Greetings, and welcome to the ABM Industries, Inc. Third Quarter 2023 earnings conference call. At this time, all participants are on a listen-only mode. A brief 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. 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 a Q&A session. But before we begin, I want to remind you that our call and presentation today contain predictions, estimates, and other forward-looking statements. Our use of the word estimate, expect, 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 Investors tab. 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 reflect 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 remained 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 footprints, given hybrid work models and the macroeconomic environment. This puts pressure on the demand side for us until vacant floors are re-leased and reoccupied. This trend will likely continue into 2024. We remain well positioned to navigate the challenges of commercial real estate, given our flexible labor model. Also importantly, our multi-tenant commercial real estate profile largely consists of Class A and newer buildings. These properties have been less impacted than Class B and Class C properties and should be leased up fairly quickly. In addition, engineering services constitute a sizable portion of our revenue in B&I. This revenue stream is less impacted than janitorial services, as HVAC and electrical systems must be maintained regardless of occupancy density. Finally, I would note that our B&I segment includes a large portion of non-multi-tenant locations, such as corporate office towers and corporate campuses. This portion of B&I has seen more stability from a vacancy perspective. So summing it all up, we see the pressures on commercial real estate modestly impacting our revenue line, but allowing us to protect margin through our labor model and ability to manage our cost structure. Moving to aviation. The leisure and business travel markets, including international travel, continue to be quite strong given pent-up demand. Our aviation team has executed well in this environment, managing through a historically tight labor market while ramping up service volumes to above pre-pandemic levels... They've also done a great job winning new business, such as a significant recent expansion at one of the country's busiest airports that included multiple service lines through our ABM Performance Solutions integrated offering, which is known as APS in the marketplace. Demand within our Manufacturing and Distribution segment has remained solid, benefiting from our core e-commerce and logistics clients and from our diversification efforts, including expanded business with clients in the manufacturing, semiconductor, and biopharma markets. These newer end markets continue to offer strong growth opportunities as clients increasingly outsource support services so they can focus on their core business operations, and the momentum for onshoring manufacturing is continuing. Of note, we booked a significant contract with a leading energy company in the third quarter, further diversifying our client base. We will continue to focus on new growth opportunities as we prepare for a large client of ours to rebid and rebalance their work needs over the next year. This is part of their normal business process, and even after the bid, while we expect some revenue pressure, we also expect to maintain a disproportionate share of their business, having provided stellar service to them through a strong growth period. Moving to Education, we continue to post mid-single-digit organic revenue growth, driven by 100% in-class learning and by the addition of new clients. We executed well on our sales pipeline and won several new contracts during the third quarter, including a sizable win with the Providence Public School District. We are pleased that Providence has opted to utilize our APS offering, which, as I noted earlier, combines multiple service offerings into one comprehensive solution. Other notable Education wins in the third quarter included the Prosper Independent School District and Palm Beach State College in Florida. Our pipeline of new business opportunities remains strong, and we expect to continue to win our fair share going forward. Moving to technical solutions. The global demand environment for EV charging infrastructure and microgrids, particularly battery storage systems, remains strong. Our ATS backlog now exceeds $450 million, with EV and microgrid services representing over 60% of the total. At the same time, we are experiencing soft market conditions in Bundled Energy Solutions, which includes HVAC, lighting, and electrical system retrofits. This is driven by reduced investment spending, especially in for K-12 schools, primarily due to higher interest rates and the pressure that puts on project ROIs. ATS did not perform as we anticipated in the third quarter for two key reasons. First, we expected to complete a greater number of booked microgrid projects at multiple locations, specifically large battery systems for a large industrial client. This project was initially impacted by supply chain constraints in the first half of the year. With the supply chain having largely stabilized, we face new delays relating to local permitting and utility issues. Because the deployment of large-scale battery storage system is relatively new, many local governments are not accustomed to dealing with the unique and complex requirements of these projects, and permitting gets protracted. We continue to work closely with our client, and we are executing a plan to address near-term hurdles, including targeting alternative sites where appropriate. Turning to eMobility. As we discussed on our last call, we expected the pace of EV charger installations to materially accelerate in the second half of the year as we began to deliver on several new programs, including one for a large automotive dealer network. Because this particular auto OEM recently announced a change in its EV production goals, the dealerships have slowed their rollout in EV infrastructure to match the production schedule. We view the battery storage system delays, as well as the project pushouts on EV, as transitory and reflective of rapidly evolving markets experiencing disruptive change. While we address the near-term challenges in this market, ABM remains well-positioned in the EV charging space, given our track record of over 22,000 EV installations, as well as our innovative technical capabilities that include end-to-end solutions. Also, the level of interest and bidding activity for EV infrastructure and microgrids has never been higher, so we remain really encouraged. Turning now to our Elevate initiative. We've continued to make important progress in reaching our long-term technology objectives. During the third quarter, we utilized our new cloud-based ERP system to complete our quarterly close for the Education segment. This platform, which provides significant efficiency and operational improvements, will be rolled out to the remainder of