What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-12-19 compared with 2023-12-18 · 140 added, 191 removed, 1216 unchanged (21% of the section changed)

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Valuation of self-insurance liabilities

As discussed in Notes 2 and 10 to the consolidated financial statements, the Company uses a combination of insured and self-insurance programs to cover workers’ compensation, general liability, automobile liability, property damage, and other

insurable risks.

The balance of casualty program insurance reserves, net of recoverables, as of October 31, 2023, amounted to $487.9 million.

As discussed in Notes 2 and 10 to the consolidated financial statements, the Company uses a combination of insured and self-insurance programs to cover insurable risks.

The balance of casualty program insurance reserves as of October 31, 2024, amounted to $608.4 million, a portion of which related to workers’ compensation and general liability self-insurance liabilities.

The Company engages actuaries to estimate its self-insurance liabilities at least annually.

We identified the evaluation of certain self-insurance liabilities as a critical audit matter because it involves a high degree of judgment and actuarial expertise to assess:

(1) the actuarial models used and (2) estimated incurred but not reported claims based on application of loss development factors to historical claims experience.

We identified the evaluation of certain workers’ compensation and general liability self-insurance liabilities as a critical audit matter because it involves a high degree of judgment and actuarial expertise to assess:

(1) the application of actuarial models used and (2) estimated incurred but not reported claims based on application of loss development factors to historical claims experience.

The following are the primary procedures we performed to address this critical audit matter.

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and involved an actuarial professional with specialized skills and knowledge who assisted in the:

• assessment of the actuarial models used by the Company for consistency with generally accepted actuarial standards and

• assessment of the application of the actuarial models used by the Company for consistency with generally accepted actuarial standards and

• development of an actuarial estimate of self-insurance liabilities based on the Company’s underlying historical paid and incurred loss data for comparison with the liabilities recorded by the Company.

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Net income 81.4 251.3 230.4

Other comprehensive income

Other comprehensive (loss)/income

Interest rate swaps ( 22.9 ) ( 0.5 ) 36.7

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Balance, beginning of year ( 9.2 ) ( 16.2 ) ( 22.5 )

Other comprehensive income

Other comprehensive (loss)/income

( 9.8 ) 6.9 6.3

Balance, end of year ( 19.1 ) ( 9.2 ) ( 16.2 )

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Depreciation and amortization 106.6 120.7 112.4

Impairment loss on fixed assets — — 9.1

Deferred income taxes ( 24.7 ) ( 4.9 ) 67.7

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Discount accretion on insurance claims 0.6 0.4 0.1

(Gain)/Loss on sale of assets ( 0.1 ) ( 0.8 ) 0.2

Gain on sale of assets ( 0.6 ) ( 0.1 ) ( 0.8 )

Income from unconsolidated affiliates ( 6.5 ) ( 3.9 ) ( 2.4 )

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Dividends paid ( 56.5 ) ( 57.5 ) ( 51.9 )

Deferred financing costs paid — — ( 6.4 )

Borrowings from debt 1,334.0 1,178.5 1,479.4

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We did not recognize any impairment charges on these investments in 2024, 2023, or 2022.

Preferred Equity investments

We own non-controlling interests (generally under 20 %) in entities that provide specialized services.

Our investments do not have readily determinable fair values;

therefore, we measure the investment at initial cost less impairment, if any.

Investments in Unconsolidated Affiliates

We own non-controlling interests (generally 20 % to 50 %) in certain affiliated entities that predominantly provide facility solutions to governmental and commercial clients, primarily in the United States and the Middle East.

We have significant influence over such investments and account for them under the equity method of accounting.

We evaluate our equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable.

An impairment loss is recognized to the extent that the estimated fair value of the investment is less than its carrying amount and we determine that the impairment is other than temporary.

Property, Plant and Equipment

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Topic 842 requires lessees to recognize substantially all leases on their balance sheet as a right-of-use (“ROU”) asset and a lease liability.

We made the accounting policy election to not recognize leases with an initial term of 12 months or less on the balance sheet and will expense payments for such leases on a straight-line basis over the lease term.

We made the accounting policy election to not recognize leases with an initial term of 12 months or less on

the balance sheet and will expense payments for such leases on a straight-line basis over the lease term.

We also elected to not separate lease components from non-lease components.

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ROU assets and lease liabilities are recognized based on the present value of lease payments over the lease term with lease expense recognized on a straight-line basis.

The present value of future lease payments is determined using our incremental borrow rate (“IBR”) unless the implicit rate in the lease is readily determinable.

The present value of future lease payments is determined using our incremental borrowing rate (“IBR”) unless the implicit rate in the lease is readily determinable.

Our IBR is equal to our rate of interest adjusted for term differences.

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Determining the Customer of the Operation Services , are excluded from the scope of Topic 842.

Lease costs associated with these arrangements are recorded as a reduction of revenues.

Rent expenses associated with these arrangements are recorded as a reduction of revenues.

See Note 4, “Revenues,” for further discussion.

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We have elected to make the first day of our fourth quarter, August 1, the annual impairment assessment date for goodwill.

However, we could be required to evaluate the recoverability of goodwill

more often if impairment indicators exist.

However, we could be required to evaluate the recoverability of goodwill more often if impairment indicators exist.

