Greetings and welcome to the ABM Industries Inc. Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Paul Goldberg, Senior Vice President, Investor Relations. Thank you. You may begin.

Good morning, everyone, and welcome to ABM's Third Quarter 2023 Earnings Call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM. With me today are Scott Salmirs, our President and Chief Executive Officer; and Earl Ellis, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our third quarter 2023 financial results. A copy of that release and accompanying slide presentation can be found on our website abm.com. After Scott and Earl's prepared remarks, we will host the Q&A session. But before we begin, I would like to remind you that our call and presentation today contain predictions, estimates, and other forward-looking statements. Our use of the words, estimates, expects, and similar expressions are intended to identify these statements and they represent our current judgment of what the future holds. While we believe them to be reasonable, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially. These factors are described in the slide that accompanies our presentation as well as in our filings with the SEC. During the course of this call, certain non-GAAP financial information will be presented. A reconciliation of historical non-GAAP numbers to GAAP financial measures is available at the end of the presentation and on the company's website under the Investor tab. And with that, I would like to now turn the call over to Scott.

Thanks, Paul. Good morning and thank you all for joining us today to discuss our third quarter results. Third quarter revenue grew 3.4% to $2 billion, including 2.5% organic growth. Our aviation, education and manufacturing and distribution segments performed well, driven by robust air travel, new education clients and our strong market positioning in M&D. These solid results were partially offset by lower activity in bundled energy solutions and delayed project starts in our Technical Solutions group and by the softening market conditions for janitorial services in business and industry. Our teams are acting to resolve project delays and technical solutions, which we believe to be transient and we've also proactively adjusted our cost structure to better match the current demand environment in B&I. In addition to our cost management efforts, we have aggressively pursued price increases to cover the inflationary labor environment and reflects the value of the essential services we provide. I'll now discuss the demand environment for each of our industry groups. Let's begin with B&I. Office density rates remain relatively static in the third quarter at around 50% on a blended basis. Although the hybrid work model remains prevalent, we expect to see a gradual increase in the number of days per week employees spend at their office. In fact, many of our clients plan to mandate employees work an additional day per week in the office starting sometime after Labor Day. Accordingly, office density is likely to gradually improve, which should help stabilize our volume of work orders over time. However, we are beginning to see what has been so prevalent in the media that as office leases expire, many clients are downsizing their office footprint given hybrid work models and the macroeconomic environment. This puts pressure on the demand side for us until vacant…

Thank you, Scott, and good morning, everyone. For those of you following along with our earnings presentation, please turn to slide five. Third quarter revenue increased 3.4% to $2 billion, comprised of organic revenue growth of 2.5% and acquisition contribution of roughly 1%. Moving onto slide six. Net income in the third quarter was $98.1 million or $1.47 per diluted share, both up 73% as compared to last year. The increase in GAAP net income was driven by a gain from employee retention credits of $22.4 million. The adjustment of the fair value of contingent consideration of $37.2 million and tight expense controls, partially offset by higher interest expense and labor costs, project delays in ATS and lower commercial office space related volume. Adjusted net income of $52.8 million and adjusted earnings per diluted share of $0.79 were both down 16% from the prior year period. The year-over-year changes in adjusted net income and adjusted EPS primarily reflected higher interest expense and slightly lower income from operations, partially offset by cost management and benefits from price increase. Adjusted EBITDA was essentially flat with the prior year at $125.3 million and adjusted EBITDA margin was 6.4% versus 6.6% last year. The margin decline was largely reflective of inefficiencies related to project delays in ATS and the impact of lower volumes in B&I, partially offset by cost initiatives. Now turning to our segment results beginning on slide seven. B&I revenue declined 1% year-over-year to $1 billion mainly due to reduced demand in the commercial office market. Operating profit in B&I decreased to $78.9 million and operating margin declined to 7.7% as the impact of lower volume was partially offset by price increases and cost actions. Aviation revenue grew 17% to $238 million, marking the ninth consecutive quarter of year-over-year revenue growth. This…

Thanks, Earl. I couldn't be more pleased with our team's efforts in the face of macroeconomic headwinds and the challenges in commercial real estate. Their unrelenting focus on client service and winning new business, combined with the mixture of our end markets, the resiliency of our culture and the extraordinary talent of our teammates, gives me great confidence we will successfully navigate any near-term challenges. With that, let's take some questions.