ABM over the next two years as planned. We also continued to leverage our workforce productivity and optimization tool, which provides our operations teams with advanced analytics into productivity levels across their portfolios. In fact, we've seen about a 10% improvement in gross margins on the jobs where the tool has been piloted. This capability will become even more critical going forward to effectively manage our labor utilization as we navigate the commercial office landscape. Additionally, we now have over 200 digital client dashboards deployed at sites across the country, and feedback has been exceptionally positive. As we manage through some specific challenges, ABM remains resilient, supported by our leading market position, diversified industry groups, and financial strength. We continue to be the clear leader in facility services, and we have expanded our long-term growth opportunity through strategic investments in fast-growing markets and will continue to do so. We've done a terrific job winning large, new contracts in aviation and Education, as well as in manufacturing and distribution, where we continue to expand. Although we've experienced some delays in ATS, we are confident our performance will improve as the market matures. In B&I, we're fortunate that our portfolio remains heavily weighted towards better-performing Class A commercial real estate and more stable engineering services, combined with our flexible labor model. Given the recent challenges in ATS and B&I, we expect full year 2023 adjusted EPS to come in at the bottom half of our prior outlook range. Looking further ahead to next year, although our forecasting and budget process is in its early stages, it wouldn't surprise me if fiscal 2024 adjusted EPS was slightly down from 2023, given the softness in the commercial office sector. We will share our more formal 2024 outlook on our Q4 earnings call in December. We are laser-focused on overcoming these near-term challenges, including tightly managing costs and making tough decisions to adjust our cost structure across the organization. Beyond that, we are building for the future by winning new business in attractive markets, leveraging our Elevate technology, and by using our strong free cash flow to enhance shareholder returns. We will also continue to invest for the long term to position ABM for sustainable success. Now I'll turn it over to Earl for the financials. Thank you, Scott, and good morning, everyone. For those of you following along with our earnings presentation, please turn to Slide 5. Third quarter revenue increased 3.4% to $2 billion, comprised of organic revenue growth of 2.5% and acquisition contribution of roughly 1%. Moving on to Slide 6. 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 volumes. 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 increases. 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 7. 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 increase was driven by strong demand for leisure and business travel. We expect demand within our aviation segment to remain constructive going forward. Aviation's operating profit was $11.7 million, versus $9.5 million in the prior year period, and operating margin expanded 20 basis points to 4.9%. The increase in profit and margin primarily reflected higher volume and price increases, partially offset by increased labor costs. Turning to Slide 8. Manufacturing and distribution revenue grew 7% to $381.9 million, reflecting broad-based demand. Operating profit increased to $38.1 million, while operating margin declined 60 basis points to 10%. Profit and margin performance was largely due to mix, as new wins came in slightly below our historical margin in this segment. Education revenue increased 6% to $219.1 million, benefiting from the addition of new clients. Education operating profit was $15.9 million, up 10% over the prior year period, while margin increased 30 basis points to 7.3%. These increases were largely attributable to increased organic revenue growth and labor efficiencies. Technical Solutions revenue grew 6% to $167.9 million, which was below our expectations heading into the quarter. Revenue growth was comprised of 12% growth from RavenVolt, partially offset by a 6% organic decline. As Scott mentioned, ATS revenue was negatively impacted by three factors, namely, delays in certain RavenVolt battery storage projects, ongoing softness in our Bundled Energy Solutions markets as investment decisions are being impacted by higher interest rate environments, and thirdly, the pushout of a large EV charging installation program. Backlog in ATS is now over $450 million, much of which is scheduled to convert to revenue in 2024. Also of note, supply chain issues in ATS have been stabilized, which will be helpful as we move forward. ATS operating profit was $11.4 million, and margin was 6.8%, compared to operating profit of $16.4 million and margin of 9.7% last year. The decrease in margin and profit were largely driven by inefficiencies associated with project delays, changes in business mix, and the amortization of intangibles related to the RavenVolt acquisition. Moving on to Slide 9, we ended the third quarter with total debt of $1.4 billion, including $58.4 million in standby letters of credit, resulting in total debt to pro forma adjusted EBITDA ratio of 2.3 times. At the end of Q3, we had available liquidity of $582.6 million, including cash and cash equivalents of $97.7 million. Free cash flow in the third quarter was strong at $138 million. During the third quarter, we repurchased 644,000 shares of common stock at an average price of $42.10, for a total cost of $27.1 million. Interest expense was $20.9 million, up approximately $10 million from the prior year period, but down slightly on a sequential basis. The year-over-year increase was primarily attributable to higher interest rates. Now let's move on to our full year fiscal 2023 outlook, as shown on Slide 10. On a GAAP basis, we now expect EPS to be in the range of $3.52-$3.62, up from our prior outlook, driven by gains from changes in items impacting comparability occurring in the third quarter. Namely, $0.26 related to employee retention credits and an incremental $0.59 related to an adjustment to the fair value of contingent consideration. As for the adjusted EPS, we are tightening to the lower end of our prior range, largely reflecting project pushouts in ATS and ongoing softness in the commercial real estate market. As a result, we now expect full-year 2023 adjusted EPS to be $3.40 to $3.50. Our full-year outlook for adjusted EBITDA margin, interest expense, and tax rate before discrete items are all unchanged. Adjusted EBITDA margin is expected to be 6.5% to 6.8%. Interest expense is expected to be approximately $80 million, and the tax rate before discrete items is expected to be between 29% and 30%. We also continue to expect to grow full year adjusted EBITDA in the mid-single digits and for full year free cash flow to be in the range of $240 million-$270 million before the CARES Act repayment of $66 million, which was made in Q1, and combined full year integration and Elevate expenses of approximately $75 million to $80 million. With that, let me turn it back to Scott for closing comments. 