Greetings welcome to the ABM conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. David Gold. Please go ahead. Thank you for joining us today. With us today is Scott Salmirs, our President and Chief Executive Officer. Earl Ellis, our Executive Vice President and Chief Financial Officer, will join for Q&A. We issued a press release earlier today announcing a definitive agreement to acquire ABLE Services. A copy of this release and an accompanying slide presentation we will be referring to can be found on our corporate website under the investor relations section. 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 estimate, expect, and similar expressions are intended to identify these statements. Statements represent our current judgment of what the future holds. While we believe them to be reasonable, these statements are subject to risks and uncertainties that could cause our actual results to differ materially. These factors are described in a slide that accompanies our presentation as well as our filings with the SEC. I would now like to turn the call over to Scott. Thank you David and thank you all for joining us to discuss ABM's pending acquisition of Able Services, a transaction that we believe will create significant value for all of our stakeholders. There is a slide presentation posted on our website under the investor relations header that I'll be referring to. We're very pleased to announce this acquisition. There are several key takeaways that I want to highlight. First, we are buying quality. Able is a leading provider of janitorial and engineering services with more than 90 years of operating excellence. They have an impressive client roster, a national footprint, and more than 13,000 employees. It's a company that we've long admired and one that will increase our scale, expand our capabilities, and accelerate our long-term growth. Second, this jumpstarts the new strategic plan that we've developed to accelerate our revenue growth and margin expansion in the coming years by strengthening our engineering capabilities and expanding our janitorial services in attractive geographies at a time of heightened demand for extra cleaning and disinfecting services. Third, we expect the transaction to be accretive to adjusted EPS from day one. After completion, we'll have a very manageable leverage ratio of approximately 3 x. With both companies having strong free cash flow generation, the ratio should decline in short order. Fourth, this acquisition clearly demonstrates how attractive ABM is as a potential acquirer when high-quality assets become available. Let's take a closer look at the strategic importance of the transaction. Please turn to slide three. The combination of ABM and Able is a compelling strategic and cultural combination, joining two trusted and experienced providers of building services. Starting with culture, we are excited to find a company that is such a strong fit. We share many core values with Able, as well as a long history born from both companies' family-founded roots in San Francisco. Like ABM, Able has grown and succeeded over many decades through a commitment to integrity and a focus on delivering exceptional service to clients. Able brings significant scale to our core service lines, expanding both our engineering and janitorial capabilities. Two areas that we see as key long-term growth drivers for ABM. In fact, our combined stationary engineering capabilities, together with our Technical Solutions services, will represent revenues of close to $2 billion. With this increased scale, ABM will be better able to address heightened client focus on sustainability and energy efficiency, as well as the need to maintain cleaner, healthier, and more productive environments. Additionally, we'll gain approximately $400 million of revenue in janitorial services at a time when safety and health are of primary importance to commercial clients. As you know, our EnhancedClean is a comprehensive service that provides rigorous cleaning and disinfecting by trained professionals. Our ability to rapidly deliver virus protection services developed by our advisory council of infectious disease and industrial hygiene experts has distinguished ABM during the pandemic and underscored the unique value that we can provide. We believe that our combined janitorial business can leverage the well-recognized EnhancedClean brand to meet continued demand for safer and healthier environments in a post-pandemic world. Able also boosts our presence and capabilities in attractive geographies while offering margin enhancement opportunities as we move forward with plans to accelerate integrated facility services and bundled service offerings to our customers. Slide four provides an overview of Able. Founded in 1926, Able is the largest family-owned building services provider in the U.S., serving more than 3,500 customer locations in over 1 billion sq ft of building space. Able's services network extends nationwide with an emphasis on three major geographies, the West Coast, the Metro Chicago area, and the East Coast. The company's highly regarded engineering services focuses on maximizing operational efficiency and cost effectiveness for facilities and related fixed assets while balancing the need for environmental comfort, convenience, and safety. ABLE also provides a comprehensive range of janitorial services for a blue-chip roster of Fortune 500 clients across a diversified range of end markets, including commercial real estate, healthcare, technology, leisure, and hospitality. Able's long history and deep client relationships in janitorial services reflects the dedication of its team members and consistent focus on providing outstanding service. Turning to slide five, let's discuss the terms of the transaction. In 2020, ABLE generated revenue of $1.1 billion, with engineering services accounting for approximately 60% of their revenue and janitorial services accounting