What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-12-19 compared with 2023-12-18 · 139 added, 137 removed, 330 unchanged (46% of the section changed)

31 unchanged sentences

Macro-Economic Environment in Commercial Real Estate and Other

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.

As a result, we expect our B&I industry to experience muted growth in the 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 .

We expect a large client within M&D to rebid and rebalance their work needs in 2024 as part of their procurement process.

While we still expect to retain a large portion of this business, we expect M&D’s financial results to be impacted in the near-term.

On an ongoing basis, we monitor changes to the macro-economic environment and their potential impacts on demand for our services and on our financial condition.

One such monitored change is the strength or softness of the commercial real estate industry, especially multi-tenant and owner-occupied commercial office buildings.

The recent softness in the market is primarily attributable to the lingering effects of the Pandemic, especially the normalization of hybrid work, which has resulted in higher office vacancy rates.

Given that Class A and high-quality commercial office buildings are a key end market for us, we have experienced modest declines in demand for janitorial services and work orders in these markets.

We expect the occupancy rates of Class A and high-quality buildings and back-to office trends to improve throughout 2025 .

A large M&D client completed its rebalancing of a portion of its work needs as part of its normal procurement process.

We expect M&D’s financial results to be adversely impacted in the near-term.

Insurance Reserves

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We utilize the results of actuarial studies to estimate our insurance rates and insurance reserves for future periods and to adjust reserves, if appropriate, for prior years.

The actuarial reviews demonstrate that the changes we have made to our risk management program continue to positively impact the frequency and severity of claims.

Furthermore, we continue to adjust our reserves consistent with known fact patterns.

Based on the results of the actuarial reviews performed, we decreased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2023 by $14.8 million.

Based on the results of the actuarial reviews performed during 2024, which included analyzing recent loss development patterns, comparing the loss development against benchmarks, and applying actuarial projection methods to determine the estimate of ultimate losses, we increased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with IBNR Claims by $20.3 million in 2024.

In 2023, we decreased our total reserves related to prior year claims by $14.8 million.

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Revenue growth was comprised of organic growth of 2.9% and acquisition growth of 0.3%.

Acquisition growth of $104.4 million was driven by the RavenVolt and Momentum acquisitions, completed in the fourth and second quarter of 2022, respectively.

Organic growth was primarily driven by the strong leisure and business travel markets served by Aviation, expansion of new business and growth with current customers in M&D, and net new business wins in Education.

The increase in revenues was partially offset by a decrease in the overall volume of work orders, lower project revenues within Technical Solutions, and soft commercial office market conditions in B&I.

• Operating profit increased by $60.7 million to $409.5 million during 2023, as compared to 2022.

The increase in operating profit was attributable to the revenue increase and:

• a decrease in the fair value of the contingent consideration related to the RavenVolt Acquisition;

• an Employee retention credit (“ERC”) refund received.

The increase was partially offset by:

• a decrease in favorable self-insurance adjustments related to prior year claims as a result of actuarial evaluations completed on our workers’ compensation, general liability, automobile liability, and property damage insurance plans;

• a decrease in work orders, which are generally more profitable than contracted service.

The organic revenue growth was due to the higher project revenues due to the timing of certain microgrid systems design and installation projects within Technical Solutions, and net new business and expansion of business with existing customers within Aviation, M&D, and Education.

The increase in revenues was partially offset by attrition of engineering customers and soft commercial office market conditions within B&I, and the expected rebalancing of the scope of work with an existing customer within M&D.

Acquisition growth of $26.3 million was driven by the Quality Uptime Acquisition, completed in the third quarter of 2024.

• Operating profit decreased by $197.5 million to $212.0 million during 2024, as compared to 2023.

The decrease in operating profit was attributable to:

• an increase in the fair value of the contingent consideration related to the RavenVolt Acquisition;

• an increase in other Corporate expenses, primarily costs associated with various systems’ go-live and other investments in technology;

• an unfavorable self-insurance reserve adjustment related to prior year claims from actuarial evaluations completed in 2024, as compared to a favorable adjustment in 2023;

• an absence of employee retention credits received as compared to 2023;

• $11.4 million in revenue recognized for an Aviation parking project during 2023, whereby all the direct labor and related costs for such project were recognized prior to 2023.

