ABM Industries Incorporated
06/05/2026 | Press release | Distributed by Public on 06/05/2026 09:26
Quarterly Report for Quarter Ending April 30, 2026 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to facilitate an understanding of the results of operations and financial condition of ABM. This MD&A is provided as a supplement to, and should be read in conjunction with, our Financial Statements and our Annual Report on Form 10-K for the year ended October 31, 2025, which has been filed with the SEC. This MD&A contains forward-looking statements about our business, operations, and industry that involve risks and uncertainties, such as statements regarding our plans, objectives, expectations, and intentions. Our future results and financial condition may be materially different from those we currently anticipate. See "Forward-Looking Statements" for more information.
Throughout the MD&A, amounts and percentages may not recalculate due to rounding. Unless otherwise indicated, all information in the MD&A and references to years are based on our fiscal years, which end on October 31.
Business Overview
ABM is a leading provider of integrated facility solutions, customized by industry, with a mission to make a difference, every person, every day.
In 2021, we launched our multiyear ELEVATE transformation and systems modernization plan to strengthen our industry leadership, enhance our core service capabilities, and modernize our systems, processes, and tools - with a goal of advancing data integrity, technology enablement, and operational consistency to support long-term growth and value creation.
As this work progresses, ABM is entering a phase of turning modernization efforts into measurable performance improvements across our enterprise.
Looking ahead, ABM will continue to advance this transformation and modernization program where appropriate while optimizing systems and processes company-wide that we expect to drive performance, strengthen client trust, and create long-term value for shareholders.
Restructuring Program
In the fourth quarter of 2025, we launched a Restructuring Program to further streamline our operations and improve the efficiency of our support functions. This initiative is intended to enhance overall organizational effectiveness and ensure alignment between our cost structure and strategic growth objectives. Once fully implemented in 2026, this program is expected to deliver approximately $35.0 million of annualized cost savings. We recognized $20.1 million of cumulative restructuring charges under this program through the second quarter of 2026. The range of the remaining costs to be incurred related to the Restructuring Program cannot be reasonably estimated at this time.
We will continue to review our overhead and cost structure for efficiency opportunities under this program.
Segment Reporting
Our current reportable segments consist of B&I, M&D, Aviation, Education, and Technical Solutions, as further described below.
| REPORTABLE SEGMENTS AND DESCRIPTIONS | |||||
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B&I, our largest reportable segment, encompasses comprehensive facility solutions, including janitorial and maintenance, facilities engineering, and parking and transportation management to a diverse range of clients. Our expertise extends to commercial real estate properties, including corporate offices for high-tech clients, sports and entertainment venues, and both traditional hospitals and non-acute healthcare facilities. We typically provide these services pursuant to monthly fixed-price, square-foot, cost-plus, and parking arrangements (i.e., management reimbursement, leased location, or allowance) that are obtained through a competitive bid process as well as pursuant to work orders.
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M&D provides integrated facility services, engineering, janitorial and maintenance, and other specialized solutions to a variety of manufacturing, distribution, and data center, facilities. We typically provide these services pursuant to monthly fixed-price, square-foot, and cost-plus arrangements, that are obtained through a competitive bid process as well as pursuant to work orders.
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Aviation provides comprehensive support services to airlines and airports, including parking and transportation management, janitorial and maintenance services, passenger assistance, catering logistics, aircraft cabin maintenance, and transportation solutions. We typically provide services to clients in this segment under master services agreements. These agreements are typically re-bid upon renewal and are generally structured as monthly fixed-price, square-foot, cost-plus, parking, transaction-price, and hourly arrangements.
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Education delivers comprehensive facility services to public school districts, private schools, colleges, and universities. Our services include janitorial and custodial services, landscaping and grounds maintenance, facilities engineering, and parking management. These services are typically provided pursuant to monthly fixed-price, square-foot, and cost-plus arrangements that are obtained through either a competitive bid process or re-bid upon renewal as well as pursuant to work orders.
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Technical Solutions specializes in comprehensive facility infrastructure services, including mechanical and electrical systems, EV charging station design, installation, and maintenance, as well as microgrid systems encompassing uninterrupted power supply ("UPS") systems and power distribution units. These offerings are strategically leveraged for cross-selling across all our industry groups, both domestically and internationally. Contracts for this segment are generally structured as electrical contracting services for energy related products such as the installation of solar solutions, battery storage, distributed generation, and other specialized electric trade.
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Key Financial Highlights
•Revenues increased by $178.3 million, or 8.4%, to $2,290.0 million during the three months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of organic growth of 6.1% and acquisition growth of 2.3%. The organic revenue growth was due to net new business and expansion of business with existing customers, primarily in Aviation, and higher battery energy storage system, and related energy infrastructure projects, as well as microgrid projects within Technical Solutions. Acquisition growth was driven by a $48.5 million revenue increase from the WGNSTAR and LMC acquisitions.
•We had an increase in operating profit of $4.6 million, to $86.9 million, during the three months ended April 30, 2026, as compared to the prior year period. The increase was primarily attributed to increase in revenues and decrease in certain discrete transformational costs under our ELEVATE strategy.
The increase was partially offset by:
◦restructuring charges incurred during the second quarter of 2026 under our Restructuring Program.