Thank you. The floor is now open for questions. [Operator Instructions] Today's first question is coming from Tim Mulrooney of William Blair. Please go ahead.

Hey, this is Sam Kusswurm on for Tim. Scott, Earl hope you both are doing well.

Hey, thanks.

I guess to start here, you shared that you're expecting the commercial real estate market to remain soft in 2024 and EPS may be down year-over-year. If that proves true, I guess I'm wondering how you think about that in terms of reaching your ELEVATE goals in 2025.

Yes. Thanks for the question. Look, I think for us, I think we have to talk about 2021 when we set our ELEVATE goals and how much the market has changed, right? I mean we have this multigenerational structural shift in commercial real estate between hybrid work and the macroeconomic environment which is certainly going to put short-term pressure on us. And the interest rate environment has significantly changed since then, right? Not to mention what's happened with wage inflation, especially in the blue-collar segment. So that's definitely going to put pressure on us and we could see that pushing out our goals maybe a couple of years. But at the end of the day, we are firmly committed to these metrics and feel strongly we're going to hit our 7.2% margin, our free cash flow targets. The investments that we're making in ELEVATE. The ROI that we're seeing early on is so compelling between the hyper targeting tool and probably, although the year is not over, we believe we're going to hit a fifth consecutive year in sales growth. So we're excited about that. I mentioned in my prepared remarks that we're seeing the labor productivity tool and the pilots, having 10% gross margin uplift. So we're absolutely firmly committed to our targets. It's just, again, maybe extended a couple of years.

Got you. Appreciate that response. Maybe pivoting to your Technical Solution, but I think it was last quarter, there was some hope that the pause in some of your Technical Solution projects was going to reverse in the back half here. But now that's looking more like in 2024. Can you give us a pulse on how clients are feeling right now? And are the projects still considered paused or have any clients canceled them altogether.

Yes. No, that's a great question. There's been no cancellations. This is all part of our backlog, which are signed contracts. And I think for this -- these are big chunky projects, a big battery storage projects. And we had initially some delays because of supply chain. We got over those hurdles. But now to get these installations in, you have to go through permitting, you have to deal with the utilities. And to give you a context on these battery storage projects, these battery farms that we're putting in are the size of one, two, sometimes three football fields, right? And this is a new market that's not really matured yet, right? So I think it's new even for the local governments in terms of permitting. So we're seeing them pushed out. We're having two of our nine projected projects happen this year. So they're actually happening. It's just really delayed starts and a reflection of the maturity of the market. But I have to tell you, when we reflect on the RavenVolt acquisition and the whole microgrid space. I think the only thing that's happened in the last year is that we're more resolved that this was an amazing acquisition for us and absolutely the right space. I mean alternative energy is kind of the future of this country. And just to give you one quick anecdote, our Chief Operating Officer is Danish and Louis in Denmark over the summer. And he was noting that when they give the weather forecast in Denmark, they give the weather forecast and they talk about how much of the country is operating on alternative power. And in some days, it approaches 100% or more. So like this is the future. We're excited about it. I think what we're going to have to get used to at ABM is that with these big chunky projects, it could be lumpy. And the timing is just going to be tough when you're dealing on a quarter-by-quarter basis. So kind of we're learning that as well as we go along.

Got you. Thanks for the insights, Scott.

You got it.

Thank you. The next question is coming from Faiza Alwy of Deutsche Bank. Please go ahead.

Yes, hi. Good morning. So I wanted to follow up on that line of questioning. You mentioned a few things, Scott, as it relates to the ATS delays. You mentioned sort of higher interest rates and potentially lower ROI, the government permitting issues and the delay around EV charging installations. Can you help us think through sort of each of those factors like how much has that been an impact this year? And when do you expect each of these to resolve, so I have a follow-up after that.

Yes. I mean, why don't I focus on EV, maybe that would be helpful because I guess I just discussed the RavenVolt and microgrids. But with EV we had talked before Pfizer about the fact that we are shifting our strategy away from dealerships and more towards bigger fleet projects, big infrastructure projects and our pipeline is bursting with those projects, right? And that's going to -- we have line of sight to '24 for that. But our bridge to that was on a dealership with a big OEM and they shifted their production goals for this year. And because of that, the bridge that we had got a little fractured for the rest of this year because they've pushed out their rollout on the dealership side. So we'll see that coming to '24. And that's why we feel so confident about ATS in '24 between the microgrid projects that are getting pushed into next year and the dealership program that's going to ramp up on EV, we feel great about it. But it put pressure on the remainder of '24 and that's why you saw pressure in Q3. Yes. So that's kind of the EV story.