The decrease was partially offset by:

• labor efficiencies within B&I, Aviation, and Education, as well as contract mix within Technical Solutions, Aviation, and M&D;

• a decrease in amortization of intangibles, primarily related to the RavenVolt Acquisition.

• Our effective tax rate on income was 39.1% for 2024, as compared to 24.1% during 2023.

Our effective tax rate for 2024 was primarily impacted by a $95.7 million non-taxable expense related to the change in the fair value of the contingent consideration related to the RavenVolt Acquisition.

Our effective tax rate for 2023 was primarily impacted by a $45.6 million non-taxable benefit related to the change in the fair value of contingent consideration related to the RavenVolt Acquisition.

• Net cash provided by operating activities was $226.7 million during 2024.

Our net cash provided by operating cash activities were higher than prior year, primarily due to the timing of certain working capital requirements, which included a $143.8 million payment for the Bucio case in 2022, and the related income tax benefit .

Our net cash provided by operating cash activities was lower than prior year, primarily due to the timing of certain working capital requirements.

• Dividends of $56.5 million were paid to shareholders, and dividends totaling $0.90 per common share were declared during 2024.

Additionally, we repurchased 3.3 million of shares for $138.1 million, including excise taxes during 2023.

Additionally, we repurchased 1.17 million of shares for $55.8 million, excluding excise taxes during 2024.

• At October 31, 2024, total outstanding borrowings under our Amended Credit Facility were $1,335.3 million, and we had up to $423.6 million of borrowing capacity.

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Net income 81.4 251.3 230.4 (169.9) (67.6)%

Other comprehensive income

Other comprehensive (loss)/income

Interest rate swaps (22.9) (0.5) 36.7 (22.4) NM*

Foreign currency translation and other 7.3 (19.8) 5.3 27.1 NM*

Foreign currency translation and other 6.8 7.3 (19.8) (0.5) (6.5)%

Income tax provision 6.3 0.1 (10.5) 6.2 NM*

4 unchanged sentences

Revenue growth was comprised of organic growth of 2.9% and acquisition growth of 0.3%.

Acquisition growth of $104.4 million was driven by the RavenVolt and Momentum acquisitions, completed in the fourth and second quarter of 2022, respectively.

The increase in revenues was partially offset by attrition of engineering customers within B&I and the expected rebalancing of the scope of work with an existing customer within M&D.

Acquisition growth of $26.3 million was driven by the Quality Uptime Acquisition, completed in the third quarter of 2024.

Operating Expenses

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Gross margin decreased by 71 bps to 12.4% in 2024, as compared to 13.1% in 2023.

The decrease in gross margin was primarily driven by the decrease in favorable self-insurance adjustments related to prior year claims as a result of actuarial evaluations completed on our workers’ compensation, general liability, automobile liability, and property damage insurance plans.

In addition, gross margins were impacted by a decrease in work orders, which are generally more profitable than contracted service.

The decrease in gross margin was primarily driven by the increase in self-insurance adjustments related to prior year claims as a result of actuarial evaluations completed on our workers’ compensation, general liability, automobile liability, and property damage insurance plans.

In addition, the decrease in gross margin was attributable to the $11.4 million in revenue from an Aviation parking project recognized in 2023.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased by $55.5 million, or 8.8%, to $572.8 million during 2023, as compared to 2022.

The decrease in selling, general and administrative expenses was primarily attributable to:

• a $45.6 million decrease in the fair value of contingent consideration related to the RavenVolt Acquisition;

• a $24.0 million benefit from ERC refunds received;

• a $6.6 million decrease in certain technology projects primarily attributable to discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics;

This decrease was partially offset by:

• a $10.8 million increase in bad debt, of which $7.7 million relates to a favorable adjustment in the prior year;

• an absence of a $7.6 million gain on the sale of a group of customer contracts related to healthcare technology management services within Technical Solutions during 2022;

• a $4.6 million increase in unfavorable self-insurance adjustment related to prior year claims as the result of actuarial evaluations completed on our medical and dental self-insurance plans.

Selling, general and administrative expenses increased by $192.5 million, or 33.6%, to $765.3 million during 2024, as compared to 2023.