•Our effective tax rates for the three months ended April 30, 2026, and April 30, 2025, were 27.9% and 29.4%, respectively, and were not impacted by any significant discrete items. Our effective tax rates for the six months ended April 30, 2026 and April 30, 2025 were 26.8% and 25.6%, respectively. Our effective tax rate for the six months ended April 30, 2026, was reduced by discrete items, primarily share based compensation. Our effective tax rate for the six months ended April 30, 2025, was reduced by discrete items, primarily return to provision adjustments related to our non-U.S. operations.
•Net cash provided by operating activities was $128.2 million for the six months ended April 30, 2026, as compared to cash used in operating activities of $73.9 million for the six months ended April 30, 2025. The $202.1 million improvement was primarily driven by favorable working capital changes, including improved cash collections and timing of payments.
•Dividends of $34.2 million were paid to shareholders, and dividends totaling $0.580 per common share were declared during the six months ended April 30, 2026. Additionally, we repurchased 0.1 million shares for $3.0 million, excluding excise taxes, during the three months ended April 30, 2026.
•At April 30, 2026, total outstanding borrowings under our Amended Credit Facility were $1.9 billion. At April 30, 2026, we had up to $518.9 million of borrowing capacity.
Results of Operations
Three Months Ended April 30, 2026, Compared with the Three Months Ended April 30, 2025
Consolidated
| Three Months Ended April 30, | |||||||||||||||||||||||
| (in millions, except per share amounts) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 2,290.0 | $ | 2,111.7 | $ | 178.3 | 8.4% | ||||||||||||||||
| Operating expenses | 2,013.0 | 1,841.0 | 172.0 | 9.3% | |||||||||||||||||||
| Gross margin | 12.1 | % | 12.8 | % | (72) bps | ||||||||||||||||||
| Selling, general and administrative expenses | 171.1 | 175.1 | (4.0) | (2.3)% | |||||||||||||||||||
| Restructuring and related expenses | 3.1 | - | 3.1 | NM* | |||||||||||||||||||
| Amortization of intangible assets | 15.9 | 13.2 | 2.7 | 20.5% | |||||||||||||||||||
| Operating profit | 86.9 | 82.3 | 4.6 | 5.5% | |||||||||||||||||||
| Income from unconsolidated affiliates | 1.0 | 1.4 | (0.4) | (28.6)% | |||||||||||||||||||
| Interest expense | (28.1) | (23.9) | (4.2) | (17.6)% | |||||||||||||||||||
| Income before income taxes | 59.7 | 59.8 | (0.1) | (0.1)% | |||||||||||||||||||
| Income tax provision | (16.6) | (17.6) | 1.0 | 5.3% | |||||||||||||||||||
| Net income | 43.1 | 42.2 | 0.9 | 2.1% | |||||||||||||||||||
| Other comprehensive income | |||||||||||||||||||||||
| Interest rate swaps | (1.6) | (5.4) | 3.8 | 70.3% | |||||||||||||||||||
| Foreign currency translation and other | (3.8) | 14.3 | (18.1) | NM* | |||||||||||||||||||
| Income tax benefit | 0.4 | 1.4 | (1.0) | (71.4)% | |||||||||||||||||||
| Comprehensive income | $ | 38.0 | $ | 52.5 | $ | (14.5) | (27.5)% | ||||||||||||||||
*Not meaningful
Revenues
Revenues increased by $178.3 million, or 8.4%, to $2,290.0 million during the three months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of organic growth of 6.1% and acquisition growth of 2.3%. The organic revenue growth was due to net new business and expansion of business with existing customers, primarily in Aviation, and higher battery energy storage system, and related energy infrastructure projects, as well as microgrid projects within Technical Solutions. Acquisition growth was driven by a $48.5 million revenue increase from the WGNSTAR and LMC acquisitions.
Operating Expenses
Operating expenses increased by $172.0 million, or 9.3%, to $2,013.0 million during the three months ended April 30, 2026, as compared to the prior year period. Gross margin decreased by 72 bps to 12.1% in the three months ended April 30, 2026, from 12.8% in the prior year period. The decrease in gross margin was primarily driven by contract and service mix in B&I,M&D, and Aviation. This was partially offset by operational efficiencies achieved through our Restructuring Program.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased by $4.0 million, or 2.3%, to $171.1 million during the three months ended April 30, 2026, as compared to the prior year period. The decrease in selling, general and administrative expenses was primarily attributable to:
•a $5.4 million decrease in certain discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics; and
•a $2.6 million decrease in accruals for potential legal settlements.
The decrease was partially offset by:
•a $2.5 million increase in compensation and related expenses primarily due to higher salaries, certain incentive plans, and headcount expansion from WGNSTAR acquisition at M&D; and
•a $2.2 million increase in acquisition and integration costs.
Amortization of Intangible Assets
Amortization of intangible assets increased by $2.7 million, or 20.5%, to $15.9 million during the three months ended April 30, 2026, as compared to the prior year period. The increase was primarily attributable to the amortization of intangibles acquired as part of the WGNSTAR Acquisition.
Interest Expense
Interest expense increased by $4.2 million, or 17.6%, to $28.1 million during the three months ended April 30, 2026, as compared to the prior year period, and was driven by higher borrowings from our Amended Credit Facility, including the First Incremental Term Loan, to fund the WGNSTAR Acquisition and working capital requirements.