Goodwill is tested for impairment at a “reporting unit” level by performing either a qualitative evaluation or a quantitative test.

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When this occurs, a recoverability test is performed that compares the projected undiscounted cash flows from the use and eventual disposition of an asset or asset group to its carrying amount.

If the projected undiscounted cash flows are less than the carrying amount, then we calculate an impairment loss.

If the projected undiscounted cash flows are

less than the carrying amount, then we calculate an impairment loss.

The impairment loss calculation compares the fair value, which is based on projected discounted cash flows, to the carrying value.

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Other Noncurrent Assets

At October 31, 2023 and 2022, other noncurrent assets primarily consisted of long-term insurance recoverables, interest rate swap assets, capitalized commissions, cloud computing arrangements, prepayments to carriers for future insurance claims, and insurance deposits.

At October 31, 2024 and 2023, other noncurrent assets primarily consisted of long-term insurance recoverables, cloud computing arrangements, capitalized commissions, interest rate swap assets, prepayments to carriers for future insurance claims, and insurance deposits.

Federal Energy Savings Performance Contract Receivables

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Liabilities associated with these losses include estimates of both filed claims and IBNR Claims.

With the assistance of third-party actuaries, we review our estimate of ultimate losses for IBNR Claims on a quarterly basis and adjust our required self-insurance reserves as appropriate.

With the assistance of third-party actuaries, we review our estimate of ultimate losses for actual and IBNR Claims on a quarterly basis and adjust our required self-insurance reserves as appropriate.

See Note 10, “Insurance,” for further details on the quarterly review procedures.

As part of this evaluation, we review the status of existing and new claim reserves as established by third-party claims administrators.

As part of this evaluation, we review the status of

existing and new claim reserves as established by third-party claims administrators.

The third-party claims administrators establish the case reserves based upon known factors related to the type and severity of the claims, demographic factors, legislative matters, and case law, as appropriate.

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Other Accrued Liabilities

At October 31, 2023 and 2022, other accrued liabilities primarily consisted of contract liabilities, employee benefits, ESPC liabilities, unclaimed property, legal fees and settlements, and dividends payable.

At October 31, 2024 and 2023, other accrued liabilities primarily consisted of the short-term contingent consideration liability, employee benefits, contract liabilities, ESPC liabilities, unclaimed property, legal fees and settlements, and dividends payable

Other Noncurrent Liabilities

At October 31, 2023 and 2022, other noncurrent liabilities primarily consisted of deferred compensation, contingent consideration liability, long-term finance leases, and retirement plan liabilities.

At October 31, 2024 and 2023, other noncurrent liabilities primarily consisted of the long-term contingent consideration liability, deferred compensation, long-term finance leases, and retirement plan liabilities.

Contracts with Customers

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We primarily account for our performance obligations under the series guidance, using the as-invoiced practical expedient when applicable.

We apply the as-invoiced practical expedient to record revenue as the services are provided, given the nature of the services provided and the frequency of billing under the customer contracts.

We apply the as-invoiced practical expedient to record revenue as the services

are provided, given the nature of the services provided and the frequency of billing under the customer contracts.

Under this practical expedient, we recognize revenue in an amount that corresponds directly with the value to the customer of our performance completed to date and for which we have the right to invoice the customer.

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Hourly arrangements are contracts in which the client is billed a fixed hourly rate for each labor hour provided.

We measure progress toward satisfaction of the performance obligation as the services are provided, and revenue is recognized at the agreed-upon contractual amount over time, because the customer simultaneously receives and consumes the benefits of the services as they are performed.

We measure progress toward satisfaction of the performance obligation as the services are provided, and

revenue is recognized at the agreed-upon contractual amount over time, because the customer simultaneously receives and consumes the benefits of the services as they are performed.

Management Reimbursement

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Fixed billing schedules may not precisely match the actual costs incurred.

Therefore, revenue recognized may differ from amounts that can be billed or invoiced to the customer at any point during the contract, resulting in balances that are considered revenue recognized in excess of amounts billed or amounts billed in excess of revenue recognized.

amounts billed in excess of revenue recognized.

Advanced payments from our customers generally do not represent a significant financing component as the payments are used to meet working capital demands that can be higher in the early stages of a contract, as well as to protect us from our customer failing to meet its obligations under the contract.

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A receivable is recognized for an estimate of the unreported royalty fees, which are reported and remitted to us in arrears.

Microgrid Systems Installation

Microgrid Systems and Uninterrupted Power Supply Systems Installation

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.

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This measurement and comparison process requires updates to the estimate of total costs to complete the contract, and these updates may include subjective assessments and judgments.

Certain projects include service maintenance agreements under which existing systems are repaired and maintained for a specific period of time.

We generally recognize revenue under these arrangements over time.

Our service maintenance agreements are generally one-year renewable agreements.

Costs to Obtain a Contract with a Customer

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We account for income taxes using the asset and liability method.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement

carrying amount of existing assets and liabilities and their respective tax bases.

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases.

We measure deferred tax assets and liabilities using enacted tax rates expected to be applied to taxable income in the years in which those temporary differences are expected to be recovered.

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ERC is a refundable tax credit for employers who kept employees on their payroll during the COVID-19 Pandemic.