The increase in selling, general and administrative expenses was primarily attributable to:

• a $95.7 million fair value adjustment to increase the contingent consideration related to the RavenVolt Acquisition recorded during 2024, as compared to a $45.6 million fair value adjustment to decrease the contingent consideration recorded during 2023;

• a $24.3 million increase in costs associated with various systems’ go-live and other investments in technology;

• an absence of a $24.0 million benefit from employee retention credits received during 2023;

• an $8.8 million increase in accruals for actual and potential legal settlements;

• a $6.5 million increase in compensation and related expenses primarily due to higher compensation under certain incentive plans.

This increase was partially offset by:

• an $18.6 million decrease in certain discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics.

Amortization of Intangible Assets

Amortization of intangible assets increased by $4.4 million, or 6.1%, to $76.5 million during 2023, as compared to 2022.

This increase was primarily due to the amortization of intangibles acquired as part of the RavenVolt and Momentum acquisitions.

Amortization of intangible assets decreased by $20.4 million, or 26.6%, to $56.1 million during 2024, as compared to 2023.

This decrease was primarily due to the lower amortization of intangibles, primarily intangibles acquired as part of the RavenVolt Acquisition.

Interest Expense

Interest expense increased by $41.2 million, or 99.9%, to $82.3 million during 2023, as compared to 2022, primarily driven by higher interest rates on our debt borrowings.

Interest expense increased by $2.7 million, or 3.3%, to $85.0 million during 2024, as compared to 2023, primarily driven by higher borrowings from our Amended Credit Facility to fund the Quality Uptime Acquisition.

During 2024 and 2023, we had effective tax rates of 39.1% and 24.1%, respectively, resulting in a provision for tax of $52.2 million and $79.7 million, respectively.

Our effective tax rate for 2023 was impacted by a $12.8 million benefit related to the non-taxable change in the fair value of the contingent consideration related to the RavenVolt Acquisition, a $2.2 million benefit for share-based compensation;

and a $1.5 million benefit for return to provision adjustment primarily related to state and local deferred income taxes;

partially offset by a $4.8 million expense related to non-deductible executive compensation.

Our effective tax rate for 2022 was impacted by the following items:

an $8.1 million benefit for uncertain tax positions with expiring statutes;

a $1.4 million benefit for share-based compensation;

and a $1.3 million return to provision adjustments.

Our effective tax rate for 2024 was negatively impacted by a $95.7 million non-taxable expense related to the change in the fair value of the contingent consideration related to the RavenVolt Acquisition.

Our effective tax rate for 2023 was favorably impacted by a $45.6 million non-taxable benefit related to the change in the fair value of the contingent consideration related to the RavenVolt Acquisition.

Interest Rate Swaps

We had a loss of $0.5 million on interest rate swaps during the year ended October 31, 2023, as compared to a gain of $36.7 million during the year ended October 31, 2022, primarily due to underlying changes in the fair value of our interest rate swaps.

We had a loss of $22.9 million on interest rate swaps during the year ended October 31, 2024, as compared to a loss of $0.5 million during the year ended October 31, 2023, primarily due to underlying changes in the fair value of our interest rate swaps.

Foreign Currency Translation and Other

We had a foreign currency translation gain of $7.3 million during the year ended October 31, 2023, as compared to a foreign currency translation loss of $19.8 million during the year ended October 31, 2022.

We had a foreign currency translation gain of $7.5 million during the year ended October 31, 2024, as compared to a foreign currency translation gain of $7.3 million during the year ended October 31, 2023.

This change was due to fluctuations in the exchange rate between the U.S.

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Financial Information for Each Reportable Segment

Years Ended October 31, 2023 vs.

Year Ended October 31, 2024 vs.

($ in millions) 2024 2023 2022 Increase/(Decrease)

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Manufacturing & Distribution 1,554.3 1,526.7 1,445.2 27.6 1.8%

Education 880.4 834.7 830.8 45.7 5.5%

Aviation 1,032.6 925.7 804.0 106.9 11.5%

Education 904.0 880.4 834.7 23.6 2.7%

Technical Solutions 809.3 674.2 626.8 135.1 20.0%

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Operating profit margin 10.7 % 10.6 % 11.2 % 11 bps

