facility to the owner.

Leased Location Under these parking arrangements, we pay a fixed amount of rent plus a percentage of revenues derived from monthly and transient parkers to the property owner.

We retain all revenues received and are responsible for most operating expenses incurred.

Under these parking arrangements, we are paid a fixed amount or hourly fee to provide parking services, and we are responsible for certain operating expenses, as specified in the contract.

Energy Savings Contracts and Fixed-Price Repair and Refurbishment

Under these arrangements, we agree to develop, design, engineer, and construct a project.

Allowance Under these parking arrangements, we are paid a fixed amount or hourly fee to provide parking services, and we are responsible for certain operating expenses, as specified in the contract.

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.

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.

Segment and Geographic Financial Information

Our current reportable segments consist of Business & Industry (“B&I”), Aviation, Technology & Manufacturing (“T&M”), Education, and Technical Solutions.

Refer to Note 2 , “Basis of Presentation and Significant Accounting Policies,” in the Notes to the Consolidated Financial Statements for information related to the modification in our presentation of inter-segment revenues and the reorganization of our Healthcare business into our other industry groups, primarily B&I, during 2019.

Our current reportable segments consist of Business & Industry (“B&I”), Technology & Manufacturing (“T&M”), Education, Aviation, and Technical Solutions.

For segment and geographic financial information, see Note 17, “Segment and Geographic Information,” in the Notes to consolidated financial statements.

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B&I also provides vehicle maintenance and other services to rental car providers.

We typically provide services in this segment 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 tag services.

T&M provides janitorial, facilities engineering, and parking services to industrial and high-tech manufacturing facilities.

We typically provide these services pursuant to monthly fixed-price, square-foot, cost-plus, and parking arrangements that are obtained through a competitive bid process as well as pursuant to work orders.

Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.

These services are typically provided pursuant to monthly fixed-price, square-foot, and cost-plus arrangements that are obtained through either a competitive bid process or re-bid upon renewal as well as pursuant to work orders.

Aviation supports airlines and airports with services ranging from parking and janitorial to passenger assistance, catering logistics, air cabin maintenance, and transportation.

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These agreements are typically re-bid upon renewal and are generally structured as monthly fixed-price, square-foot, cost-plus, parking, transaction-price, and hourly arrangements.

Two clients accounted for approximately 27% of revenues for this segment in 2019.

T&M provides janitorial, facilities engineering, and parking services to industrial and high-tech manufacturing facilities.

Education delivers janitorial, custodial, landscaping and grounds, facilities engineering, and parking services for public school districts, private schools, colleges, and universities.

One client accounted for approximately 15% of revenues for this segment in 2020.

Technical Solutions specializes in mechanical and electrical services.

These services can also be leveraged for cross-selling across all of our industry groups, both domestically and internationally.

Contracts for this segment are generally structured as energy savings and fixed-price repair and refurbishment contracts and franchise arrangements.

Contracts for this segment are generally structured as energy savings, fixed-price repair, refurbishment contracts, and franchise arrangements.

Service Marks, Trademarks, and Trade Names

We hold various service marks, trademarks, and trade names, such as “ABM,” “ABM Building Value,” “ABM Greencare,” “Linc Service,” “MPower,” “OmniServ,” and “TEGG,” 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.

We hold various service marks, trademarks, and trade names, such as “ABM,” “ABM Building Value,” “ABM Greencare,” “EnhancedClean,” “EnhancedFacility,” “Linc Service,” “MPower,” and “TEGG,” 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.

Dependence on Significant Client

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Our sales and marketing activities include digital engagement and direct interactions with prospective and existing clients, pricing, proposal management, and customer relationship management by dedicated business development teams, operations personnel, and management.

These activities are executed by branch and regional sales, marketing, and operations teams assigned to our industry groups and are supported by centralized sales support teams, inside sales teams, corporate marketing personnel, and our Center of Excellence teams.

These sales and marketing teams acquire, nurture, and manage leads, as well as train personnel on sales tools and proposal systems, all governed by standard operating procedures.

Regulatory Environment and Environmental Compliance

Our operations are subject to various federal, state, and/or local laws regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, such as discharge into soil, water, and air, and the generation, handling, storage, transportation, and disposal of waste and hazardous substances.

From time to time we are involved in environmental matters at certain of our locations or in connection with our operations.

Historically, the cost of complying with environmental laws or resolving environmental issues relating to locations or operations in the United States or abroad has not had a material adverse effect on our financial position, results of operations, or cash flows.

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.

Regulatory Environment

Our operations are subject to various federal, state, and/or local laws, rules, and regulations regulating the discharge of materials into the environment or otherwise relating to the protection of the environment, as well as laws and regulations relating to, among other things, labor, wages, and health and safety matters.

Historically, the cost of complying with these laws, rules, and regulations has not had a material adverse effect on our financial position, results of operations, or cash flows.

Corporate Responsibility and Sustainability

As a company with more than 110 years’ experience, we understand the need to embed corporate responsibility into our business practices to create value and support the long-term success of our business, shareholders, clients, and team members.

Our strategy has evolved over the years to align with our stakeholders’ expectations regarding environmental, social, and governance policies.