During the year ended October 31, 2023, we received and recorded an employee retention credit totaling $ 24.0 million, within the “Selling, general and administrative expenses” on the unaudited Consolidated Statements of Comprehensive Income.

During the year ended October 31, 2023, we received and recorded an employee retention credit totaling $ 24.0 million, within the “Selling, general and administrative expenses” on our Consolidated Statements of Comprehensive Income.

Recently Adopted Accounting Standards

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848), Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

This ASU provides optional expedients to assist with the discontinuance of London Interbank Offered Rate (“LIBOR”).

The expedients allow companies to ease the potential accounting burden when modifying contracts and hedging relationships that use LIBOR as a reference rate, if certain criteria are met.

In January 2021, FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

This ASU clarifies that derivatives affected by the discounting transition are explicitly eligible for certain optional expedients and exceptions under Topic 848.

Effective November 1, 2022, we applied available practical expedients under Topic 848 to account for modifications, changes in critical terms, and updates to the designated hedged risks as qualifying changes have been made to applicable debt and derivative contracts as if they were not substantial.

Recently Issued Accounting Standards

In September 2022, the FASB issued ASU 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50):

In September 2022, the Financial Accounting Standards Board (“FASB”) issued ASU 2022-04, Liabilities — Supplier Finance Programs (Subtopic 405-50):

Disclosure of Supplier Finance Program Obligations , 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.

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, with early adoption permitted.

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.

We adopted this standard, effective November 1, 2023, on a prospective basis, except for the rollforward requirement, which becomes effective in fiscal year 2025.

We do not participate in any material supplier finance programs and, as such, the adoption of this guidance did not have an impact on our disclosures.

Recently Issued Accounting Standards

In November 2023, the FASB issued ASU 2023-07, 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.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosure .

This accounting update enhances the transparency and decision usefulness of income tax disclosure.

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.

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

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

In November 2024, the FASB issued ASU 2024-03, Income Statement — Reporting Comprehensive Income — Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

This accounting update improves financial reporting by requiring public business entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods.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.

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

We do not expect any other recently issued accounting pronouncements to have a material impact on our consolidated financial statements and related disclosures.

ACQUISITIONS AND DISPOSITIONS

Acquisition of Quality Uptime

Effective June 21, 2024, we acquired Quality Uptime Services, Inc.

(“Quality Uptime”), an uninterrupted power supply system (“UPS”) installation and maintenance company providing customized preventive and emergency service programs for mission-critical data centers and other facilities, for a net cash purchase price of approximately $ 118.2 million (subject to customary working capital adjustments).

The acquisition was accounted for under the acquisition method.

Accordingly, the assets acquired and liabilities assumed were recognized on the date of acquisition at their estimated fair values, with the excess of the purchase price recorded as goodwill.

The goodwill is amortizable over 15 years for income tax purposes.

As of October 31, 2024, we recorded preliminary goodwill and intangibles of $ 80.6 million and $ 35.2 million, respectively.

The total assets acquired, excluding goodwill and intangibles, and liabilities assumed amounted to $ 24.0 million and $ 21.6 million, respectively.

The acquisition accounting is subject to change as we obtain additional information about the facts and circumstances that existed as of the acquisition date during the measurement period, not to exceed one year from the acquisition date.

The final acquisition accounting may include changes to non-current assets, including intangible assets and working capital.

The Consolidated Statements of Comprehensive Income for the year ended October 31, 2024, include revenues attributable to Quality Uptime of $ 26.3 million.

The operations of Quality Uptime are included in our Technical Solutions segment.

Acquisition of RavenVolt

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We applied the acquisition method of accounting.

The initial purchase price for the acquisition was approximately $ 170.0 million in cash at closing (subject to customary working capital and net debt adjustments) plus the potential of post-closing contingent consideration of up to $ 280.0 million.

The post closing contingent consideration is payable in cash in calendar years 2024, 2025, and 2026 if RavenVolt’s earnings before interest, taxes, depreciation, and amortization (EBITDA), as defined in the RavenVolt merger agreement, meets or exceeds certain defined targets.

The maximum contingent consideration that is payable in calendar years 2024, 2025, and 2026 is $ 75.0 million, $ 75.0 million, and $ 130.0 million, respectively.

The purchase price for the acquisition was approximately $ 170.0 million in cash at closing (subject to customary working capital and net debt adjustments) plus the potential of post-closing contingent consideration of up to $ 280.0 million.

The post closing contingent consideration would be payable in cash in calendar years 2024, 2025, and 2026 if RavenVolt’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”), as defined in the RavenVolt merger agreement, meets or exceeds certain defined targets.

The defined EBITDA targets for calendar year 2023 were not achieved, and as a result, no contingent consideration payment was made in 2024.

The maximum remaining contingent consideration that is payable in calendar years 2025 and 2026 is $ 75.0 million, and $ 130.0 million, respectively.

If the EBITDA achieved for calendar years 2023 - 2025 cumulatively meets the defined EBITDA targets, the entire $ 280.0 million would be paid in calendar year 2026, minus any earn-out payments made in 2024 and 2025.

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A simulation of one million scenarios was performed with the assistance of a third-party valuation specialist, resulting in a fair value for the cumulative contingent consideration for calendar years 2023 through 2025 totaling $ 59.0 million.

There were no material adjustments to the fair value of the contingent consideration from September 1, 2022 to October 31, 2022.