Income Taxes from Operations
Our effective tax rates from income on operations for the three months ended April 30, 2026, and April 30, 2025, were 27.9% and 29.4%, respectively, resulting in provisions for taxes of $16.6 million and $17.6 million, respectively.
The WOTC and FEZ credit are federal tax credits available to employers for hiring individuals from certain targeted groups. We have historically benefited from these credits, and they expired on December 31, 2025. As of April 30, 2026, the credits have not been renewed and our effective tax rate for the three months ended April 30, 2026, includes a benefit only for those employees who started work before December 31, 2025.
Interest Rate Swaps
We had a loss of $1.6 million on interest rate swaps during the three months ended April 30, 2026, as compared to a loss of $5.4 million during the three months ended April 30, 2025, primarily due to underlying changes in the fair value of our interest rate swaps.
Foreign Currency Translation
We had a foreign currency translation loss of $3.8 million during the three months ended April 30, 2026, as compared to a foreign currency translation gain of $14.3 million during the three months ended April 30, 2025. This change was due to fluctuations in the exchange rate between the U.S. dollar ("USD") and the British pound sterling ("GBP"). Future gains and losses on foreign currency translation will be dependent upon changes in the relative value of foreign currencies to the USD and the extent of our foreign assets and liabilities.
Segment Information
Financial Information for Each Reportable Segment
| Three Months Ended April 30, | |||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Business & Industry | $ | 1,015.8 | $ | 1,015.5 | $ | 0.3 | -% | ||||||||||||||||
| Manufacturing & Distribution | 463.8 | 398.1 | 65.8 | 16.5% | |||||||||||||||||||
| Aviation | 310.8 | 260.1 | 50.7 | 19.5% | |||||||||||||||||||
| Education | 232.2 | 227.8 | 4.4 | 1.9% | |||||||||||||||||||
| Technical Solutions | 267.3 | 210.2 | 57.2 | 27.2% | |||||||||||||||||||
| $ | 2,290.0 | $ | 2,111.7 | $ | 178.3 | 8.4% | |||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Business & Industry | $ | 76.7 | $ | 83.0 | $ | (6.3) | (7.6)% | ||||||||||||||||
| Operating profit margin | 7.6 | % | 8.2 | % | (63) bps | ||||||||||||||||||
| Manufacturing & Distribution | 40.6 | 39.9 | 0.7 | 1.9% | |||||||||||||||||||
| Operating profit margin | 8.8 | % | 10.0 | % | (126) bps | ||||||||||||||||||
| Aviation | 16.3 | 16.5 | (0.2) | (0.9)% | |||||||||||||||||||
| Operating profit margin | 5.3 | % | 6.3 | % | (108) bps | ||||||||||||||||||
| Education | 16.4 | 13.8 | 2.6 | 18.8% | |||||||||||||||||||
| Operating profit margin | 7.0 | % | 6.0 | % | 100 bps | ||||||||||||||||||
| Technical Solutions | 16.8 | 13.4 | 3.4 | 25.0% | |||||||||||||||||||
| Operating profit margin | 6.3 | % | 6.4 | % | (11) bps | ||||||||||||||||||
| Corporate | (79.0) | (82.9) | 3.9 | 4.7% | |||||||||||||||||||
| Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions | (1.0) | (1.4) | 0.4 | 28.6% | |||||||||||||||||||
| Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions | - | (0.1) | 0.1 | 33.6% | |||||||||||||||||||
| $ | 86.9 | $ | 82.3 | $ | 4.6 | 5.5% | |||||||||||||||||
*Not meaningful
| Business & Industry | |||||||||||||||||||||||
| Three Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 1,015.8 | $ | 1,015.5 | $ | 0.3 | 0.03% | ||||||||||||||||
| Operating profit | 76.7 | 83.0 | (6.3) | (7.6)% | |||||||||||||||||||
| Operating profit margin | 7.6 | % | 8.2 | % | (63) bps | ||||||||||||||||||
B&I revenues increased by $0.3 million, or 0.03%, to $1,015.8 million during the three months ended April 30, 2026, as compared to the prior year period. The revenue increase was primarily driven by new client wins internationally partially offset by attrition of certain clients in the U.S. Management reimbursement revenues for this segment totaled $74.1 million and $71.8 million for the three months ended April 30, 2026 and 2025, respectively.
Operating profit decreased by $6.3 million, or 7.6%, to $76.7 million during the three months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 63 bps to 7.6% in the three months ended April 30, 2026, from 8.2% in the prior year period. The decrease in operating profit margin was primarily driven by contract and service mix, partially offset by operational efficiencies achieved through our Restructuring Program.
| Manufacturing & Distribution | |||||||||||||||||||||||
| Three Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 463.8 | $ | 398.1 | $ | 65.8 | 16.5% | ||||||||||||||||
| Operating profit | 40.6 | 39.9 | 0.7 | 1.9% | |||||||||||||||||||
| Operating profit margin | 8.8 | % | 10.0 | % | (126) bps | ||||||||||||||||||
M&D revenues increased by $65.8 million, or 16.5%, to $463.8 million during the three months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of acquisition growth of 9.2% and organic growth of 7.3%. Acquisition growth was driven by a $36.6 million revenue increase from the WGNSTAR Acquisition. The increase in organic revenue was primarily attributable to the expansion of business with existing clients and new business wins.
