What changed in this filing

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Item 1. Business

2022-12-21 compared with 2021-12-22 · 82 added, 52 removed, 130 unchanged (51% of the section changed)

ABM Industries Incorporated, which operates through its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”), is a leading provider of integrated facility solutions with a mission to make a difference, every person, every day .

ABM Industries Incorporated, which operates through its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”), is a leading provider of integrated facility, infrastructure, and mobility solutions with a mission to make a difference, every person, every day .

Our history dates back to 1909, when American Building Maintenance Company began as a window washing company in San Francisco with one employee.

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

Since that time, 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 (“U.K.”), particularly with the GBM and Westway acquisitions, which expanded our janitorial and technical solutions businesses overseas.

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.

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.

As part of this initiative, we centralized key functional areas, strengthened our sales capabilities, and initiated investments in service delivery tools and processes to help support standard operating practices that we believe are foundational to our long-term success.

As part of the transformation initiative, we also evaluated all of our service offerings and sold our Security and Government Services businesses, which did not align with our long-term focus on industry groups.

Through this initiative, we centralized key functional areas and industry groups, strengthened our sales capabilities, and initiated investments in service delivery tools and processes to help support standard operating practices that we believe remain foundational to our long-term success.

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.

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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.

As a result of these strategic changes, we have strengthened our ability to offer Janitorial, Parking, Facilities Services, Building & Energy Solutions, and Airline Services, on a standalone basis or in combination, and positioned ourselves as a leading integrated facilities management company.

Building off the foundation of our 2020 Vision initiative, in 2021, we also launched our next five-year strategic plan, ELEVATE (described below).

Reflecting the ELEVATE strategy to grow through strategic acquisitions that expand the Company’s core capabilities in attractive geographies and dynamic end-markets, in 2022, ABM completed two strategic acquisitions, including:

• Dublin, Ireland-based Momentum Support (“Momentum”), a leading independent provider of facility services, primarily janitorial, across the Republic of Ireland and Northern Ireland.

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.

(“RavenVolt”), a leading nationwide provider of advanced turn-key microgrid systems utilized by diversified commercial and industrial customers, national retailers, utilities, and municipalities.

A complementary extension of ABM’s Technical Solutions service offerings, the addition of RavenVolt enhances ABM’s position as a market leader in electric vehicle (“EV”) charging infrastructure, power, and bundled energy solutions.

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.

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 is embarking on the next step of our journey with a multi-year strategic plan called ELEVATE .

Our new strategy is designed to strengthen our industry leadership position through end-market repositioning and build on our core services, which we expect will drive significant long-term value for our stakeholders.

Over the next four years, we plan to make significant investments totaling $150 - $175 million and implement various measures with the aim to ELEVATE :

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 .

The ELEVATE strategy is designed to strengthen our industry leadership position through end-market repositioning and building on our core services, which we expect together will drive significant long-term value for our stakeholders.

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;

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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.

Segment and Geographic Financial Information

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

The newly acquired Able is integrated within our B&I reportable segment.

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

The recently acquired Momentum is integrated within our B&I reportable segment, and RavenVolt is positioned within Technical Solutions.

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

REPORTABLE SEGMENTS AND DESCRIPTIONS

B&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parking services for commercial real estate properties, sports and entertainment venues, and traditional hospitals and non-acute healthcare facilities.

B&I, our largest reportable segment, encompasses janitorial, facilities engineering, and parking services for commercial real estate properties (including corporate offices for high tech clients), sports and entertainment venues, and traditional hospitals and non-acute healthcare facilities.

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 work orders.

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.

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.

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

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One client accounted for approximately 16% of revenues for this segment in 2022.

Technical Solutions specializes in mechanical and electrical services.

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.

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Service Marks, Trademarks, and Trade Names

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.

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.

Dependence on Significant Client

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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.

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.

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 of history and experience, we understand the need to embed and integrate corporate responsibility into and within our business practices and commit to sustainable operations to create value and support the long-term success of our business, shareholders, employees, and clients.

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

We have established three strategic axes of our sustainability strategy based on the topics that are critical to our business:

doing business in a responsible way to ensure compliance with ethical business practices and bring sustainable services to the market;

ensuring the well-being and professional development of our employees;

and managing our carbon footprint to grow environmentally friendly practices.

Our Board of Directors and its Stakeholder and Enterprise Risk Committee are responsible for the Company’s activities and practices relating to social, environmental, and public policy matters.

Additionally, our internal sustainability team works in cross functional collaboration with departments throughout and across the enterprise to advance our sustainability and ESG strategies.

Since 2011, we have voluntarily published a Sustainability 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.

Environmental, Social and Governance (“ESG”), Responsible Practices, and Corporate Citizenship

Our mission is to make a difference — for all those we serve, including our employees, clients, shareholders, communities, and the world around us.

As a company with more than 110 years of history and experience, we embrace our role in taking care of people, places and spaces in ways that are ethical, responsible, respectful, inclusive, and environmentally sustainable.

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.

Our strategy has evolved over the years to align with the needs of our business and our clients with our stakeholders’ expectations regarding ESG policies.

We have established three strategic areas of focus to guide our ESG practices:

• doing business in a responsible way to ensure compliance with ethical business practices;

bring sustainable services to the market;

and engage with the local communities in which we operate;

• ensuring the well-being and professional development of our employees by cultivating a culture where our employees feel seen, heard, and valued, and can grow a career and a future with ABM in a safe and healthy environment;

• managing our environmental footprint through our expanding offering of sustainable services and measuring and enhancing our business practices to manage the greenhouse gas emissions footprint of our own operations.