At October 31, 2023, the estimate of the fair value of the contingent consideration was $ 13.4 million.

Results of operations subsequent to the acquisition date and changes to management’s forecasts, as well as the accretion of the liability, resulted in a total decrease in fair value of $ 45.6 million.

This decrease is recognized within the “Selling, general and administrative expenses” of the Consolidated Statements of Comprehensive Income.

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

Final Acquisition Accounting

The assets acquired and liabilities assumed were recognized at their acquisition date fair values.

Goodwill arising from the RavenVolt Acquisition is not deductible for tax reporting purposes.

There were no material changes made to preliminary acquisition accounting.

The following table summarizes the final acquisition accounting:

(in millions)

Cash and cash equivalents $ 29.0

Trade accounts receivable 16.5

Other assets 3.8

Intangible assets 16.7

Goodwill 207.4

Trade accounts payable ( 5.2 )

Deferred revenue ( 31.6 )

Other accrued liabilities ( 3.2 )

Deferred income tax liability, net ( 4.5 )

Net assets acquired $ 228.9

Acquisition of Momentum

Effective April 7, 2022, we acquired Maybin Support Services Limited, Momentum Support Limited (UK), and Momentum Property Support Services Limited (collectively “Momentum”), a leading independent provider of

facility services, primarily janitorial, across Ireland and Northern Ireland, for a purchase price of approximately $ 54.8 million.

We have completed the acquisition accounting, and recorded final goodwill and intangibles of $ 42.9 million and $ 10.4 million, respectively.

The total assets acquired, excluding goodwill and intangibles, and liabilities assumed amounted to $ 20.4 million and $ 18.9 million, respectively.

Goodwill is not deductible for income tax purposes.

There were no material changes made to preliminary acquisition accounting.

Disposition of Assets

During 2022, we sold a group of customer contracts for healthcare technology management within our Technical Solutions segment for $ 8.5 million and recognized a gain of $ 7.6 million, which is included in “ Selling, general and administrative expenses ” in the accompanying Consolidated Statements of Comprehensive Income.

Acquisition of Able

On September 30, 2021, we completed the Able Acquisition for a net cash purchase price of $ 741.7 million.

Pursuant to the terms of the purchase agreement, approximately $ 12.1 million of the cash consideration was placed into escrow accounts, of which approximately $ 8.2 million was placed into escrow to satisfy any applicable indemnification claims for a period of 12 months.

To fund the cash purchase price, we used cash on hand and borrowed $ 325.0 million on September 30, 2021, at an average interest rate of 1.58 % from our revolving line of credit.

Changes in results of operations and management’s forecasts during 2024 for calendar years 2024 and 2025 were primarily due to the timing of large microgrid systems’ and generators’ installation project performing better than anticipated, resulting in a total increase of fair value to $ 109.1 million at October 31, 2024, of which $ 75.0 million relates to the calendar year 2024 payment to be made in 2025.

Given the relatively short period of time until the end of the earn-out period, there is a high level of confidence in the projections for calendar year 2024 that are the basis for the estimated contingent consideration payment.

This change in the fair value is recognized within the “Selling, general and administrative expenses” of the Consolidated Statements of Comprehensive Income.

Disaggregation of Revenues

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These arrangements are generally structured as monthly fixed-price, cost-plus, and work order contracts.

(4) Building & Energy Solutions arrangements provide custom energy solutions, including microgrid systems installation, electrical, HVAC, lighting, electric vehicle charging station installation, and other general maintenance and repair services for clients in the public and private sectors and are generally structured as Energy Savings and Fixed-Price Repair and Refurbishment contracts.

(4) Building & Energy Solutions arrangements provide custom energy solutions, including microgrid systems installation, electrical, HVAC, lighting, electric vehicle charging station installation, uninterrupted power supply services, and other general maintenance and repair services for clients in the public and private sectors and are generally structured as Energy Savings, Fixed-Price Repair, and Refurbishment contracts.

We also franchise certain operations under franchise agreements relating to our Linc Network and TEGG brands pursuant to franchise contracts.

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Balance at beginning of year $ 141.2

Acquisition additions (2)

Additional contract liabilities 256.7

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(1) Included in other accrued liabilities on the Consolidated Balance Sheets.

(2) Represents additions associated with the Quality Uptime Acquisition.

The components of lease assets and liabilities and their classification on our Consolidated Balance Sheets were as follows:

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The components of lease costs and classification within the Consolidated Statements of Comprehensive Income were as follows:

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023

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The following table presents information on short-term and variable lease costs:

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023

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Lease Liabilities Total

Fiscal 2024 $ 38.5 $ 3.8 $ 42.2

Fiscal 2025 27.9 3.8 31.7

Fiscal 2026 25.8 3.0 28.8

Fiscal 2027 19.4 1.4 20.8

Fiscal 2028 13.2 1.4 14.6

$ 31.9 $ 5.5 $ 37.4

29.7 4.7 34.4

22.8 3.1 25.9

16.2 3.1 19.4

11.6 3.1 14.7

Thereafter 25.1 3.1 28.2

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The following table includes the weighted-average remaining lease terms, in years, and the weighted-average discount rate used to calculate the present value of operating lease liabilities:

Years Ended October 31,

Year Ended October 31,

Weighted-average remaining lease term (years)

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The following table includes supplemental cash and non-cash information related to operating leases:

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023

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Assets held in funded deferred compensation plan (3)

Debt facilities (4)

Credit facility (4)

2 1,335.3 1,313.8

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See Note 10, “Insurance,” for further information.