Education 49.7 47.1 61.5 2.6 5.5%

Aviation 59.1 60.0 29.3 (0.9) (1.4)%

Operating profit margin 5.7 % 6.5 % 3.6 % (75) bps

Aviation 60.0 29.3 32.1 30.7 NM*

Education 55.3 49.7 47.1 5.6 11.4%

Operating profit margin 6.1 % 5.6 % 5.6 % 48 bps

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Adjustment for income from unconsolidated

affiliates, included in Aviation (3.9) (2.4) (2.1) (1.5) (60.1)%

affiliates, included in Aviation and Technical Solutions

(6.5) (3.9) (2.4) (2.6) (69.4)%

Adjustment for tax deductions for energy

efficient government buildings, included in

Technical Solutions (0.3) (0.9) (1.2) 0.6 66.8%

Technical Solutions (5.5) (0.3) (0.9) (5.2) NM*

$ 212.0 $ 409.5 $ 348.8 $ (197.5) (48.2)%

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Business & Industry

Years Ended October 31,

Year Ended October 31,

($ in millions) 2024 2023 Increase

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B&I revenues decreased by $30.3 million, or 0.7%, to $4,059.1 million during 2024, as compared to 2023.

This decrease in revenue was comprised of acquisition growth of 0.8%, offset by organic decrease of 0.9%.

Acquisition growth of $32.1 million was driven by the Momentum Acquisition, completed in the second quarter of 2022.

Organic decrease was primarily driven by decrease in work orders, soft commercial office market conditions, and the expected attrition of certain engineering clients.

The revenue decrease was primarily driven by attrition of certain engineering clients and soft commercial office market conditions, partially offset by the new clients and existing client expansions both domestically and internationally.

Management reimbursement revenues for this segment totaled $281.4 million and $270.1 million during 2024 and 2023, respectively.

1 unchanged sentence

Operating profit margin decreased by 15 bps to 7.6% in 2024 from 7.7% in 2023.

The decrease in operating profit margin was primarily driven by a decrease in work orders, which are generally more profitable than contracted service, the change in contract mix, and an increase in direct labor and related costs due to a limited labor supply in certain non-union markets.

The decrease was partially offset by lower amortization of intangible assets.

The decrease in operating profit margin was primarily driven by a change in contract mix and higher legal, bad debt, and insurance expense.

The decrease was partially offset by labor efficiencies and lower amortization of intangible assets.

Manufacturing & Distribution

Years Ended October 31,

Year Ended October 31,

($ in millions) 2024 2023 Increase

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M&D revenues increased by $27.6 million, or 1.8%, to $1,554.3 million during 2024, as compared to 2023.

The increase was primarily attributable to the net new business wins and the expansion of business with existing customers, partially offset by a decrease in work orders.

The increase was primarily attributable to the expansion of business with existing customers, partially offset by the expected rebalancing of the scope of work with an existing customer and a loss of a certain customer.

Operating profit increased by $4.6 million, to $166.3 million during 2024, as compared to 2023.

Operating profit margin increased by 11 bps to 10.7% in 2024 from 10.6% in 2023.

The increase in operating profit margin was primarily attributable to the change in contract mix, partially offset by investments to hire certain technical expertise to support future growth.

Year Ended October 31,

($ in millions) 2024 2023 Increase / (Decrease)

Revenues $ 1,032.6 $ 925.7 $ 106.9 11.5%

Operating profit 59.1 60.0 (0.9) (1.4)%

Operating profit margin 5.7 % 6.5 % (75) bps

Aviation revenues increased by $106.9 million, or 11.5% to $1,032.6 million, during 2024, as compared to 2023.

The increase was primarily attributable to new business and scope expansions with the existing clients as well as continuing recovery in travel volume.

In addition, in 2023, we recognized $11.4 million in revenue from an Aviation parking project, whereby all the direct labor and related costs were recognized prior to 2023.

Management reimbursement revenues for this segment totaled $36.3 million and $31.8 million during 2024 and 2023, respectively.

Operating profit decreased by $0.9 million, to $59.1 million during 2024, as compared to 2023.

Operating profit margin decreased by 75 bps to 5.7% in 2024, from 6.5% in 2023.

The decrease in operating profit margin was primarily attributable to the change in contract mix and decrease in work orders, which are generally more profitable than contracted service.

Years Ended October 31,

The decrease in operating profit margin was primarily attributable to the $11.4 million in revenue from an Aviation parking project recognized in 2023.