Operating profit increased by $0.7 million, or 1.9%, to $40.6 million during the three months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 126 bps to 8.8% in the three months ended April 30, 2026, from 10.0% in the prior year period. The decrease in operating profit margin was primarily attributable to contract mix and investments made in the second half of 2025 to hire certain technical expertise to support future growth.
| Aviation | |||||||||||||||||||||||
| Three Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 310.8 | $ | 260.1 | $ | 50.7 | 19.5% | ||||||||||||||||
| Operating profit | 16.3 | 16.5 | (0.2) | (0.9)% | |||||||||||||||||||
| Operating profit margin | 5.3 | % | 6.3 | % | (108) bps | ||||||||||||||||||
Aviation revenues increased by $50.7 million, or 19.5%, to $310.8 million during the three months ended April 30, 2026, as compared to the prior year period. The increase was primarily attributable to new business wins domestically in the second half of 2025, and internationally in the first half of 2026, and scope expansions with existing clients. Management reimbursement revenues for this segment totaled $13.9 million and $12.6 million for the three months ended April 30, 2026 and 2025, respectively.
Operating profit decreased by $0.2 million, or 0.9%, to $16.3 million for the three months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 108 bps to 5.3% in the three months ended April 30, 2026. The operating profit margin decreased primarily due to contract and service mix as well as weather-related disruptions.
| Education | |||||||||||||||||||||||
| Three Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase | ||||||||||||||||||||
| Revenues | $ | 232.2 | $ | 227.8 | $ | 4.4 | 1.9% | ||||||||||||||||
| Operating profit | 16.4 | 13.8 | 2.6 | 18.8% | |||||||||||||||||||
| Operating profit margin | 7.0 | % | 6.0 | % | 100 bps | ||||||||||||||||||
Education revenues increased by $4.4 million, or 1.9%, to $232.2 million during the three months ended April 30, 2026, as compared to the prior year period. The increase was primarily attributable to price escalations on certain contracts.
Operating profit increased by $2.6 million, or 18.8%, to $16.4 million for the three months ended April 30, 2026, as compared to the prior year period. Operating profit margin increased by 100 bps to 7.0% in the three months ended April 30, 2026, from 6.0% in the prior year period. The increase in operating profit margin was primarily attributable to favorable pricing and labor management, including strict control over overtime cost.
| Technical Solutions | |||||||||||||||||||||||
| Three Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 267.3 | $ | 210.2 | $ | 57.2 | 27.2% | ||||||||||||||||
| Operating profit | 16.8 | 13.4 | 3.4 | 25.0% | |||||||||||||||||||
| Operating profit margin | 6.3 | % | 6.4 | % | (11) bps | ||||||||||||||||||
Technical Solutions revenues increased by $57.2 million, or 27.2%, to $267.3 million during the three months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of organic growth of 21.5% and acquisition growth of 5.7%. The organic revenue growth was primarily driven by battery energy storage system and related energy infrastructure projects as well as microgrid projects. Acquisition growth was driven by a $12.0 million revenue increase from the LMC Acquisition.
Operating profit increased by $3.4 million, or 25.0%, to $16.8 million during the three months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 11 bps to 6.3% in the three months ended April 30, 2026, from 6.4% in the prior year period. The decrease in operating profit margin was primarily attributable to service mix.
| Corporate | |||||||||||||||||||||||
| Three Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Decrease | ||||||||||||||||||||
| Corporate expenses | $ | (79.0) | $ | (82.9) | $ | 3.9 | 4.7 | % | |||||||||||||||
Corporate expenses decreased by $3.9 million, or 4.7%, to $79.0 million during the three months ended April 30, 2026, as compared to the prior year period. The decrease in corporate expenses was primarily attributable to:
•a $5.4 million decrease in certain discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics; and
•a $3.2 million decrease in compensation and related expenses primarily due to lower expenses under certain incentive plans.
The decrease was partially offset by:
•a $3.1 million increase in restructuring charges under our Restructuring Program; and
•a $2.3 million increase in costs associated with systems' go-live.
Results of Operations
Six Months Ended April 30, 2026, Compared with the Six Months Ended April 30, 2025
Consolidated
| Six Months Ended April 30, | |||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 4,533.5 | $ | 4,226.6 | $ | 306.9 | 7.3% | ||||||||||||||||
| Operating expenses | 3,996.5 | 3,696.1 | 300.4 | 8.1% | |||||||||||||||||||
| Gross margin | 11.8 | % | 12.6 | % | (71) bps | ||||||||||||||||||
| Selling, general and administrative expenses | 340.9 | 344.1 | (3.2) | (1.0)% | |||||||||||||||||||
| Restructuring and related | 6.8 | - | 6.8 | NM* | |||||||||||||||||||
| Amortization of intangible assets | 27.9 | 26.5 | 1.4 | 5.2% | |||||||||||||||||||
| Operating profit | 161.6 | 159.9 | 1.7 | 1.1% | |||||||||||||||||||
| Income from unconsolidated affiliates | 2.4 | 2.1 | 0.3 | 12.8% | |||||||||||||||||||
| Interest expense | (52.1) | (46.8) | (5.3) | (11.4)% | |||||||||||||||||||
| Income before income taxes | 111.9 | 115.2 | (3.3) | (2.9)% | |||||||||||||||||||
| Income tax provision | (30.0) | (29.5) | (0.5) | (1.9)% | |||||||||||||||||||
| Net income | 81.8 | 85.8 | (4.0) | (4.6)% | |||||||||||||||||||
| Other comprehensive income (loss) | |||||||||||||||||||||||
| Interest rate swaps | (3.5) | (6.5) | 3.0 | (46.8)% | |||||||||||||||||||
| Foreign currency translation and other | 5.7 | 6.7 | (1.0) | (14.6)% | |||||||||||||||||||
| Income tax benefit | 0.9 | 1.7 | (0.8) | (48.2)% | |||||||||||||||||||
| Comprehensive income | $ | 84.9 | $ | 87.6 | $ | (2.7) | (3.1)% | ||||||||||||||||
*Not meaningful
Revenues
Revenues increased by $306.9 million, or 7.3%, to $4,533.5 million during the six months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of organic growth of 5.8% and acquisition growth of 1.5%. The organic revenue growth was primarily driven by net new business and expansion of business with existing customers, primarily within Aviation and M&D, as well as higher project revenues for battery energy storage system and related energy infrastructure projects, and microgrid projects within Technical Solutions. Acquisition growth was driven by a $61.5 million revenue increase from the WGNSTAR and LMC acquisitions.