(3) Represents investments held in Rabbi trusts associated with two of our deferred compensation plans, which we include in “Other noncurrent assets” on the accompanying Consolidated Balance Sheets.

(3) Represents investments held in Rabbi trusts associated with one of our deferred compensation plans, which we include in “Other noncurrent assets” on the accompanying Consolidated Balance Sheets.

The fair value of the assets held in the funded deferred compensation plan is based on quoted market prices.

See Note 12, “Employee Benefit Plans,” for further information.

(4) Represents gross outstanding borrowings under our syndicated line of credit and term loan.

(4) Represents gross outstanding borrowings under our Amended Credit Facility.

Due to variable interest rates, the carrying value of outstanding borrowings under our line of credit and term loan approximates the fair value.

See Note 11, “Debt,” for further information.

See Note 11, “Credit Facility,” for further information.

(5) Represents interest rate swap derivatives designated as cash flow hedges.

The fair values of the interest rate swaps are estimated based on the present value of the difference between expected cash flows calculated at the contracted interest rates and the expected cash flows at current market interest rates using observable benchmarks for the Secured Overnight Financing Rate (“SOFR”) forward rates at the end of the period.

At October 31, 2023 and 2022, our interest rate swap assets and liabilities are included in “Other noncurrent assets” and “Other noncurrent liabilities,” respectively, on the accompanying Consolidated Balance Sheets.

See Note 11, “Debt,” for further information.

(6) We purchased $ 12.4 million in a preferred equity investment and preferred stock warrants of a privately held company that specializes in the development of electric vehicle charging stations and related software during the year ended October 31, 2023, which we include within “Other investments” on the accompanying Consolidated Balance Sheet.

Our total investments in preferred equity securities amounted to $ 15.4 million at October 31, 2023.

At October 31, 2024 and 2023, our interest rate swap assets are included in “Other noncurrent assets” on the accompanying Consolidated Balance Sheets.

See Note 11, “Credit Facility,” for further information.

(6 Our investments do not have a readily determinable fair value;

therefore, we account for the investments using the measurement alternative under Topic 321 and measure the investments at initial cost less impairment, if any.

therefore, we account for the investments using the measurement alternative under Topic 321 and measure the investments at initial cost plus or minus fair value adjustments if there are observable prices minus impairment, if any.

(7) At October 31, 2024, our contingent consideration payable related to the RavenVolt Acquisition is recorded at fair value as a liability on the acquisition date and is remeasured at each reporting date, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy.

At September 1, 2022, we recorded the contingent consideration at fair value of $ 59.0 million.

After the acquisition date and until the contingency is resolved, the fair value of contingent consideration payable is adjusted each reporting period based primarily on the expected probability of achievement of the contingency targets which are subject to our estimate.

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There were no transfers to or from Level 3 financial assets or liabilities during 2024 and 2023.

At October 31, 2022, the Company had no financial assets or liabilities recorded at fair value using Level 3 inputs.

At October 31, 2024 and 2023, the Company had no financial assets recorded at fair value using Level 3 inputs.

Non-Financial Assets Measured at Fair Value on a Non-Recurring Basis

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and long-lived assets that have been reduced to fair value when they are held for sale.

If certain triggering events occur or if an annual impairment test is required,

we would evaluate these non-financial assets for impairment.

If certain triggering events occur or if an annual impairment test is required, we would evaluate these non-financial assets for impairment.

If an impairment were to occur, the asset would be recorded at the estimated fair value, using primarily unobservable Level 3 inputs.

During the first quarter of 2022, we performed a reorganization of our T&M segment, and reallocated $ 95.0 million of goodwill from our B&I segment to our M&D segment using a relative fair value approach.

M&D’s goodwill balance was $ 502.2 million after the reorganization, which includes $ 407.2 million of previously recorded goodwill from our T&M segment.

In addition, we completed an assessment of any potential goodwill impairment for all reporting units immediately prior to and following the reallocation and determined that no impairment existed.

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 Enterprise Resource Planning (“ERP”) system implementation.

The Company determined that certain components that were previously developed would no longer be implemented.

The impairment charge reduced the carrying value to zero for those components and is recorded in “Selling, general and administrative expenses” on our Consolidated Statements of Comprehensive Income for the year ended October 31, 2021.

PROPERTY, PLANT AND EQUIPMENT

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3.6 — — 0.3 0.8 4.7

Reallocation (1)

( 95.0 ) 95.0 — — — —

Balance at October 31, 2023 $ 1,092.7 $ 502.2 $ 459.3 $ 69.0 $ 368.0 $ 2,491.3

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Balance at October 31, 2024 $ 1,095.5 $ 502.2 $ 459.3 $ 69.4 $ 449.6 $ 2,575.9

(1) In connection with the reorganization of our T&M segment in the first quarter of 2022, we reallocated $ 95.0 million of goodwill from our B&I segment to our M&D segment using a relative fair value approach.

(2) During 2023, represents final acquisition accounting adjustments to goodwill from RavenVolt and Momentum acquisitions.