The decrease in operating profit margin was partially offset by contract mix and labor efficiencies primarily due to increases in travel volume.

Year Ended October 31,

($ in millions) 2024 2023 Increase

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Operating profit increased by $5.6 million, or 11.4% to $55.3 million during 2024, as compared to 2023.

Operating profit margin of 5.6% in 2023 was consistent with 2022.

The operating profit margin was positively impacted by labor efficiencies and lower amortization of intangible assets, offset by an increase in start-up supplies to support new business growth and the decrease in work orders, which are generally more profitable than contracted service.

Years Ended October 31,

($ in millions) 2023 2022 Increase

Revenues $ 925.7 $ 804.0 $ 121.7 15.1%

Operating profit 60.0 29.3 30.7 NM*

Operating profit margin 6.5 % 3.6 % 283 bps

Aviation revenues increased by $121.7 million, or 15.1% to $925.7 million, during 2023, as compared to 2022.

The increase was primarily attributable to a recovery in leisure and business travel (both domestic and international) and new parking-related services.

In addition, we recognized $11.4 million in revenue from an Aviation parking project, whereby all the direct labor and related costs were recognized in prior periods.

The related revenue was not recognized in the prior periods since the criteria for revenue recognition was not met until February 2023.

Management reimbursement revenues for this segment totaled $31.8 million and $52.6 million during 2023 and 2022, respectively.

Operating profit increased by $30.7 million, to $60.0 million during 2023, as compared to 2022.

Operating profit margin increased to 6.5% during 2023, from 3.6% during 2022.

The increase in operating profit margin was primarily attributable to the $11.4 million in revenue from an Aviation parking project.

Operating profit margin was negatively impacted by an increase in direct labor and related costs due to increased headcounts as travel continues to recover.

Operating profit margin increased by 48 bps to 6.1% in 2024 from 5.6% in 2023.

The operating profit margin was positively impacted by labor efficiencies and lower amortization of intangibles, partially offset by higher bad debt expense.

Technical Solutions

Years Ended October 31,

($ in millions) 2023 2022 Increase / (Decrease)

Year Ended October 31,

($ in millions) 2024 2023 Increase

Revenues $ 809.3 $ 674.2 $ 135.1 20.0%

2 unchanged sentences

Technical Solutions revenues increased by $135.1 million, or 20.0%, to $809.3 million during 2024, as compared to 2023.

Revenue growth included acquisition growth of 11.5%, which was partially offset by an organic decrease of 3.9%.

Acquisition growth of $72.3 million was driven by the RavenVolt Acquisition, which was completed in the fourth quarter of 2022.

The organic revenue decrease was primarily driven by the decline in electric vehicle charging station installation sales and lower project revenues due to the timing of completions of certain bundled energy solutions projects.

Operating profit decreased by $10.6 million, or 16.5%, to $53.2 million during 2023, as compared to 2022.

Operating profit margin decreased by 228 bps to 7.9% in 2023 from 10.2% in 2022.

The decrease in operating profit margin was primarily attributable to a $7.6 million gain recognized on the sale of a group of customer contracts related to healthcare technology management services recognized in the prior year, and amortization of intangible assets related to the RavenVolt Acquisition, partially offset by the contract mix.

Years Ended October 31,

($ in millions) 2023 2022 Decrease

Revenue growth was comprised of organic growth of 16.1% and acquisition growth of 3.9%.

The organic revenue increase was primarily driven by higher project revenues due to the timing of completions of microgrid systems and generators installation projects, partially offset by a decrease in electric vehicle charging station sales.

Acquisition growth of $26.3 million was driven by the Quality Uptime Acquisition, completed in the third quarter of 2024.

Operating profit increased by $16.2 million, or 30.4%, to $69.4 million during 2024, as compared to 2023.

Operating profit margin increased by 68 bps to 8.6% in 2024 from 7.9% in 2023.

The increase in operating profit margin was primarily attributable to the contract mix and lower amortization of intangible assets.

This increase was partially offset by an expected charge to potentially settle a certain client matter.

Year Ended October 31,

($ in millions) 2024 2023 Increase

Corporate expenses $ (433.1) $ (226.6) $ 206.5 (91.1)%

Corporate expenses decreased by $57.9 million, or 20.3%, to $226.6 million during 2023, as compared to 2022.