Operating Expenses
Operating expenses increased by $300.4 million, or 8.1%, to $3,996.5 million during the six months ended April 30, 2026, as compared to the prior year period. Gross margin decreased by 71 bps to 11.8% in the six months ended April 30, 2026, from 12.6% in the six months ended April 30, 2025. The decrease in gross margin was primarily driven by contract and service mix within B&I, M&D, and Aviation, and weather-related impacts in Aviation and Technical Solutions, partially offset by operational efficiencies, particularly in managing overtime, in Education.
Selling, General and Administrative Expenses
Selling, general and administrative expenses decreased by $3.2 million, or 1.0%, to $340.9 million during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025. The decrease in selling, general and administrative expenses was primarily attributable to:
•a $6.3 million decrease in accruals for potential legal settlements; and
•a $4.7 million decrease in certain discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics.
The decrease was partially offset by:
•a $5.3 million increase in costs associated with systems' go-live; and
•a $1.9 million increase in compensation and related expenses primarily due to higher salaries, certain incentive plans, and headcount expansion from the WGNSTAR Acquisition within M&D.
Amortization of Intangible Assets
Amortization of intangible assets increased by $1.4 million, or 5.2%, to $27.9 million during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025. This increase was due to the amortization of intangibles acquired as part of the WGNSTAR Acquisition.
Interest Expense
Interest expense increased by $5.3 million to $52.1 million during the six months ended April 30, 2026, as compared to the six months ended April 30, 2025. The increase was driven by higher borrowings from our Amended Credit Facility, including the First Incremental Term Loan, to fund the WGNSTAR Acquisition and working capital requirements.
Income Taxes from Operations
Our effective tax rates on income from operations for the six months ended April 30, 2026, and April 30, 2025, were 26.8% and 25.6%, respectively, resulting in provisions for taxes of $30.0 million and $29.5 million, respectively.
Our effective tax rate for the six months ended April 30, 2026, was reduced by discrete items, primarily share based compensation. Our effective tax rate for the six months ended April 30, 2025, was reduced by discrete items, primarily return to provision adjustments related to our non-U.S. operations.
Interest Rate Swaps
We had a loss of $3.5 million during the six months ended April 30, 2026, as compared to a loss of $6.5 million during the six months ended April 30, 2025, primarily due to underlying changes in the fair value of our interest rate swaps.
Foreign Currency Translation
We had a foreign currency translation gain of $5.7 million during the six months ended April 30, 2026, as compared to a foreign currency translation gain of $6.7 million during the six months ended April 30, 2025. This change was due to fluctuations in the exchange rate between the USD and the GBP. Future gains and losses on foreign currency translation will be dependent upon changes in the relative value of foreign currencies to the USD and the extent of our foreign assets and liabilities.