See Note 3, “Acquisitions and Dispositions,” for additional information.

(1) During 2024, goodwill increased primarily as a result of the Quality Uptime Acquisition.

See Note 3, “Acquisitions”, for additional information.

We did not record goodwill impairment charges during fiscal years 2024 and 2023.

19 unchanged sentences

For the majority of these insurance programs, we retain the initial $ 1.0 million to $ 1.5 million of exposure on a per-occurrence basis, either through deductibles or self-insured retentions.

Beginning November 1, 2023, retentions will range between $ 1.0 million and $ 5.0 million of exposure on a per-occurrence basis.

Beginning November 1, 2023, retentions range between $ 1.0 million and $ 5.0 million of exposure on a per-occurrence basis.

Beyond the retained exposures, we have varying primary policy limits ranging between $ 1.0 million and $ 5.0 million per occurrence.

16 unchanged sentences

These Interim Updates were abbreviated in nature based on actual versus expected development during the periods analyzed and relied on the key assumptions in the Actuarial Reviews (most notably loss development patterns, trend assumptions, and underlying expected loss costs).

Based on the results of the Actuarial Reviews and Interim Updates, w e 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 and Interim Updates, w e 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.

The adverse development was offset by improvements in other legacy programs.

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

15 unchanged sentences

Claims paid ( 157.3 ) ( 131.4 ) ( 129.1 )

Acquisition (1)

— ( 8.2 ) 91.6

Net balance, October 31 (1)

2 unchanged sentences

Gross balance, October 31 $ 608.4 $ 555.0 $ 551.0

(1) During 2021, insurance reserves increased as a result of the Able Acquisition.

(1) Includes reserves related to discontinued operations of approximately $ 0.7 million for 2024, $ 0.1 million for 2023, and $ 0.2 million for 2022.

6 unchanged sentences

Total $ 230.7 $ 234.7

Components of Debt

CREDIT FACILITY

As of October 31,

4 unchanged sentences

Current portion of term loan $ 31.6 $ 31.5

Receivables facility — 150.0

Current portion of debt $ 31.5 $ 181.5

Long-term debt (1)(2)

4 unchanged sentences

Long-term debt $ 1,302.2 $ 1,279.8

(1) Standby letters of credit amounted to $ 58.2 million at October 31, 2023.

(2) At October 31, 2023, we had borrowing capacity of $ 483.0 million.

(1) At October 31, 2024, and October 31, 2023, the weighted average interest rate on our outstanding borrowings, not including letters of credit and swaps, was 6.68 %.and 7.17 %, respectively.

(2) At October 31, 2024, we had borrowing capacity of up to $ 423.6 million

(3) At October 31, 2024 standby letters of credit amounted to $ 57.9 million

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, consisting of a $ 900.0 million revolving line of credit and an $ 800.0 million amortizing term loan, both of which were scheduled to mature on September 1, 2022.

8 unchanged sentences

In the event of a material acquisition, as defined in the Amended Credit Facility, we may elect to increase the maximum total net leverage ratio to 5.50 to 1.00 for a total of four fiscal quarters and increase the maximum secured net leverage ratio to 4.50 to 1.00 for a total of four fiscal quarters.

We did not make this election for the Able Acquisition.

Our borrowing capacity is subject to, and limited by, compliance with the covenants described above.

1 unchanged sentence

The Amended Credit Facility also includes customary events of default, including:

failure to pay principal, interest, or fees when due, failure to comply with covenants;

failure to pay principal, interest, or fees when due;

failure to comply with covenants;

the occurrence of certain material judgments;

change in control of the Company.

and a change in control of the Company.

If certain events of default occur, including certain cross-defaults, insolvency, change in control, or violation of specific covenants, then the lenders can terminate or suspend our access to the Amended Credit Facility, declare all amounts outstanding (including all accrued interest and unpaid fees) to be immediately due and payable, and require that we cash collateralize the outstanding standby letters of credit.

1 unchanged sentence

Total deferred financing costs of $ 12.6 million, consisting of $ 4.9 million related to the term loan and $ 7.7 million related to the revolver, are being amortized to interest expense over the term of the Amended Credit Facility.

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

We accounted for the sale of receivables under the Receivables Facility as short-term debt and carried the receivables on the Consolidated Balance Sheets, primarily as a result of the requirement to repurchase receivables sold.

Long-Term Loan Maturities

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

As of October 31, 2023, the following principal payments are required under the term loan.

As of October 31, 2024, the following principal payments are required under the Amended Credit Facility.

(in millions) 2025

16 unchanged sentences

$ 170.0 million 3.81 % November 1, 2022 June 28, 2026

(1) In July 2022, we entered into interest rate swap agreements with notional values totaling $ 300.0 million at inception.

The notional amount reduces to $ 250.0 million in April 2024, $ 175.0 million in October 2024, and $ 100.0 million in October 2025 before maturing on June 28, 2026.

(1) In July 2022, we entered into amortizing interest rate swap agreements with notional values totaling $ 300.0 million at inception.

The notional amount reduces to $ 100.0 million in October 2025 before maturing on June 28, 2026.

At October 31, 2024 and 2023, amounts recorded in AOCL for interest rate swaps were a gain of $ 9.2 million, net of taxes of $ 4.3 million, and a gain of $ 26.0 million, net of taxes of $ 10.5 million, respectively.