And if I just add to that. If you look at our longer-term financial goals, which Scott just mentioned, will probably get pushed out a couple of years. A lot of what was driving those benefits were really driven by our ELEVATE initiatives. And the good news is the benefits associated with ELEVATE are still very well intact. In fact, we've already probably reaped about 50% of those benefits to-date. Now some of the headwinds we've actually seen in the business that Scott alluded to, so the interest rate, the softness that we're seeing in CRE, the continued wage inflation that we're experiencing, some of those things will continue. So if I break it down, the interest rates, we believe, have kind of like plateaued, and we've now built that we're going to be building that into our projections to come. CRE, we expect softness to continue into 2004. And the wage inflation, the teams have really done a great job in counteracting that with price increases. So the good news is that some of these headwinds that we've seen that have actually offset the benefits with regards to ELEVATE will subside. And therefore, we still are expecting to hit those long-term ELEVATE benefits, however, probably two years out.

Okay. That's really helpful. I was going to follow up on that. I guess if I think about then your comment that 2024 EPS might be below $23 million, if ATS is going to sort of see this recovery and interest rates have stabilized, it seems like it's more around wages in the commercial real estate market, I guess, what is your opinion on the commercial real estate market? And sort of what inning are we in, in your opinion?

Yes. This is solely pinned on commercial real estate. Because Faiza, you have to think about it, 50% of our revenue base was in B&I, right? And when you have all the compression that's happening, I think the latest statistic is that tenants on average are taking 19% space, right? So that demand and that demand reduction is going to pull through to our EPS for next year. B&I is one of our highest margin segments. So there's no getting around that. But I would say where we become so resilient is a third of our revenue in B&I is in engineering, which is more stable and doesn't have the demand compression because you have the air condition space regardless of occupancy. But the other two-thirds is in that commercial real estate segment and we will see pressure on that. And the reason that we wanted to get that sentiment out there for next year, even ahead of guidance is, we typically grow 2% to 3% in B&I. And you can see with the compression that's going on, it becomes clear that, that could be in reverse. And it could be that negative 2% to 3%. And I think in context to everything that's going on with this massive structural shift in commercial real estate, the fact that we could look ahead to B&I and feel like we're only going to be down low single-digit. I mean, again, it speaks to the resilience of our business model. And you pair that with our flexible labor model and our ability to protect margin. I mean it's -- we think it becomes compelling, but there's just no way around the fact that we're not going to see the demand effect with the compression that's going on.

Got it. Thank you so much.

Sure.

Thank you. The next question is coming from Andy Wittmann of Baird. Please go ahead.

Okay. Thanks for taking my question guys and good morning. Your response so far to the questions have been helpful for the context in '24. I just wanted to touch on one other thing regarding that outlook that I think would be incremental. In your prepared remarks, Scott, you kind of talked about in the M&D segment, which has been a very good segment for you over the last several years, very good growth. Obviously, very good margins here. But here, you said that there's a large client that's got a rebid, and this is an area that you're going to see some revenue pressure here. Do you still expect that the M&D segment margin can show some growth even with some potential revenue pressure that you might be looking at there? I guess because as I go through the segments here, you made it very clear in the last response, B&I is the area where you're seeing the most pressure. These other areas seems like pretty good with ATS maybe being very good on a year-over-year basis next year. So I guess the one area that I want to get a better sense on is this M&D segment. Please?

Yes. That's great. Great, Andy. And like I'm in a weird position, right, because we're in advance of like providing guidance and finishing up our budgets, but I do want to give you color, and I want to be responsive to you. So let me start by saying like M&D is probably one of the best ideas from the management team in the last few years, and it's paid dividends to your point. And we're a little bit of a victim of our own success here because we have one very, very large client that we kind of grew up together with, right? And as part of their normal business process, they're going through a rebid and we're expecting to see revenue compression there. It just makes sense, right? We'll still end up with a disproportionate share of their work. But that's going to put pressure on the M&D. But if you kind of segment that outside of M&D, M&D as a whole is still going to grow high single-digit, low double-digit. It still has all the compelling factors about it. It's just we have to think about kind of the impediment with this one rebid, but we feel good about that segment. But I think it's just too early to tell whether or not -- this is going to be margin accretive next year. It's going to be flat, but we do think there's going to be some pressure on the revenue side. But again, just reaffirming, it's just such a terrific segment for us. So I think this is more about an episodic event than any kind of structural change.