Segment Information
Financial Information for Each Reportable Segment
| Six Months Ended April 30, | |||||||||||||||||||||||
| (in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Business & Industry | $ | 2,080.9 | $ | 2,038.4 | $ | 42.5 | 2.1% | ||||||||||||||||
| Manufacturing & Distribution | 886.1 | 792.4 | 93.8 | 11.8% | |||||||||||||||||||
| Aviation | 608.5 | 530.2 | 78.3 | 14.8% | |||||||||||||||||||
| Education | 460.9 | 453.2 | 7.7 | 1.7% | |||||||||||||||||||
| Technical Solutions | 497.1 | 412.4 | 84.6 | 20.5% | |||||||||||||||||||
| $ | 4,533.5 | $ | 4,226.6 | $ | 306.9 | 7.3% | |||||||||||||||||
| Operating profit | |||||||||||||||||||||||
| Business & Industry | $ | 156.4 | $ | 162.4 | $ | (6.0) | (3.7)% | ||||||||||||||||
| Operating profit margin | 7.5 | % | 8.0 | % | (45) bps | ||||||||||||||||||
| Manufacturing & Distribution | 77.0 | 79.3 | (2.3) | (2.9)% | |||||||||||||||||||
| Operating profit margin | 8.7 | % | 10.0 | % | (132) bps | ||||||||||||||||||
| Aviation | 28.9 | 28.7 | 0.2 | 0.6% | |||||||||||||||||||
| Operating profit margin | 4.7 | % | 5.4 | % | (67) bps | ||||||||||||||||||
| Education | 38.0 | 27.8 | 10.2 | 36.6% | |||||||||||||||||||
| Operating profit margin | 8.2 | % | 6.1 | % | 211 bps | ||||||||||||||||||
| Technical Solutions | 25.2 | 30.0 | (4.8) | (15.9)% | |||||||||||||||||||
| Operating profit margin | 5.1 | % | 7.3 | % | (220) bps | ||||||||||||||||||
| Corporate | (160.9) | (166.1) | 5.2 | 3.1% | |||||||||||||||||||
| Adjustment for income from unconsolidated affiliates, included in Aviation and Technical Solutions | (2.4) | (2.1) | (0.3) | (12.8)% | |||||||||||||||||||
| Adjustment for tax deductions for energy efficient government buildings, included in Technical Solutions | (0.6) | (0.1) | (0.5) | NM* | |||||||||||||||||||
| $ | 161.6 | $ | 159.9 | $ | 1.7 | 1.1% | |||||||||||||||||
*Not meaningful
| Business & Industry | |||||||||||||||||||||||
| Six Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 2,080.9 | $ | 2,038.4 | $ | 42.5 | 2.1% | ||||||||||||||||
| Operating profit | 156.4 | 162.4 | (6.0) | (3.7)% | |||||||||||||||||||
| Operating profit margin | 7.5 | % | 8.0 | % | (45) bps | ||||||||||||||||||
B&I revenues increased by $42.5 million, or 2.1%, to $2,080.9 million during the six months ended April 30, 2026, as compared to the prior year period. The revenue increase was primarily driven by client expansions both domestic and international, partially offset by attrition of certain clients in the second quarter of 2026. Management reimbursement revenues for this segment totaled $147.9 million and $143.1 million for the six months ended April 30, 2026 and 2025, respectively.
Operating profit decreased by $6.0 million, or 3.7%, to $156.4 million during the six months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 45 bps to 7.5% in the six months ended April 30, 2026, from 8.0% in the six months ended April 30, 2025. The decrease in operating profit margin was primarily driven by contract and service mix.
| Manufacturing & Distribution | |||||||||||||||||||||||
| Six Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 886.1 | $ | 792.4 | $ | 93.8 | 11.8% | ||||||||||||||||
| Operating profit | 77.0 | 79.3 | (2.3) | (2.9)% | |||||||||||||||||||
| Operating profit margin | 8.7 | % | 10.0 | % | (132) bps | ||||||||||||||||||
M&D revenues increased by $93.8 million, or 11.8%, to $886.1 million during the six months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of organic growth of 7.2% and acquisition growth of 4.6%. The increase in organic revenue was primarily attributable to the expansion of business with existing clients and new business wins. Acquisition growth was driven by a $36.6 million revenue increase from the WGNSTAR Acquisition.
Operating profit decreased by $2.3 million, or 2.9%, to $77.0 million during the six months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 132 bps to 8.7% in the six months ended April 30, 2026, from 10.0% in the six months ended April 30, 2025. The decrease in operating profit margin was primarily attributable to contract mix and investments made in the second half of 2025 to hire certain technical expertise to support future growth.
| Aviation | |||||||||||||||||||||||
| Six Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 608.5 | $ | 530.2 | $ | 78.3 | 14.8% | ||||||||||||||||
| Operating profit | 28.9 | 28.7 | 0.2 | 0.6% | |||||||||||||||||||
| Operating profit margin | 4.7 | % | 5.4 | % | (67) bps | ||||||||||||||||||
Aviation revenues increased by $78.3 million, or 14.8%, to $608.5 million during the six months ended April 30, 2026, as compared to the prior year period. The increase was primarily attributable to new business and scope expansions with the existing clients both domestically and internationally. Management reimbursement revenues for this segment totaled $29.5 million and $23.2 million for the six months ended April 30, 2026 and 2025, respectively.
Operating profit increased by $0.2 million, or 0.6%, to $28.9 million during the six months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 67 bps to 4.7% in the six months ended April 30, 2026, from 5.4% in the six months ended April 30, 2025. The decrease was primarily attributable to contract and service mix as well as weather-related disruptions.
| Education | |||||||||||||||||||||||
| Six Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase | ||||||||||||||||||||
| Revenues | $ | 460.9 | $ | 453.2 | $ | 7.7 | 1.7% | ||||||||||||||||
| Operating profit | 38.0 | 27.8 | 10.2 | 36.6% | |||||||||||||||||||
| Operating profit margin | 8.2 | % | 6.1 | % | 211 bps | ||||||||||||||||||
Education revenues increased by $7.7 million, or 1.7%, to $460.9 million during the six months ended April 30, 2026, as compared to the prior year period. The increase was primarily attributable to net new business and expansion of business with existing customers.