Our Board of Directors is responsible for overseeing the Company’s activities and practices relating to ESG, Our Board of Directors receives regular reports from meetings of its Stakeholder and Enterprise Risk Committee, which is responsible for oversight of (i) social matters, including, but not limited to, diversity, culture and inclusion, employee engagement, talent development and safety;

(ii) environmental issues, including, but not limited to, sustainability and climate change;

and (iii) enterprise and strategic risks.

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.

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.

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.

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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 2021.

Direct labor costs represented 70% of our total revenue for 2022.

As of October 31, 2022, we employed approximately 127,000 employees, of whom approximately 45,000, or 35%, were subject to various local collective bargaining agreements.

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 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.

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.

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 .

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Human resources, hiring, and training

With a team of approximately 124,000 employees across the United States, United Kingdom, 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.

In fiscal year 2021, we successfully piloted a frontline leadership training program, which we plan to formally launch enterprise-wide.

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.

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.

We also enhanced recruiting strategies to keep our client facilities staffed and improve our ability to hire in a more efficient manner.

Specifically, in fiscal year 2021, we introduced a rapid recruiting program that expands the reach of our talent acquisition efforts through new processes, strategic solutions, and targeted marketing efforts to better attract and retain talent.

Team Member Experience is one of the main pillars of our ELEVATE strategy.

We plan to make significant investments to attract, develop, and retain talent and to help our operators manage labor more efficiently, including the development of a new applicant tracking system and enhanced workforce management tools.

Specifically, in 2022, we opened dedicated regional hiring centers across key U.S.

markets to support and enable the recruiting efforts of our in-market Industry Groups and hire more people as efficiently and quickly as possible.

We also continued to leverage a rapid recruiting program launched in 2021 that expands the reach of our talent acquisition efforts through new processes, strategic solutions, and targeted marketing efforts to better attract and retain talent.

Enhancing the Team Member Experience is one of the main pillars of our ELEVATE strategy, with strategic investments designed to attract, develop, and retain talent and to help our operators manage labor more efficiently.

MyRecruiting, ABM’s applicant tracking system that was introduced in 2022, provides end-to-end visibility of the applicant hiring journey and creates a high-quality candidate experience, resulting in increased hiring effectiveness.

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.

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Compensation and employee benefits

In addition to competitive wages and salaries, we provide all of our employees access to a variety of health and wellness benefits, including a 24/7 employee assistance program, as well as the addition of telemedicine benefits and a dedicated COVID-19 employee resource site in response to the Novel Coronavirus (“COVID-19”) Pandemic (the “Pandemic”).

Our comprehensive benefits offerings are designed to meet the needs of our employees.

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.

Labor relations

With approximately 45,000 union-represented employees, we are party to more than 300 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.

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 2021 helped produce claim frequency reductions.

A critical component of ABM’s commitment to fostering a professional and safe working environment for all of our employees is our zero tolerance for sexual and other unlawful harassment.

For example, in recent years, we have taken actions to further strengthen our safeguards against harassment, including expanding our robust anti-harassment trainings and policies.

We take any claim of unlawful harassment seriously and remain committed to providing a safe workplace for all.

ABM’s mission to make a difference, every person, every day, is evidenced in our approach to risk management and safety.

Our programs are designed not only to ensure compliance with Occupational Safety and Health Administration and other regulatory bodies, but also to protect the health and welfare of our employees and our clients.

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;

• proficient in reporting accidents, utilizing applicable procedures, to ensure appropriate loss mitigation techniques are implemented should a loss occur.

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.

Examples include the ABMWay Hub, which contains specific information about how to prevent certain types of workplace injuries;

ways to proactively address potentially catastrophic situations such as hurricanes or tornadoes;

and refreshers on ABM’s safety practices and protocols.

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.

Frontline leader training also provides guidance on what to do should a claim occur in order to ensure our employees receive the right care at the right time to expedite their recovery.

Culture and inclusion

Grounded by our values and guided by our mission, we employ approximately 124,000 individuals from all backgrounds with the talent, experience, and compassion that enable us to best deliver for those we serve.

Grounded by our mission and guided by our values, we employ individuals from all backgrounds with the talent, experience, and compassion that enable us to best deliver for those we serve.

We cultivate a culture aimed at ensuring that our employees feel seen, heard, and valued.

Diversity, inclusion, equity, and belonging are core to this culture.

Inviting different perspectives and driving inclusion enables us to connect meaningfully, adapt, and innovate.

Diversity, equity, and inclusion are core to our culture.

Inviting different perspectives and driving inclusion enables us to connect meaningfully, adapt, innovate, and bring lasting change.

In 2020, we established the Company’s Culture and Inclusion Leadership Council, supported by our executive leadership team and guided by our employees.

This council is focused on how ABM successfully converts its values into measurable action.

In fiscal year 2021, through meetings of this council and employees surveys and with the assistance of third-party experts, the council identified four key focus areas, including:

training, data and analytics, internal engagement, and partnering with respected organizations dedicated to building a more equitable society.

In 2022, the Culture and Inclusion Leadership Council operationalized its structure to align with business objectives

and ABM’s ELEVATE strategy and identified three strategic priorities focused on driving meaningful change for our people, our culture, and our business.

Through the Culture and Inclusion Leadership Council’s leadership, ABM will focus on making an impact to:

• Workforce Diversity and Equity:

foster a diverse workforce with equitable opportunities for all employees;

• Workplace Inclusion and Belonging:

cultivate a culture of inclusion so that every employee feels seen and heard;

• Marketplace and Community:

increase positive impact for our clients, partners and communities with service.

Activities of the Culture and Inclusion Leadership Council are reported to the Board’s Stakeholder and Enterprise Risk Committee through management presentations on matters such as corporate culture, diversity, equity, and inclusion.

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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