In 2022, these amounts included the gain associated with the interest rate swaps we terminated in 2018, which was amortized to interest expense as interest payments were made over the original term of our Credit Facility.

During 2022, we amortized $ 3.5 million, net of taxes of $ 1.3 million, of that gain.

At October 31, 2023, the total amount expected to be reclassified from AOCL to earnings during the next 12 months was $ 9.8 million, net of a taxes of $ 3.8 million.

At October 31, 2024, the total amount expected to be reclassified from AOCL to earnings during the next 12 months was $ 5.9 million, net of taxes of $ 2.2 million.

EMPLOYEE BENEFIT PLANS

2 unchanged sentences

The Plans were previously amended to preclude new participants.

All but one of the Plans are unfunded.

All of the Plans are unfunded with the exception of one, which is underfunded.

Information for the Plans

40 unchanged sentences

4.3 4.8 5.8 N/A* 5/31/2026 - 4/4/2027

Western Conference of Teamsters Pension Plan 91-6145047 / 001 Green 12/31/2023 Green 12/31/2022 N/A* 2.7 2.4 2.2 N/A* 11/30/2026 - 12/31/2029

IUOE Stationary Engineers Local 39 Pension Plan 94-6118939 / 001 Green 12/31/2023 Green 12/31/2022 N/A*

2.5 4.6 4.4 N/A* 8/31/2029

Western Conference of Teamsters Pension Plan 91-6145047 / 001 Green 12/31/2022 Green 12/31/2021 N/A*

2.4 2.2 2.0 N/A* 11/30/2026 - 12/31/2029

All Other Plans:

3 unchanged sentences

(2) The “EIN/PN” column provides the Employer Identification Number and the three-digit plan number assigned to the plan by the IRS.

(3) The Pension Protection Act Zone Status columns provide the two most recently available Pension Protection Act zone statuses from each plan.

(3) The Pension Protection Act Zone Status columns provide the two most recently available Pension Protection Act zone status reports from each plan.

The zone status is based on information provided to us and other participating employers and is certified by each plan’s actuary.

9 unchanged sentences

Building Service Pension Plan* 4/30/2023, 4/30/2022, and 4/30/2021

Central Pension Fund of the IUOE & Participating Employers 1/31/2023

Central Pennsylvania Teamsters Defined Benefit Plan* 12/31/2023

Central Pension Fund of the IUOE & Participating Employers 1/31/2024 and 1/31/2023

Contract Cleaners Service Employees' Pension Plan* 12/31/2022 and 12/31/2021

IUOE Local 30 Pension Fund* 12/31/2023 and 12/31/2022

IUOE Stationary Engineers Local 39 Pension Plan 12/31/2023, 12/31/2022, and 12/31/2021

1 unchanged sentence

Local 670 Pension Plan* 12/31/2023, 12/31/2022

Local 68 Engineers Union Pension Plan* 6/30/2023

Local 808 IBT Pension Fund* 9/30/2023

Massachusetts Service Employees Pension Plan* 12/31/2023, 12/31/2022, and 12/31/2021

4 unchanged sentences

Teamsters Local 617 Pension Fund* 2/28/2023, 2/28/2022, and 2/28/2021

Teamsters Local Union No.

727 Pension Plan* 2/28/2023

Local 74 Welfare Fund* 12/31/2023, 12/31/2022, and 12/31/2021

9 unchanged sentences

During 2024, 2023, and 2022, our contributions to such plans were $ 434.1 million, $ 441.8 million, and $ 426.6 million, respectively.

There have been no significant changes that affect the comparability of total contributions for any of the periods presented,except for the additions associated with the Able acquisition in 2022.

There have been no significant changes that affect the comparability of total contributions for any of the periods presented .

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

We use letters of credit and surety bonds to secure certain commitments related to insurance programs and for other purposes.

As of October 31, 2023, these letters of credit totaled $ 58.2 million, and surety bonds and surety-backed letters of credit totaled $ 776.2 million, respectively.

As of October 31, 2024, these letters of credit totaled $ 57.9 million, and surety bonds and surety-backed letters of credit totaled $ 854.7 million.

In some instances, we offer clients guaranteed energy savings under certain energy savings contracts.

30 unchanged sentences

None of these preferred shares are issued.

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.

Share repurchases may take place on the open market or otherwise, and all or part of the repurchases may be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions.

26 unchanged sentences

There are 3,975,000 total shares of common stock authorized for issuance under the 2021 Equity Plan, and at October 31, 2024, there were 1,308,462 shares of common stock available for grant for future equity-based compensation awards.

In addition, there are certain plans under which we can no longer issue awards, such as the 2006 Equity Plan, although awards outstanding under such plans may still vest and be exercised.

there are certain plans under which we can no longer issue awards, such as the 2006 Equity Plan, although awards outstanding under such plans may still vest and be exercised.

We also maintain an employee stock purchase plan, which our stockholders approved on March 9, 2004 (the “2004 Employee Stock Purchase Plan”).