Operating profit increased by $10.2 million, or 36.6%, during the six months ended April 30, 2026, as compared to the prior year period. Operating profit margin increased by 211 bps to 8.2% in the six months ended April 30, 2026, from 6.1% in the six months ended April 30, 2025. The increase in operating profit margin was primarily attributable to operational efficiencies, particularly in managing overtime, aided by the impact of weather-related school closures on operating costs.
| Technical Solutions | |||||||||||||||||||||||
| Six Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Increase / (Decrease) | ||||||||||||||||||||
| Revenues | $ | 497.1 | $ | 412.4 | $ | 84.6 | 20.5% | ||||||||||||||||
| Operating profit | 25.2 | 30.0 | (4.8) | (15.9)% | |||||||||||||||||||
| Operating profit margin | 5.1 | % | 7.3 | % | (220) bps | ||||||||||||||||||
Technical Solutions revenues increased by $84.6 million, or 20.5%, to $497.1 million during the six months ended April 30, 2026, as compared to the prior year period. Revenue growth was comprised of organic growth of 14.5% and acquisition growth of 6.0%. The organic revenue increase was primarily driven by battery energy storage system and related energy infrastructure projects, microgrid projects, and mechanical projects. Acquisition growth was driven by a $24.9 million revenue increase from the LMC Acquisition.
Operating profit decreased by $4.8 million, or 15.9%, to $25.2 million during the six months ended April 30, 2026, as compared to the prior year period. Operating profit margin decreased by 220 bps to 5.1% in the six months ended April 30, 2026, from 7.3% in the six months ended April 30, 2025. The decrease in operating profit margin was primarily attributable to service mix, as well as temporary weather-related delays in the completion of certain projects.
| Corporate | |||||||||||||||||||||||
| Six Months Ended April 30, | |||||||||||||||||||||||
| ($ in millions) | 2026 | 2025 | Decrease | ||||||||||||||||||||
| Corporate expenses | $ | (160.9) | $ | (166.1) | $ | 5.2 | 3.1% | ||||||||||||||||
Corporate expenses decreased by $5.2 million, or 3.1%, to $160.9 million during the six months ended April 30, 2026, as compared to the prior year period. The decrease in corporate expenses was primarily attributable to:
•a $5.5 million decrease in accruals for potential legal settlements;
•a $4.7 million decrease in certain discrete transformational costs under our ELEVATE strategy for developing the new ERP system, client-facing technology, workforce management tools, and data analytics; and
•a $3.2 million decrease in compensation and related expenses primarily due to lower expenses under certain incentive plans.
This decrease was partially offset by:
•a $6.8 million increase in restructuring charges under our Restructuring Program; and
•a $4.2 million increase in costs associated with systems' go-live.
Liquidity and Capital Resources
Our primary sources of liquidity are operating cash flows and borrowing capacity under our Amended Credit Facility. We assess our liquidity in terms of our ability to generate cash to fund our short- and long-term cash requirements. As such, we project our anticipated cash requirements as well as cash flows generated from operating activities to meet those needs.
In addition to normal working capital requirements, we anticipate that our short- and long-term cash requirements will include funding legal settlements, insurance claims, dividend payments, capital expenditures, share repurchases, mandatory loan repayments, contingent consideration payments from acquisitions, and systems and technology transformation initiatives under our ELEVATE strategy. We anticipate long-term cash uses may also include strategic acquisitions. On a long-term basis, we will continue to rely on our Amended Credit Facility for any long-term funding not provided by operating cash flows.
We believe that our operating cash flows and borrowing capacity under our Amended Credit Facility are sufficient to fund our cash requirements for the next 12 months. In the event that our plans change or our cash requirements are greater than we anticipate, we may need to access the capital markets to finance future cash requirements. However, there can be no assurance that such financing will be available to us should we need it or, if available, that the terms will be satisfactory to us and not dilutive to existing shareholders.
Credit Facility
On September 1, 2017, we refinanced and replaced our then-existing $800.0 million credit facility with a new senior, secured five-year syndicated credit facility, consisting of a $900.0 million revolver and an $800.0 million amortizing term loan. In accordance with terms of the Credit Facility, the revolver was reduced to $800.0 million on September 1, 2018. On February 26, 2025, we amended and restated the Credit Facility (the "Amended Credit Facility"), extending the maturity date to February 26, 2030, and increasing the capacity of the revolving credit facility from $1.3 billion to $1.6 billion and the then-remaining term loan outstanding from $528.1 million to $600.0 million. The Amended Credit Facility provides for the issuance of up to $250.0 million for standby letters of credit and the issuance of up to $100.0 million in swingline advances.
The Amended Credit Facility contains certain covenants, including a maximum total net leverage ratio of 5.00 to 1.00, a maximum secured net leverage ratio of 4.00 to 1.00, and a minimum interest coverage ratio of 1.50 to 1.00, as well as other financial and non-financial covenants. 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. Our borrowing capacity is subject to, and limited by, compliance with the covenants described above. At April 30, 2026, we were in compliance with these covenants.
On February 3, 2026, we entered into the First Amendment to the Amended Credit Facility to provide for the First Incremental Term Loan in an aggregate principal amount equal to $255.0 million. The terms and conditions that apply to the First Incremental Term Loan are substantially the same as the terms and conditions that apply to the other term loans outstanding under the Amended Credit Facility. No amounts under the Amended Credit Facility were repaid as a result of the execution of the First Incremental Term Loan.
During the six months ended April 30, 2026, we made principal payments under the term loan of $18.2 million. At April 30, 2026, the total outstanding borrowings under our Amended Credit Facility in the form of cash borrowings and standby letters of credit were $1.9 billion and $23.5 million, respectively, and our weighted average interest rate on all outstanding borrowings, excluding letters of credit, was 5.66%. At April 30, 2026, we had up to $518.9 million of borrowing capacity.