The decrease in corporate expenses was primarily related to:

• a $45.6 million decrease in the fair value of contingent consideration related to the RavenVolt Acquisition;

• a $24.0 million benefit from ERC refunds received;

• a $6.4 million decrease in compensation and related expenses primarily due to lower compensation under certain incentive plans;

• a $2.4 million decrease in acquisition and integration costs primarily attributable to our prior years’ acquisitions.

This decrease was partially offset by:

• a $22.0 million decrease in favorable self-insurance adjustments related to prior year claims as the result of actuarial evaluations completed on our workers’ compensation, general liability, automobile liability, and property damage insurance plans;

• a $4.6 million increase in unfavorable self-insurance adjustment related to prior year claims as the result of actuarial evaluations completed on our medical and dental self-insurance plans.

Corporate expenses increased by $206.5 million, or 91.1%, to $433.1 million during 2024, as compared to 2023.

The increase in corporate expenses was primarily related to:

• a $20.3 million unfavorable self-insurance reserve adjustment related to prior year claims from actuarial evaluations completed during 2024, as compared to a favorable $14.8 million adjustment recorded in 2023;

• a $24.3 million increase in costs associated with various systems’ go-live and other investments in technology;

• an absence of a $24.0 million benefit from employee retention credits received during 2023.

This increase was partially offset by:

The Year Ended October 31, 2023, Compared with the Year Ended October 31, 2022

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As such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet those needs.

In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include funding insurance claims, dividend payments, capital expenditures, share repurchases, mandatory loan repayments, and systems and technology transformation initiatives under our ELEVATE strategy.

In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include funding insurance claims, dividend payments, capital expenditures, share repurchases, mandatory loan repayments, contingent consideration payments from acquisitions, and systems and technology transformation initiatives under our ELEVATE strategy.

We anticipate long-term cash uses may also include strategic acquisitions.

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However, there can be no assurance that such financing will be available to us should we need it or, if available, that the terms will be satisfactory to us and not dilutive to existing shareholders.

Debt Facilities

Credit Facility

On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-year syndicated credit facility (the “Credit Facility”), consisting of a $900.0 million revolving line of credit and an $800.0 million amortizing term loan.

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At October 31, 2024, we were in compliance with these covenants and expect to be in compliance in the foreseeable future.

On March 1, 2022, we entered into a new uncommitted receivable repurchase facility (the “Receivables Facility”) of up to $150 million, which expired on March 30, 2023.

This facility was considered a secured borrowing and provided the buyer with customary rights of termination upon the occurrence of certain events of default.

We have guaranteed all of the sellers’ obligations under the facility.

During 2024, we made $32.5 million of principal payments under the term loan.

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growth and expansion, and we do not anticipate remitting such earnings to the United States.

federal tax expense has been recognized as a result of the Tax Cuts and Jobs Act of 2017, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.

federal tax expense has been recognized as a

result of the Tax Cuts and Jobs Act of 2017, no deferred tax liabilities with respect to federal and state income taxes or foreign withholding taxes have been recognized.

We believe that our cash on hand in the United States, along with our Amended Credit Facility and future domestic cash flows, are sufficient to satisfy our domestic liquidity requirements.

Share Repurchases

Effective December 18, 2019, our Board of Directors replaced our then-existing share repurchase program with a new share repurchase program under which we may repurchase up to $150.0 million of our common stock.

Effective December 9, 2022, and December 13, 2023, our Board of Directors expanded the Share Repurchase Program by $150.0 millionand $150.0 million, respectively.

Effective December 13, 2023, our Board of Directors expanded our existing share repurchase program by an additional $150.0 million of our common stock.

We repurchased shares under the share repurchase program during the year ended October 31, 2024, as summarized below.

22 unchanged sentences

revenue levels;

profitability levels of our jobs;

the quality and timing of collections of accounts receivable;

1 unchanged sentence

the timing and amount of income tax payments;

the actual payments of contingent consideration made in excess of the acquisition-date fair value;

and the timing and amount of payments on insurance claims and legal

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023 2022

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Operating Activities

Net cash provided by operating activities of continuing operations increased by $222.9 million during 2023, as compared to 2022.

The increase was primarily driven by a $143.8 million payments made for the Bucio settlement in 2022, and the related income tax benefit .