for the remaining 40%. Approximately 80% of the company's workforce is unionized, mitigating the risk of wage inflation and labor shortages. The acquisition is accretive to adjusted EPS from day one. We expect to realize total annual operating synergies of approximately $30 million-$40 million over time, with the majority to be achieved in the first year after closing. We also see the potential for revenue synergies over time as we deepen our client relationships and realize cross-selling opportunities. We have not included any revenue synergies in our calculations. With a purchase price of $830 million, the transaction values ABLE at approximately 8x its estimated annual adjusted EBITDA, including projected synergies of $35 million, the midpoint of our estimated synergy guidance range. This is an attractive valuation multiple given ABLE's significant scale, marquee client roster, broad service capabilities, and strong financial profile. While subject to customary closing conditions, including regulatory clearance, we expect to close the transaction by the end of September. Turning to slide six. The acquisition of ABLE is aligned with our strategic priorities and M&A strategy, which is designed to complement organic growth through acquisitions that expand our capabilities, increase efficiency through greater scale, and enhance our long-term growth potential. The addition of ABLE significantly strengthens ABM's core janitorial and engineering services, which remain priority growth areas for ABM. By joining together, we have the opportunity to expand our client relationships and more fully address our customers' needs for innovative and cost-effective solutions that align with their sustainability and energy efficiency objectives. Supported by long-standing relationships with many prestigious corporate clients, ABLE significantly expands our client base and our geographic footprint. This will enable ABM to more easily capitalize on above average growth in certain regions, and we also have identified opportunities to capture revenue synergies as our expanded capabilities enable us to deepen our engagement with clients and, more broadly, cross-sell complementary solutions and services. Specifically, our enhanced scale in engineering services will be critical as we execute our new 5-year growth plan, which we will communicate to investors in the coming months. These services are an important accelerator for integrated facility services and multi-service bundles, which we already are performing for certain clients. In addition to enhancing our growth and margins, these service offerings create significant value for our clients by reducing costs, enhancing safety, and maximizing the operational efficiency of their real estate. On a long-term basis, our increased scale will further enhance our efficiency as we increase our investments in IT systems and implement new client-facing and workforce technologies. The combinations of the two firms will also provide additional opportunities for employees of both organizations to step into leadership roles. We are excited about the value this acquisition will create for all of our stakeholders. The acquisition builds our scale in priority growth areas while broadening our capabilities, offerings, and geographic footprint. The combination creates a true industry leader in the facility services and solutions space. In the coming months, we will share our new five-year growth plan with the investment community, along with our growth and margin expansion targets for the years ahead. You will be able to see firsthand how well ABLE fits with our strategic priorities and what it brings to ABM with respect to scale, capabilities, geographic footprint, and margin expansion. ABLE is an outstanding company with a strong financial profile, deep client relationships, extensive capabilities, and a dedicated and talented team. Together, ABM and ABLE will be uniquely positioned to serve our customers with a broader portfolio of services and solutions customized to meet their evolving needs. We look forward to welcoming ABLE's employees to ABM and to our future together as one company. Operator, I'd now like to open the call for questions. Thank you. At this time we'll be conducting a question and answer session. If you'd like to ask a question please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. The participants using speaker equipment it maybe necessary to pick up your handset before pressing the star key. One moment please while we poll for questions. Your first question comes from line of Tim Mulrooney with William Blair. Please proceed with your question. Good afternoon Scott. Hey thanks for being on. Sorry for the late hour Tim. It's all good. Thanks for taking my questions. I just have a few here, and I'll hop back in queue. Can you talk a little bit about ABLE's historical revenue growth rate, what your sense is for how fast they were growing for the few years heading into the pandemic? We're trying to understand what a normalized growth rate for this business would be. Yeah. Look, I think on a high level, you're going to hear this thematically through this call. It's like when you think of ABLE, think of ABM, right? I will tell you, it's like not all services are created equal. Their engineering side has grown, in some years, double-digit, right? They're really strong on the engineering side. Strong on janitorial too, but it's kind of on an enterprise level, emulated our growth, but particularly strong on the engineering side. Okay. Yeah, that's why I was asking. I know cleaning services is more of a low single digit, but given 60% of the business was engineering, I thought maybe growing a little faster, which it sounds like it probably is, all else equal. When you say ABLE's EBITDA is about $65 million normalized, was that for 2020 or is that more of an LTM figure or a forward-looking figure? Yeah, that's as we looked at 2020. Okay. We