Reinvestment of Foreign Earnings
We plan to reinvest our foreign earnings to fund future non-U.S. growth and expansion, and we do not anticipate remitting such earnings to the United States.
IFM Insurance Company
IFM Assurance Company ("IFM") is a wholly owned captive insurance company that we formed in 2015. IFM is part of our enterprise-wide, multiyear insurance strategy that is intended to better position our risk and safety programs and provide us with increased flexibility in the end-to-end management of our insurance programs. IFM began providing coverage to us as of January 1, 2015.
Share Repurchases
We repurchased shares under the share repurchase program during the three months ended April 30, 2026, as summarized below. 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. The timing of repurchases is at our discretion and will depend upon several factors, including market and business conditions, future cash flows, share price, share availability, and other factors. 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 April 30, 2026, authorization for $89.0 million of repurchases remained under our share repurchase program.
| (in millions, except per share amounts) |
Three Months Ended April 30, 2026 |
Six Months Ended April 30, 2026 | ||||||||||||
| Total number of shares purchased | 0.07 | 2.13 | ||||||||||||
|
Average price paid per share(1)
|
$ | 45.61 | $ | 44.17 | ||||||||||
|
Total cash paid for share repurchases(1)
|
$ | 3.0 | $ | 94.1 | ||||||||||
(1) Average price paid per share and total cash paid for share repurchases does not include any excise tax for share repurchases as part of the Inflation Reduction Act of 2022.
Cash Flows
In addition to revenues and operating profit, our management views operating cash flows as a good indicator of financial performance, because strong operating cash flows provide opportunities for growth both organically and through acquisitions. Operating cash flows primarily depend on: revenue levels; the quality and timing of collections of accounts receivable; the timing of payments to suppliers and other vendors; the timing and amount of income tax payments; and the timing and amount of payments on insurance claims and legal settlements.
| Six Months Ended April 30, | |||||||||||
| (in millions) | 2026 | 2025 | |||||||||
| Net cash provided by (used in) operating activities | $ | 128.2 | $ | (73.9) | |||||||
| Net cash used in investing activities | (298.4) | (31.6) | |||||||||
| Net cash provided by financing activities | 159.9 | 98.7 | |||||||||
Operating Activities
Net cash provided by operating activities was $128.2 million for the six months ended April 30, 2026, as compared to cash used in operating activities of $73.9 million during the six months ended April 30, 2025. The $202.1 million improvement was primarily driven by favorable working capital changes, including improved cash collections and timing of payments.
Investing Activities
Net cash used in investing activities increased by $266.8 million during the six months ended April 30, 2026, as compared to the prior year period. This increase was primarily due to the WGNSTAR Acquisition.
Financing Activities
Net cash provided by financing activities was $159.9 million during the six months ended April 30, 2026, as compared to net cash provided by financing activities of $98.7 million during the six months ended April 30, 2025. This quarter's activity was primarily related to the First Incremental Term Loan.
Contingencies
For disclosures on contingencies, see Note 11, "Commitments and Contingencies," of the Notes to unaudited Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Critical Accounting Policies and Estimates
Our Financial Statements are prepared in accordance with U.S. GAAP, which require us to make certain estimates in the application of our accounting policies based on the best assumptions, judgments, and opinions of our management. There have been no significant changes to our critical accounting policies and estimates. For a description of our critical accounting policies, see Item 7., "Management's Discussion and Analysis of Financial Condition and Results of Operations," in our Annual Report on Form 10-K for the year ended October 31, 2025.
Recently Issued Accounting Pronouncements
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Accounting Standard Updates
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Topic | Summary |
Effective Date/ Method of Adoption |
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| 2023-09 | Income Taxes (Topic 740): Improvements to Income Tax Disclosures | This ASU, issued in December 2023, is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in this ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. We are currently evaluating the impact of implementing this guidance on our financial statements. |
This ASU is effective for fiscal years beginning after December 15, 2024, with early adoption permitted.
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| 2024-03 | Income Statement Reporting Comprehensive Income Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses | This ASU, issued in November 2024, is intended to improve financial reporting by requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements at interim and annual reporting periods. We are currently evaluating the impact of implementing this guidance on our financial statements. |
This ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.
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| 2025-06 | Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software |
This ASU, issued in September 2025, removes all references to prescriptive and sequential software development stages (referred to as "project stages") throughout Subtopic 350-40 and requires the capitalization of software costs to begin when 1) management has authorized and committed to funding the software project, and 2) it is probable that the project will be completed and the software will be used to perform the function intended.
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This ASU is effective for fiscal years beginning after December 15, 2027, and for interim periods within those annual reporting periods, with early adoption permitted. | |||||||||||||||||
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2025-11
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Interim Reporting (Topic 270): Narrow-Scope Improvements
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This ASU, issued in December 2025, improves the guidance in Topic 270, Interim Reporting, by improving the navigability of the required interim disclosures and clarifying when that guidance is applicable. The amendments also add a principle that requires entities to disclose events since the end of the last annual reporting period that have a material impact on the entity. We are currently evaluating the impact of implementing this guidance on our financial statements.
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This ASU is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.
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