Net cash provided by operating activities of continuing operations decreased by $293.9 million during 2022, as compared to 2021.

The decrease was primarily driven by payments made for the Bucio settlement, which was recorded within “Other Accrued Liabilities” in the Consolidated Balance Sheets, and deferred remittance of payroll taxes in the current year and the timing of client receivable collections and vendor payments.

Net cash provided by operating activities decreased by $16.6 million during 2024, as compared to 2023.

The decrease was primarily driven by the timing of working capital requirements.

The decrease was partially offset by the absence of a $66.0 million payment of deferred payroll taxes done in 2023.

Net cash provided by operating activities increased by $222.9 million during 2023, as compared to 2022.

The increase was primarily driven by a $143.8 million payment made for the Bucio settlement in 2022 and the related income tax benefit.

Investing Activities

Net cash used in investing activities changed by $109.8 million during 2024, as compared to 2023.

The change was primarily related to the Momentum and RavenVolt acquisitions, completed in 2022.

The change was primarily related to the Quality Uptime Acquisition, completed in 2024.

Net cash used in investing activities changed by $179.5 million during 2023, as compared to 2022.

The change was primarily related to the Able Acquisition during the fourth quarter of 2021, partially offset by Momentum and RavenVolt acquisitions.

The change was primarily related to the Momentum and RavenVolt acquisitions, completed in 2022.

Financing Activities

Net cash used in financing activities was $61.5 million in 2024, as compared to net cash used in financing activities of $186.3 million in 2023.

The decrease in net cash used was primarily related to lower share buyback repurchases in 2024 and an increase in our book cash overdrafts.

Net cash used in financing activities was $186.3 million in 2023, as compared to net cash provided by financing activities of $235.5 million in 2022.

The change was primarily related to a decrease in net borrowings from our Amended Credit Facility, as in 2022 we had higher borrowings to fund Momentum and RavenVolt acquisitions, and higher share repurchases in 2023.

Net cash provided by financing activities was $235.5 million in 2022, as compared to $92.4 million in 2021, primarily due to higher net borrowings to fund acquisitions and working capital requirements.

The change was primarily related to a decrease in net borrowings from our Amended Credit Facility, as in 2022 we had higher borrowings to fund the Momentum and RavenVolt acquisitions and higher share repurchases in 2023.

On December 5, 2024, we announced a quarterly cash dividend of $0.265 per share on our common stock, payable on February 3, 2025, to shareholders of record on January 2, 2025.

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The interest payments on our remaining borrowings under the Amended Credit Facility will be determined based upon the average outstanding balance of our borrowings and the prevailing interest rate during that time.

See Note 11, “Debt,” in the Financial Statements for further detail of our debt and the timing of expected future principal and interest payments.

See Note 11, “Credit Facility,” in the Financial Statements for further detail of our debt and the timing of expected future principal and interest payments.

• Operating and Finance Leases – We enter into various noncancelable l ease agreements for office space, parking facilities, warehouses, vehicles, and equipment used in the normal course of business.

and finance lease obligations were $168.0 million, with $42.2 million payable within 12 months.

Operating and finance lease obligations were $160.0 million, with $37.4 million payable within 12 months.

See Note 5, “Leases,” in the Financial Statements for further detail of our obligations and the timing of expected future payments.

• Service Concession Arrangements – As defined under Topic 853, Service Concession Arrangements , our leased location parking arrangements are represented as service concession arrangements.

• Service Concession Arrangements – As defined under ASU No.

2017-10, Service Concession Arrangements (Topic 853) :

Determining the Customer of the Operation Services , our leased location parking arrangements are represented as service concession arrangements.

We had contractual payments for these arrangements of $71.4 million, with $25.0 million payable within 12 months.

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These amounts are based on expected future service and were calculated using the same assumptions used to measure our benefit obligation at October 31, 2024.

• Contingent Consideration Payable Connection with Our Acquisition of RavenVolt – At October 31, 2024, contingent consideration of up to $75.0 million in cash may be paid in calendar year 2025 if the RavenVolt business achieves certain financial targets in calendar year 2024, as defined in the merger agreement .

We expect the RavenVolt business to achieve the aforementioned financial targets for calendar year 2024, and as such, we currently expect to make a $75.0 million payment in May 2025 for calendar year 2024.