Okay. That makes sense. I guess for my follow-up let's talk maybe about ATS. The early COVID money from the federal government impacted schools in several ways, but one of them was on capital projects for ventilation and air conditioning projects. Many schools have gone ahead and done those. And I think your business, correct me, if I'm wrong, did benefit from that. How much of some of the pressures that you're seeing in that part of, I mean, you talked about EV being good. You talked about microgrids being good, but this bundled Energy Solutions business, which is the education business largely is seeing some pressure. Is it just -- is it a tough compare from the federal dollars that's kind of propped up that market for a couple of years. I know you mentioned interest rates. But is there this other effect as well? Or do you not see that as being one of the reasons for some of the pressure you're seeing today there?

Yes. I think it's like -- I don't want to oversimplify it, but so much of this is weighted towards interest rates because what happens, Andy, is that these are all highly financed, almost 100% financed, right? So when a school is looking at their infrastructure and a large-scale project that they want to put forward, they do that against the interest rate environment and the ROI against it. And when interest rates go up like this, it just puts pressure on those ROIs. And then what starts happening as you start going through this triage process where there are some schools that irregardless of the ROI have to make these changes to their air conditioning systems to the lighting and they still move ahead. And that's why our BES segment isn't zero, right? It's just -- it's got pressure, but there are still projects that are happening. Where we're seeing the pressure is those projects that it's more of a nice to have. It's on the fringe, and now the ROIs get to a place where a lot of them aren't even canceling the projects, they're just kicking the can because they want to do them, but they're protracting them. So -- and that's why because we don't think the interest rate environment is going to dramatically change anytime soon, we think there could be pressure in '24. But the BES segment is kind of alive and well. And if you were to take like a five-year view, we're as excited as ever. But I think until we get a little relief on interest rates and the ROIs become more compelling, they'll have pressure. And now as we look at it, just to finish it up, as we start hunting again, we're now hunting for projects where it's not necessarily just about ROI on the fringe. We're looking at school districts where it's like they have to do these projects. But that takes time. There's a lead time on that. But it's -- interest rates is the majority of it, Andy.

Okay. Thanks for the commentary, guys. Have a good day.

Appreciate it.

Thanks.

Thank you. The next question is coming from Sean Eastman of KeyBanc Capital Markets. Please go ahead.

Hey, guys. This is Nick Breckenridge for Sean today. Yes, I just wanted to sort of ask more about some of those prepared remarks you made, Scott, particularly that comment about how the CRE conditions are going to flow through in the model in '24. Just if you could give more color into the sort of how that labor market tightness would that improve visibility on the out-year margin trends with just being sort of less, I mean, less occupancy rates are going to drive. I mean, maybe less more, I guess, more flexibility. Could you just provide more color on that, please?

Sure. I mean, look, I think the foundation of our B&I segment is the fact that we have this flexible labor model. So I'll just put it like simplistic terms, right? If a tenant's got five floors in the building and they go down to four floors, what happens the staff on that floor that gets vacated, we're allowed to release that staff, right? So that's how we end up protecting our margin through this is because we have this flexible labor model. So we think -- we think there's some positive trends, believe it or not, in terms of people coming back to work. But there is still this macroeconomic environment that's happening and clients are taking less space. So we are going to see contraction on that demand side. But again, we love the fact that we have this flexibility on the cost side. And that's the key to B&I. And that's why B&I has always been so successful through the years.

Awesome. Thanks for that. And then just one more sort of follow-up around ATS. Just sort of going forward and assuming that everything starts to flow through in terms of projects getting sort of taken out of backlog sort of the BES coming back is -- would you say you'd have more visibility onto ATS getting a sustained positive growth trend on the op income line. And would that be fair to say?

Absolutely, absolutely. As we look out over the next year or two, ATS we see going back to what it's historically been over many years, which is top line double-digit growth and bottom line double-digit growth there as well. So this is one of our most exciting segments and will continue to be so.

