What changed in this filing

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Item 1. Business

2023-12-18 compared with 2022-12-21 · 63 added, 85 removed, 127 unchanged (54% of the section changed)

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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 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.

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.

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.

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.

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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 specialized industry groups.

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.

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(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.

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.

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.

In 2022, we acquired 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.

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

In 2022, we acquired Momentum Support (“Momentum”), a leading independent provider of facility services, primarily janitorial, across Ireland and Northern Ireland.

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.

The above acquisitions and divestitures we’ve made since 2015 largely reflect strategies first introduced in our 2020 Vision initiative and also strategies included in our follow-on launched strategic plan called ELEVATE, which was introduced in 2021 and is described below.

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.

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 .

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 .

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 :

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;

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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.

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.

The client agrees to pay us based on a predetermined contractual milestone schedule.

Segment and Geographic Financial Information

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.

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

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.

M&D provides integrated facility services, engineering, janitorial, and other specialized services to a variety of manufacturing, distribution, and data center facilities.

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

One client accounted for approximately 32% of revenues for this segment in 2023.

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 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 installation.

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.

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

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..

Service Marks, Trademarks, and Trade Names

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Dependence on Significant Client

No client accounted for more than 10% of our consolidated revenues during 2022, 2021, or 2020.

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.

No single client accounted for more than 10% of our consolidated revenues during 2023, 2022, or 2021.

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.

A majority of our revenue is derived from projects requiring competitive bids;

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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.

Largely driven by the lingering effects of the pandemic, especially the normalization of hybrid work, the commercial real estate industry, particularly multi-tenant and owner-occupied commercial office buildings, is experiencing an increase in vacancy rates.

Given that Class A and high-quality commercial office buildings are a key end market for the Company, we expect a decline in demand for janitorial services and work orders in these markets near-term.

Longer term, we expect the vacancy rates of Class A and high-quality buildings to gradually decrease and our volume of work to stabilize.

Regulatory Environment

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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.

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.

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.

Our Board of Directors and its committees are responsible for overseeing the Company’s activities and practices relating to ESG.

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.

Additionally, our internal culture, sustainability, diversity, equity and inclusion teams work

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.

More information about our ESG performance, progress, and goals can be found in the Human Capital section of this report and in the ESG section of the Company’s corporate website.

Human Capital

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

Given that ABM is a service-oriented business, our employees are the driving force behind our success, and we believe our ability to attract, develop, and retain our employees at all levels of our organization has a direct impact on client satisfaction and our ability to grow the Company.

To succeed in a competitive labor market, ABM has developed key recruitment and retention strategies, objectives, and measures that we focus on as part of the overall management of our business.

These strategies, objectives, and measures form the pillars of our human capital management framework and are advanced through the programs, policies and initiatives described below.

Direct labor costs represented 69% of our total revenue for 2023.

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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.

We prioritize our human capital development in order to do business in a responsible way and enable 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 .

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 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 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 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.

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.

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 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.

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.

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.

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.

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.

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.

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.

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.

With approximately 46,000 union-represented employees, we are party to more than 250 collective bargaining agreements nationwide, with 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.

We strive to engage with our labor partners in an atmosphere of mutual respect, and seek to resolve disputes in a fair and equitable manner.

Safe working environment

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:

ABM’s commitment to its team members is evidenced in its approach to risk management and safety.

The Company’s programs are designed to meet or exceed compliance standards of the Occupational Safety and Health Administration and other regulatory bodies, and 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 confirm our employees are:

• educated on how to complete tasks safely;

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• 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.

• proficient in reporting accidents and utilizing applicable procedures to confirm 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.

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.

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.

Culture and inclusion

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, 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 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.

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.

With a widely distributed workforce serving over 20,000 clients across multiple nations and geographic regions, ABM’s culture, and the team member experience it supports, plays a vital role in attracting, retaining, and engaging talent.

The Company works to develop an increasingly inclusive culture, where individuals from all backgrounds are equally able to contribute and are provided with opportunities to grow in their careers.

Guided by ABM’s mission and values and aligned with its ELEVATE strategy, the Company’s inclusive culture strategy is activated through its Culture & Inclusion Council.

ABM’s President and CEO and Chief Human Resources Officer each serve as executive sponsors of the Culture & Inclusion Council, and reports of Culture & Inclusion Council activities are provided to the Board’s Stakeholder and Enterprise Risk Committee.

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.

Available Information

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

Ellis 57 Executive Vice President and Chief Financial Officer of ABM since November 2020;

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

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

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from March 2007 to February 2014.

Raúl Valentin 59 Executive Vice President and Chief Human Resources Officer of ABM since September 2021;

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;

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Vice President, Talent Acquisition of Comcast from 2011 to 2015.

Chin 54 Treasurer of ABM since May 2021;

Treasurer of ABM since May 2021;

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