Recently, we have established three strategic axes of our sustainability strategy based on the topics that are most material to our business:

doing business in a responsible way and creating value for clients;

improving our value chain continuously;

and positively impacting the ecosystem.

Since 2011, we have voluntarily published a Sustainability Report on an annual basis in alignment with the Global Reporting Initiative framework to address our business, our team members, and the environment.

doing business in a responsible way, ensuring our employees’ well-being, and managing our environmental footprint.

Since 2011, we have voluntarily published a Sustainability Report on an annual basis in alignment with the Global Reporting Initiative framework to address our business, our employees, and the environment.

More information can be found in the corporate sustainability section of our corporate website.

As of October 31, 2019 , we employed approximately 140,000 persons, of which approximately 45,000 , or 32% , were subject to various local collective bargaining agreements.

Human Capital

Our employees are the driving force behind everything we do, and supporting our employees is a foundational value for the Company.

Direct labor costs represented 68% of our total revenue for fiscal year 2020.

As of October 31, 2020, we employed approximately 114,000 employees, of whom approximately 36,000, or 32%, were subject to various local collective bargaining agreements.

As of October 31, 2020, our front line employees represented 95% of our total workforce, while staff and management employees represented the other 5%.

Our human capital strategy is grounded 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’ success.

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.

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 training and certification program on our Code of Business Conduct for our Board of Directors and all of our staff and management employees annually.

Human resources, hiring, and training

Over the past few years, we have made investments to our human resources (“HR”) organization and structure that centralized and standardized hiring and training practices, including upgrades to our cloud-based human capital management system.

We have also introduced new tools to help our operators manage labor more efficiently, and we continue to invest in attracting, developing, and retaining talent.

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 front line employees receive on-the-job training to ensure we are executing for our clients.

Labor relations

With approximately 36,000 union-represented employees, we are party to more than 250 collective bargaining agreements nationwide, with more than 20 major labor unions.

Our collective bargaining agreements include regional multiemployer agreements covering thousands of employees as well as localized site agreements covering smaller groups.

We strive to interact with our labor partners in an atmosphere of mutual respect, and we always seek to resolve any dispute in an equitable manner.

Safe working environment

The cornerstone of our comprehensive risk management and safety program is safety awareness.

We have established a “safety-first” culture through various programs and initiatives including, but not limited to, incorporation into our daily shift protocols, training, and alignment with our corporate incentive plans.

Our safety programs for fiscal year 2020 helped produce the fifth consecutive year of claim frequency reductions.

Culture and inclusion

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.

We pride ourselves on our commitment to fostering a diverse, inclusive, and empowered workforce.

In 2020, we established the Company’s Culture and Inclusion Leadership Council, which seeks to obtain feedback from our employees and focuses on matters related to corporate culture at ABM, specifically related to diversity, inclusion, and social justice.

Available Information

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Executive Officers on December 17, 2020

Principal Occupations and Business Experience

Name Age Principal Occupations and Business Experience

Scott Salmirs

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Member of the Board of Directors of ABM since January 2015.

Anthony Scaglione

Executive Vice President and Chief Financial Officer of ABM since April 2015;

Senior Vice President, Treasurer, and Head of Mergers and Acquisitions of ABM from January 2012 to April 2015;

Vice President and Treasurer of ABM from June 2009 to January 2012;

Chairman of the Board of the Association for Financial Professionals (AFP), the professional society that represents finance executives across the globe, from November 2014 to October 2016.

Executive Vice President and Chief Human Resources Officer of ABM since June 2018;

Ellis 55 Executive Vice President and Chief Financial Officer of ABM since November 2020;

Senior Vice President, Finance and Procurement of Best Buy Co.

from January 2018 to November 2020;

Chief Financial Officer of Best Buy Canada from May 2016 to December 2017;

Vice President, Finance, Retail of Canadian Tire Corporation Limited from May 2014 to May 2016.

Block 52 Executive Vice President and Chief Human Resources Officer of ABM since June 2018;

Senior Vice President, Talent and Organizational Performance (Chief HR Officer) of Buffalo Wild Wings, Inc.

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from December 2002 to April 2010.

Executive Vice President, Chief Strategy and Transformation Officer of ABM since November 2019;

Feinberg 46 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.

Principal of The Boston Consulting Group from February 2011 to July 2014;

Project Leader of The Boston Consulting Group from August 2009 to February 2011.

Scott Giacobbe

Executive Vice President and Chief Revenue Officer of ABM since October 2019;

Chief Operating Officer of ABM from November 2017 to October 2019;

President of ABM’s U.S.

Technical Solutions from November 2010 to November 2017.

Rene Jacobsen

Executive Vice President and Chief Facilities Services Officer of ABM since October 2019;

Rene Jacobsen 59 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;

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Executive Vice President and Chief Operating Officer of Temco Service Industries from November 2007 to April 2012.

Executive Vice President, General Counsel, and Corporate Secretary of ABM since July 2017;

Mahoney 54 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.

Newborn 57 Executive Vice President, General Counsel, and Corporate Secretary of ABM since July 2017;

Executive Vice President and General Counsel of TravelClick, Inc.

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from March 2007 to February 2014.

Chin 52 Interim Chief Financial Officer of ABM from July 2020 to November 2020;

Senior Vice President, Chief Accounting Officer, and Corporate Controller of ABM since June 2010;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business