Awesome. Thanks, guys.

Thank you.

Thank you. The next question is coming from Marc Riddick of Sidoti. Please go ahead.

Hey, good morning.

Good morning.

Good morning.

So a lot of my questions have been answered. I was sort of curious as to whether you can sort of give us a bit of an update as to maybe some of the opportunities that you might see in the acquisition pipeline, valuations that you're seeing and maybe sort of your appetite as far as if there are some things out there that might make sense in this environment?

Yes. One of our biggest opportunities is our capital structure, right? I mean we're at 2.3 times leverage. So we have plenty of powder not only from an M&A standpoint, but share buyback from our dividend standpoint. We have a lot of levers to pull in '24, Mark, which we're excited about. And the M&A pipeline probably not as robust as it was a couple of years ago just because of the financial markets, right? But we still have a pipeline there is stuff that we're working on, and we'll update you as that happens. But thankfully our capital structure and our strong free cash flow is one of the accelerators for ABM as we move forward.

Excellent. And along those lines, with the investment spending for be it technology personnel and the like I know there's been really some of that as you prepare for future opportunities. Are there any areas that you feel as though as the timing or being able to pull the trigger on some of those types of investments? Has that changed at all? Or are there any areas that actually might maybe need to be accelerated more so than maybe what you may have thought a year ago?

No, I think we still -- we have our ELEVATE plan. We have our CADENCE. The majority of the funds for ELEVATE have been deployed now and is behind us, which is good, and that's why you're going to see an uptick in free cash flow over the next couple of years. And we're right on plan. We've got a lot going on here, but I have to tell you, as I said earlier, the ROI is proving out to be exactly what we wanted, if not better.

Okay. And then finally for me, just labor availability, I know it's always kind of -- can be a little tricky. I just want to talk a little bit about -- just as far as broad term wise, has that changed much over the last six months or so or are there any particular areas that maybe they've improved and -- or particular areas where it's maybe even gotten a little more difficult?

No, no, I was -- I'm glad you asked that question because I probably should have addressed that. We are seeing positive signs in the labor markets in terms of participation rate applicant flow. It's allowed us to reduce our overtime because we've been able to hire better. It doesn't change the fact, though, Mark, that wage inflation is still there. We're seeing that in the 5% range which is absolutely a headwind and we didn't predict this when we started ELEVATE. We were in like the 3% range. So to be kind of at 5% now, it's a big deal, but our operations team is such an amazing job on price increases and recovery. And we've said we've been in that 75% to 80% recovery range, which is best-in-class. So the good news is better Canada flow, more people coming in. We just need to get the wage inflation down and -- but we don't necessarily have a solve for that at this moment.

Great. Thank you very much.

Thanks, Marc.

Thank you. The next question is coming from Josh Chan of UBS. Please go ahead.

Hi. Good morning Scott, Earl and Paul. Thanks for taking my questions. Yes, I guess on your comments about 2024 EPS being slightly down, I guess, does that scenario require total revenue to be down? Because otherwise, I would have thought that the ATS recovery and a couple of small items could at least give you some EPS growth next year.

Yes. I don't think that necessarily means that our total revenue as an enterprise is going to be down. Certainly, it will be impeded. But I think you got to -- where we got to focus, Josh, is on the mix of business, right? And when B&I is going to be down possibly two or three points. Now remember, B&I as a segment is one of our highest performing margin segments, right? So it's really about a mix and so for us, the flow through of B&I being 50% of our book of business and that being down flows through as to why EPS could have that pressure on it. So it's clearly just business mix, but shouldn't let you believe that the firm will be down organically as a whole. We have segments that are firing on all cylinders right now. Just, again, hard to overcome one segment that's 50% of our revenue and high margin.

That's right. That's good color there. Thank you. And then my follow up. So I guess in the past, you've been able to do a good job of maintaining margins flattish to maybe even higher during downturn. You mentioned the flexible labor model. Could you talk about the ability to do that again in this downturn within B&I? What are the pluses and minuses of achieving that next year?

Yes, I think it's early to tell right now. We haven't formed our '24 guidance. But again, you hit it on the head with our flexible labor model. We are able to protect margins in each segment. And again I just don't -- I don't want to come out and give margin guidance now. But again on top of -- and I would say like on top of our Flex in the field. We also have the ability to do structural cost changes even on enterprise-wide, right? So we have -- we still have plenty of labor. And I guess the grounding point is, we still firmly believe we're going to be at 7.2% as our ELEVATE call in the future. So we've always said that it wasn't going to be a straight line. And again I don't think we could have predicted this massive structural change in commercial real estate. But even with that, we're resolved to hit our 7.2%.