looked at what happens for ABM and we kind of took those same principles and put it towards ABLE. You mean the principles when you talked about adjusting for normalized Scott? Yeah. Just to add to that. It's Earl Ellis on the line. Think of the $65 as more of a run rate going in as we take over the business. What we did is we normalized a couple of things. Knowing that this is a family-owned business, we actually did adjustments to get the EBITDA comparable to the way we actually report EBITDA. We also did some adjustments with regards to just hedging back some of the tailwinds associated with COVID. You can think about the $65 million as what we would actually be taking on this business before we actually add on any synergies. That's perfect. Earl you anticipated my next question. For most people, when they're normalizing EBITDA for COVID, they're bringing their numbers up because COVID hurt them. In this case, you're actually taking ABLE's numbers down a little bit because of the COVID-related tailwinds. That's exactly right. Yeah. Okay. Just one more from me, and I'll hop back in line. Can you guys talk a little bit about the potential revenue synergies associated with the transaction? I'm thinking about two potential ones, which are cross-selling EnhancedClean into ABLE's customer base, but also potentially cross-selling Technical Solutions across each other's customer bases. Am I thinking about that correctly or am I off base here? You're not supposed to ask a question, then answer it. You actually got it right. Yeah, we're excited about EnhancedClean. ABLE had a product they call ReliAble ABLE, right? Reliable. Yeah. It's probably not as well-developed as EnhancedClean, right? We have an advisory council and it's just a different sell-through, right? We think we're going to have an opportunity to do that. The nice thing about this is that, I shouldn't say the nice thing, it sounds terrible, but we see that there's going to be a longer tail to COVID, right? I think we're going to be able to jump on this and maybe sell them EnhancedClean. I think Technical Solutions is going to be key because we're taking on so much more stationary engineering. I think that's going to be big. I think the other thing too, Tim, is that when you look at these facility assignments, usually engineering is kind of the value play. It's the catalyst to solidify a relationship. We actually believe, and we've put none of this in the numbers. We actually believe having such prowess now on the stationary engineering side by having like $1.4 billion in stationary engineering combined is kind of the stickiness for a relationship to cross-sell some of our janitorial services as well. We think the revenue synergies are going to be great, and we love the fact that we did not have to put them into the numbers to make this work. Yeah. Well, we like that too Scott Salmirs. Thanks for taking my questions. Congrats on the deal. Thank you so much. Thanks Tim. Your next question comes from the line of Andy Wittmann with Baird. Please proceed with your question. Great. Thanks for taking my questions this evening. Hello to you both. I guess just given that COVID had a lot of impacts on the business in 2020, and I appreciate you guys try to normalize that to get to the 65 in 2020, but for a different baseline, could you maybe talk about what the business was doing before COVID to start out with, just so we can kind of assess it in that greater context as well? No, listen, I think we'll be sharing some of that stuff as it goes, but right now we're going to stick with 2020 as the baseline. I can tell you and I'll go back to what I said before, Andrew Wittmann, think of them as kind of a carbon copy in a lot of ways of ABM and kind of use that. Look, they're a private company and there's not a lot of that stuff that we can share right now. Remember, the deal hasn't closed. Yeah. Okay. That's fair enough. Okay, just a couple other things maybe for Earl. In the calculation of the enterprise here, the purchase price, was there any assumed contribution to that enterprise value for unfunded or underfunded liabilities associated with pensions? I think particularly relevant given the heavy union presence here, and/or for liabilities that are associated with pending litigation. These things can be notable from time to time. I was wondering if there's anything else in the enterprise value that's maybe not immediately apparent, but probably relevant to the discussion and to what you're actually acquiring here. Sure. Yeah. Things like pension liabilities, insurance, we've actually treated those as debt-like items. Yeah. Therefore, as we've actually done the adjustments off of the $830 million price, we're taking on the cash on the balance sheet. Then we're netting that against the debt-like, that is a netted number, which is taken off of the $830 million. I'm sorry. Put it another way, Earl. Are you saying the $830 million is fully loaded with the net impact from these sorts of balance sheet adjustments? Is that another way of saying what you just said? I just want to make sure I was clear on that. That's exactly correct. Yes. Got it. Okay. I guess maybe my final question, and this one is more subjective, so I guess maybe for Scott. It sounds like good client base here. It sounds like you're pretty excited to have this customer base. What kind of underwriting or due diligence have you been able to do in this transaction to really understand how tight those relationships are that you're acquiring so that you can be assured that they are in place and ready to grow with you once you take over the ownership of the company? Yeah. I guess in the acquisition diligence, we had an unfair advantage to everyone else is that we've been interacting with these guys for, I'll say 90 years, right? Like, in the last 10 years. Just because that's more relevant. We've been interacting with them in the same markets. We know these folks really, really