78 unchanged sentences

Geographic Sources of Income Before Income Taxes

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023 2022

4 unchanged sentences

Components of Income Tax Provision

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023 2022

8 unchanged sentences

Statutory Tax Rate to Annual Effective Tax Rate

Years Ended October 31,

Year Ended October 31,

2024 2023 2022

8 unchanged sentences

Nontaxable RavenVolt contingent consideration

20.1 ( 3.9 ) —

Other nondeductible expenses 2.1 0.6 0.3

2 unchanged sentences

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.

Under various payroll tax provisions included in the CARES Act, through December 31, 2020, we deferred approximately $ 132 million of payroll tax.

The deferred payroll tax has been remitted in full:

$ 66 million was paid in

December 2021 and the remaining $ 66 million was paid in December 2022.

The CARES Act did not have a material impact on our income tax provision.

Our effective tax rate for 2024 was negatively impacted by a $ 95.7 million non-taxable change to increase the fair value of the contingent consideration related to the RavenVolt Acquisition, partially offset by a $ 7.3 million tax benefit for return to provision adjustments related to our non-U.S.

operations, and a $ 5.5 million benefit related to energy efficiency incentives.

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

Components of Deferred Tax Assets and Liabilities

11 unchanged sentences

Unrecognized tax benefits 3.5 3.6

Deferred payroll taxes — 18.1

Operating lease liabilities 23.5 27.3

8 unchanged sentences

Other comprehensive income

( 2.3 ) ( 8.4 )

Other ( 12.3 ) ( 11.3 )

18 unchanged sentences

At October 31, 2024 and 2023, accrued interest and penalties were $ 1.3 million and $ 1.4 million, respectively.

For interest and penalties, we recognized a $ 0.7 million expense, a $ 0.9 million benefit, and a $ 0.1 million expense in 2023, 2022, and 2021, respectively.

For interest and penalties, we recognized a $ 0.1 million benefit, a $ 0.7 million expense, and a $ 0.9 million benefit in 2024, 2023, and 2022, respectively.

Reconciliation of Total Unrecognized Tax Benefits

2 unchanged sentences

Balance at beginning of year $ 20.7 $ 22.0 $ 30.4

Additions for tax positions related to the current year — — 3.7

Additions for tax positions related to prior years — 2.1 0.3

9 unchanged sentences

Generally, for the majority of state and foreign jurisdictions where we do business, periods prior to fiscal 2020 are no longer subject to examination.

We are currently being examined by the tax authorities of California, New York City, Montana, Massachusetts, and Oregon.

We are currently being examined by the City of New York City.

SEGMENT AND GEOGRAPHIC INFORMATION

9 unchanged sentences

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

Technical Solutions Technical Solutions specializes in facility infrastructure, mechanical and electrical services, including EV power design, installation and maintenance, as well as microgrid systems installations.

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

3 unchanged sentences

Financial Information by Reportable Segment

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023 2022

1 unchanged sentence

Manufacturing & Distribution 1,554.3 1,526.7 1,445.2

Education 880.4 834.7 830.8

Aviation 1,032.6 925.7 804.0

Education 904.0 880.4 834.7

Technical Solutions 809.3 674.2 626.8

$ 8,359.4 $ 8,096.4 $ 7,806.6

Operating profit

Operating profit (loss)

Business & Industry $ 307.0 $ 315.6 $ 334.9

Manufacturing & Distribution 166.3 161.7 161.8

49.7 47.1 61.5

Aviation 59.1 60.0 29.3

55.3 49.7 47.1

Technical Solutions (1)

3 unchanged sentences

( 433.1 ) ( 226.6 ) ( 284.5 )

Adjustment for income from unconsolidated affiliates, included in Aviation ( 3.9 ) ( 2.4 ) ( 2.1 )

Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions

( 6.5 ) ( 3.9 ) ( 2.4 )

Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions

7 unchanged sentences

Manufacturing & Distribution 12.2 13.1 13.4

Education 22.5 25.4 30.5

Aviation 12.6 9.6 8.2

Education 21.8 22.5 25.4

Technical Solutions 7.7 17.5 7.0

2 unchanged sentences

(1) Reflects a $ 7.6 million gain on the sale of assets during the year ended October 31, 2022.

(2) Reflects adjustments to the fair value of the contingent consideration payable related to the RavenVolt Acquisition of $ 95.7 million during the year ended October 31, 2024.

(3) Reflects adjustments to the fair value of the contingent consideration payable related to the RavenVolt Acquisition of $ 45.6 million and an employee retention credit totaling $ 24.0 million during the year ended October 31, 2023.

(3) Reflects accrued litigation settlement reserve totaling $ 142.9 million for the Bucio case during the year ended October 31, 2021.

Geographic Information Based on the Country in Which the Sale Originated (1)

Years Ended October 31,

Year Ended October 31,

(in millions) 2024 2023 2022

3 unchanged sentences

(1) Substantially all of our long-lived assets are related to U.S.

SUBSEQUENT EVENTS

Share Repurchase Program

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

Repurchases of our common stock may take place on the open market or otherwise, and all or part of the repurchases may be made pursuant to Rule 10b5-1 plans or in privately negotiated transactions.

The timing of repurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share price, and share availability.

Repurchased shares are retired and returned to an authorized but unissued status.

The Share Repurchase Program may be suspended or discontinued at any time without prior notice.

At December 13, 2023, authorization for $ 210.3 million of repurchases remained under the Share Repurchase Program.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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 8. Financial Statements and Supplementary Data