Okay. Great. Thanks for the color and thanks for the time spent.

Thanks.

Thank you. The next question is coming from David Silver of CL King. Please go ahead.

Yeah, hi. Good morning. I'd like to start with a couple maybe for Earl. But in this quarter, there were a couple of big positive nonrecurring items, the employee retention credit and the contingent consideration adjustment. So firstly with employee retention, is that $22 million number. Is that the sum total of all of the credit or will that be adjusted or could there be incremental credits coming in the future? And then secondly, if you could just talk about the adjustment to RavenVolt purchase price. It's an incentive laden purchase structure that was established. And I think this -- I asked this question last time when the adjustment was smaller. But is this the case where the revenues are a little light, the adjusted EBITDA? Is this -- and you mentioned the project delays. I'm just wondering if this is potentially an unanticipated benefit? In other words, longer term, the business retains its full value, but for the incentive period you know maybe you're benefiting by some of these delays or permitting issues that you cited. So just some comments on those two, please.

Sure. Yes. So let me start with the question with regards to the ERC. So, yes, the majority of the credit has come in. We actually apply for all eligible credits. The majority has come in. We'll probably maybe see some more trickle in, but nothing significant. With regards to the contingent liability, as Scott mentioned earlier, a lot of the -- what we've actually seen within RavenVolt this year has been a result of the delays most notably based on delays in just permitting. So when you look at kind of like the first year, that's going to result in virtually no consideration or earn-out for this year. Then secondly, when you look at the forecast going forward and then you risk adjust that from an accounting perspective than discount it, just from an accounting perspective, it results in a lower contingent liability. Now having said that, the teams are more than ever committed and motivated to driving as much EBITDA and profit as possible. And so long-term, we are still very bullish and very optimistic in the value that this acquisition is going to create. One thing I do want to note is that when we did the deal model for RavenVolt, it did not assume and earn it. And it actually has a significant payback. So when you look long-term, I think it's still going to be value accretive, and we see great opportunities long-term.

Okay. Great. I'd like to go back to maybe the comment about the ATS backlog $450 million as of, I guess, end of July -- could you kind of benchmark that? I mean how does that compare to the backlog maybe at the beginning of this fiscal year or 12 months ago? Just how should we think about the growth in that backlog over like I guess the medium term? Thank you.

Yes. I mean it's as high as it's been. This is the backlog is so strong. And I think the significant part of the backlog is that it's happening in EV and microgrids. And that's what's compelling because as you know, that's been the areas of investment for the firm over the last couple of years. So I think it validates that we're playing in the right space. So backlog is strong.

Okay. And then maybe the last one, I'd like to pick up on Scott's comment just a minute or so ago regarding certain parts of your business that are firing on all cylinders, I believe you said. And look I know there are some issues maybe driving the sentiment this morning. But overall, I mean, I was looking at the organic growth numbers in aviation and manufacturing and distribution and education. And I mean, historically, those are great organic growth numbers. And I'm just wondering if you could highlight, are there some common themes? Is it -- are you gaining the organic growth in these areas due to better labor procurement and evaluation? Is it a bundled service offering? So in your core kind of bread and butter or segments where you're not affected by, let's say, the commercial real estate was. I mean what is the recipe that's kind of driving that historically well above average organic growth?

Yes. I think it's more about a strong focus on development, a strong focus on business development. We have a whole sales effectiveness area, utilizing tools like Salesforce and a CRM model, our hypertargeting tool that we invested in with ELEVATE where you can kind of zero in on opportunities and go after them with focus. It's just been a very strategic approach to business development and figuring out where we -- the term we use here is do we have the right to win in that space and it's just been paying dividends for us. So I think that's the key.

Thank you. At this time, I would like to turn the floor back over to management for closing comments.

Yes. I just want to thank everybody for participating today. Again, we've talked about some of the impediments, but we are as confident as ever about what's going on at ABM and excited to come back to you next quarter with our results and our full year guidance. But have a good fall and we'll see you in December. Thanks, everybody.

Ladies and gentlemen this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.