In addition, our material cash requirements for other obligations, for which we cannot reasonably estimate future payments, include the following:

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In addition, certain of these matters may not require cash settlements due to the utilization of credits and net operating loss carryforwards as well as other offsets, including the indirect benefit from other taxing jurisdictions that may be available.

• Contingent Consideration Payable in Connection with Our Acquisition of RavenVolt – At October 31, 2023, contingent consideration of up to $280.0 million in cash may be paid in calendar years 2024, 2025, and 2026, if the RavenVolt business achieves certain financial targets, as defined in the merger agreement, in calendar years 2023, 2024, and 2025 .

We do not expect the RavenVolt business to achieve the aforementioned financial targets for calendar year 2023, and as such, we do not expect contingent consideration to be payable in the next 12 months.

• Contingent Consideration Payable in Connection with Our Acquisition of RavenVolt – At October 31, 2024, contingent consideration of up to $205.0 million, of which $34.1 million has been accrued as of October 31, 2024, in cash may be paid in calendar year 2026 if the RavenVolt business achieves certain financial targets in calendar year 2025, as defined in the merger agreement.

Off-Balance Sheet Arrangements

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As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates.

We removed “Contingent Consideration” from our critical accounting policies and estimates in 2023.

There have been no other significant changes to our critical accounting policies and estimates for the year ended October 31, 2023.

There have been no significant changes to our critical accounting policies and estimates for the year ended October 31, 2024.

We believe the following critical accounting policies govern the more significant judgments and estimates used in the preparation of our Financial Statements.

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A goodwill impairment analysis was performed for each of our reporting units on August 1, 2024.

Based on these studies, the implied fair value of each of our reporting units was substantially in excess of its carrying value, with the exception of the Education reporting unit, where the excess of the fair value over its carrying value was less than 20%.

Therefore, we concluded there were no indicators of impairment.

A 10% decrease in the estimated fair value of any of our reporting units would not have resulted in a different conclusion.

We concluded there were no indicators of impairment.

During the third quarter of 2021, we recognized a non-cash impairment charge totaling $9.1 million in our Corporate segment for previously capitalized internal-use software related to our ERP system implementation.

The Company determined that certain components that were previously developed would no longer be integrated into the new ERP system.

The impairment charge reduced the carrying value to zero for those components.

Description Judgments and Uncertainties Effect if Actual Results Differ from Assumptions

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We have not made any changes in the accounting methodology used to establish our self-insurance liabilities during the past three years.

After analyzing recent loss development patterns, comparing the loss development patterns against benchmarks, and applying actuarial projection methods to estimate the ultimate losses, we decreased our total reserves related to prior years known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2023 by $14.8 million.

After analyzing recent loss development patterns, comparing the loss development patterns against benchmarks, and applying actuarial projection methods to estimate the ultimate losses, we increased our total reserves related to prior years for known claims as well as our estimate of the loss amounts associated with IBNR Claims during 2024 by $20.3 million.

In 2023, we decreased our total reserves related to prior years claims by $14.8 million.

It is possible that actual results could differ from recorded self-insurance liabilities.

Our insurance claims liabilities as of October 31, 2024 amounted to $619.4 million.

A 10% change in our projected ultimate losses would have affected net income by approximately $37.2 million for 2024.

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Method of Adoption

Liabilities - Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations This Accounting Standard Update (“ASU”), issued in September 2022, is designed to enhance transparency around supplier finance programs by requiring new disclosures that would allow a user of the financial statements to understand the program’s nature, activity during the period, changes from period to period, and potential magnitude.

While we are currently evaluating the impact of implementing this guidance on our financial statements, we do not expect adoption to have a material impact.

This ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023.

Early adoption is permitted.

Segment Reporting (Topic 280):

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We are currently evaluating the impact of implementing this guidance on our financial statements.

however, we do not expect adoption to have a material impact.

This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted.

Income Taxes (Topic 740):

Improvements to Income Tax Disclosures

This ASU, issued in December 2023, is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments in this ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

We are currently evaluating the impact of implementing this guidance on our financial statements.

This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.

Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

This ASU, issued in November 2024, is intended to improve financial reporting by requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods.

We are currently evaluating the impact of implementing this guidance on our financial statements.

This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

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 7. Management’s Discussion and Analysis