well. We know the clients. By the way, Andy, a lot of these clients are shared clients that we have. This is super powerful, when you do this due diligence and you kind of know the team, you know what they have, even if it's not in the clean room as part of due diligence, you know you have it because you're interacting in the market and you can literally walk down the streets of L.A. and San Francisco, and you know you've probably competed for a particular property that they have right now. You know those same clients from the BOMA and industry events. We feel really good about having a deep understanding about these clients. The other thing, Andrew Wittmann, is this is our wheelhouse, right? As you can imagine, I don't know what the percentage, 80% is B&I, right? That's going to fall in there. We feel super comfortable. If that makes sense. Yep, it does. I'm sorry, if you'll afford me a last question, I guess I just want to ask one more. Sorry. Maybe for Earl. You didn't mention any cost to achieve the $30 million-$40 million of cost synergies and/or deal closing costs. Sometimes those are relevant, I thought I'd ask if you have an estimate for what those are going to be for you. Yeah. There will be some one-time costs associated with that. Again, what we're doing is looking at which ones of those are truly one-time that will actually be noted as items for non-comparability. As far as anything that is ongoing it's very immaterial. Yeah. Okay. Thanks guys. Have a good night. Thank you. Thank you. Your next question comes from line of Sean Eastman with KeyBanc Capital Markets. Please proceed with your question. Hi guys. Big deal. Congratulations. Thank you. Thanks. First question from me is, I don't know if you have this at your fingertips, but how does ABLE convert that EBITDA to free cash flow relative to ABM? I'm just trying to get a sense for maybe how accretive to free cash flow per share you anticipate the deal to be, and how quickly you think you can get that pro forma 3x net leverage down to the targeted level. Yeah absolutely. Thanks for the question. A couple of things. When we look at the free cash flow, we are estimating that in year two, we'll actually have free cash flow from this acquisition of approximately $60 million. You can see that converting EBITDA to cash flow is quite liquid in that they do not have a lot of capital expenditures. With regards to our leverage, as Scott adequately pointed out, we peak at 3x. Based on the cash flow that we generate standalone as well as this incremental cash, we can see ourselves ticking down the leverage rate by about a half a turn per year. We quickly get down below 2.5x within a 12-month period. To that point, we've always said our comfortable range is 2.5x-3x. What's so outstanding about this transaction is we're consummating it, and we're staying in our target leverage zone. We have integration stuff that we have to do, but we're still in that zone where we can continue to deploy capital if we want. Okay. That's really helpful. Just in light of everybody being very concerned about labor availability, clearly this transaction helps in terms of acquiring these customer relationships, but kind of acquiring these labor union relationships. Is that a meaningful kind of element around the transaction as well in the context of investor concerns about labor availability? Yeah, that was super important attribute of this transaction. 80% of their work is unionized. Sean, the way to think about that means above scale wage rates and union benefits, right? We don't see nearly the turnover on union assignments that we do non-union. To us, this transaction insulates our issues with the quote, unquote, "labor crisis" out there, right? This was a fantastic attribute of this acquisition from a risk mitigation standpoint. Yep. Okay. I think that's important. We've kind of discussed historical normalized growth rate. The business kind of mimics ABM, but it also seems to be a bit of a play on sustainability, energy efficiency, which is kind of a secular driver that seems to be ramping. Have you seen those types of drivers impact ABLE's backlog? What does ABLE's backlog look like year-over-year or sort of sequential growth over the past couple of quarters? Yeah, I tell you like on the engineering side in 2020 that it's super strong growth. We love that aspect. Let's look at ABM from a business service mix standpoint, right? Before this transaction between our Technical Solutions group and our stationary engineers, it probably made up about 18% of our revenue mix. We're going to about 30%. We're changing a little bit of the character of the firm towards energy efficiency, sustainability, climate change. Everything that we've been thinking about that is so important to society right now, we're heading in that zone. It's a value play too, right? We look at this as, there's so many amazing financial aspects to this firm that happen immediately, but to me, I look at this as a major strategic acquisition to bolster our engineering and technical capabilities and start changing the character of the firm, and just really excited about that. These guys, there's a reason why in years they've grown double-digit in engineering. They put a lot of focus and attention on it because it's 60% of their business, right? It was like stationary engineering was probably like 7% or 8% of our business. It's quite exciting. Okay great. That's all I have for today. Thanks guys. Thanks. Thanks Sean. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad. As a reminder, if you'd like to ask a question, please press star one on your telephone keypad now. One moment please, while we poll for questions. Your next question comes from line of Marc Riddick with Sidoti. Please proceed with your question. Good evening everyone. Hey Marc, how are you? Very good. Yourself? Do you believe we have David Gold on the line the ex-alumni? Go figure, right? Sorry Marc. I'll be honest it's not just going to be one question. I wanted to just maybe start with, and without maybe stealing thunder from what you talked about as far as talking about your upcoming five-year growth plan introduction. Why don't you talk a little bit about maybe what type of technology opportunities or needs you might see coming, either to bridge this particular acquisition or sort of just in general, what types of opportunities you might see there as far as bulking up or any key areas that you can see improving? Yeah. Look, I think we've done some pretty good due diligence, but we haven't gotten to the details of the systems that they have yet, like in terms of client facing. I'm particularly excited about what they may have on the engineering side. Like there's this whole narrative about what do we get on their platform in terms of technology for running their business. You look at ABM's technology platform. We're going to be spending a great deal of energy and effort in upgrading our platform. To me, this gives us a better base to spread it out across, right? I know that's happy talk for Earl, who gets to amortize our technology spend over a greater platform. He's the guy with the biggest smile of the day. I think it suits multiple purposes, right? It makes our investments in technology more affordable per revenue dollar, and we may get some hidden gems on the ABLE side on the engineering. Excellent. One of the things that seems to jump out, and I'm glad you spent some time going over the talent and labor side of the equation, but also it seems to me as though from a competitive standpoint, for those who are not part of the organization looking in, it seems as though it would've made this combined entity a better destination for others who may be considering changing courses given the platform. I was wondering if you could talk about maybe how that might play into the recruitment of adding additional talent and how that might spread throughout, from a geographical mix perspective? You must have been listening to my town hall to the firm earlier today because that was the center point of it. People want to be part of a growing company, right? There is this labor crisis. We are trying to retain and attract talent, and there's no better catalyst for that than a growing successful company. I think that's the greatest attribute about this, to be able to talk about what we're doing, and then to be able to continue to invest into the company over the next five years, which again, we'll be sharing with you guys in the next few months. I mean, you're spot on. From the pure strategy standpoint, it's great. There's a scarcity of assets in our business, and to take the crown jewel off the table and put that chip over in our side, big deal for us. Okay, great. There's two more for me. One, I wanted to touch on, maybe you could talk a little bit about how this came about. One of the things I did sort of come across was it seems as though, while you have done business against each other for many years, it also appears as though your two companies were part of that founding group of the Cleaning Coalition that was formed last year. Will you talk a little bit about how did that sort of accelerate the pace of getting to know each other a little bit? Maybe can sort of take us through that acceleration of this process. Well, we have not been shy over the last few months about saying we're in the acquisition mode, right? That message was out there to the investment community, right? People knew we were after assets. What was so nice is, outside from the fact that our teams in the field have known ABLE for years and interacted with them, our executives got more comfortable with their executive team through the Cleaning Coalition. That just created a bond because, as you can imagine, the ABLE folks have a choice, right? They go through this dance with potential suitors, and we become a very attractive acquirer because our cultures are so locked together and we got to know each other. I think it's a confluence of the fact that we put it out there that we are in acquisition mode, the fact that our people in the field knew them really well, and then on an executive level, we got to know them really well. Excellent. The last one for me. There's a lot of detail as far as some of the potential overlap and customer and some of the regional. One of the things I don't think I saw was a focus around airport airline customers. Is there any way we should think about that, or is there a similarity? I lied, I just thought of another question, and I'm following that. They only have a couple of airport assets. This is a B&I play more than anything. Okay excellent. The one that I recalled, is there a way to think about them? Should we view them as a similar as far as revenue skew and sort of the flow throughout the year? Should we think about them as a similar seasonality to yours, or is there any particular reason to think that it might be a little different? Thanks. Yeah. They're similar. In B&I, there's not a lot of seasonality. It's pretty straightforward. Okay great. Thank you very much. Thanks Marc. Ladies and gentlemen, we have reached the end of the question and answer session, and I'd like to turn the call back to Mr. Scott Salmirs for closing remarks. Thank you very much. Listen, I'm so glad you guys made the time to do this. I'm sorry it was a little late in the evening, but hopefully you can sense how palpable it is, how excited we are about this transaction. We'll be talking about this for a long time to come because we think this is game changer for the firm. Got a lot of time to spend to close this out by the end of September, and we'll be speaking to you all just in a couple of weeks with our third quarter earnings. Thanks for making the time, and we'll chat soon, everyone. Thank you. This concludes todays conference. You may disconnect your lines at this time. Thank you all for your participation.