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. If you would like to ask a question, please press star one on your telephone keypad at this time. A confirmation tone will indicate your line is in the question queue. You may press star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the star keys. We do ask that you please limit yourself to one question and one follow-up. Again, that's star one to register a question at this time. Today's first question is coming from Tim Mulrooney of William Blair. Please go ahead. Hey, this is Sam Kusswurm for Tim Mulrooney, Scott Salmirs, Earl Ellis. 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? ... Yeah, thanks for the question. Look, I think, you know, 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 multi-generational structural shift in commercial real estate between hybrid work and the macroeconomic environment, which is certainly gonna 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 gonna 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 gonna 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 gonna hit a fifth consecutive year in sales growth. We're excited about that. I mentioned in my prepared remarks that we're seeing the labor productivity tool in the pilots having 10% gross margin uplifts. We're absolutely firmly committed to our targets. It just, again, may be extended a couple of years. Gotcha. Appreciate the response. Maybe pivoting to your, your, technical solutions, but I think it was last quarter, there was some hope that the pause in some of your Technical Solutions projects was gonna reverse in the back half year. But now that's looking more like in 2024. Can you give us a pulse on how clients are doing right now? And are the projects still considered paused, or have any clients canceled them altogether? Yeah, no, that's a great question. No, there's been no cancellations. This is all part of our backlog, which are signed contracts. And, you know, I, I think for this, these are, these are big, chunky projects. They're big battery storage projects. And, you know, 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 context on these battery storage projects, these, 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, for the, 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, you know, 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. You know, just to give you one, one quick anecdote, our, our Chief Operating Officer is, is Danish and lives in Denmark over the summer, and he was noting that when they give the weather forecast in Denmark, they, 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, this is the future. We're excited about it. I think what we're gonna have to get used to at ABM is that with these big, chunky projects, it could be lumpy, and the timing is just gonna 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. Gotcha. Thanks for the insight, 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. So 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 installation. 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, you know, each of these to resolve? So I'll—I have a follow-up after that. Yeah, I mean, why don't I focus on EV? Maybe that would be helpful because, you know, I guess I just discussed the RavenVolt and microgrids. But with EV, you know, we had talked before, Faiza, 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 gonna, we have line of sight to 2024 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 come into 2024. And that's why we feel so confident about ATS in 2024. Between the microgrid projects that are getting pushed into next year and the dealership program that's gonna ramp up on EV, we feel great about it. But it put pressure on the remainder of 2024, and that's why you saw pressure in Q3. Yeah, so that's kind of the EV story. If I just add to that, if you look at, you know, our longer-term financial goals, which, you know, Scott just mentioned, will probably get pushed out a couple of years. You know, a lot of what was driving you know, those benefits were really driven by our Elevate initiatives. ... The good news is, the benefits associated with Elevate are, are still very well intact. In fact, we've already probably reaped about 50% of those benefits to date. Now, you know, some of the headwinds we've actually seen in the business that Scott alluded to, so the interest rates, you know, the softness that we're seeing in CRE, the continued wage inflation that we're experiencing, you know, 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 gonna be building that into our projections to come. CRE, we expect, you know, softness to continue into 2004. And the wage inflation, the teams have really done a great job in counteracting that with price increases. The good news is that, you know, some of these headwinds that we've seen, that have actually offset the benefits with regards to Elevate, you know, will subside, and therefore, we still are expecting to hit those long-term Elevate benefits, however, probably two years out. Okay, that's, that, that's really helpful. I was gonna follow up on that. I guess if I think about then, you know, your comment that 2024 EPS might be below 2023, if ADS is gonna, you know, sort of see this recovery, you know, and interest rates have stabilized, it seems like it's more around, you know, wages and the commercial real estate market. I guess, what - you know, what, what is your opinion on the commercial real estate market, and sort of what inning are we in, you know, in, in your opinion? Yeah, this is solely pinned on commercial real estate. 'Cause it, you know, Faiza, you have to think about it. You know, 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 gonna 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, you know, 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 to air condition space regardless of occupancy. But the other two thirds is in that commercial real estate segment, and, you know, 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, you know, we typically grow 2% to 3% in B&I. And you can see with the compression that's going on, you know, it becomes clear that that could be in reverse, and it could be that -2% to -3%. And I think, you know, 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 gonna be down the low single digit, I mean, again, speaks to the resilience of our business model. You know, 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 gonna 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. Oh, great! Thanks for taking my question, guys, and good morning. Your responses so far to the questions have been helpful for the context into 2024. 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, you know, 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 gonna 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? Or I guess, 'cause as I go through the segments here, and you made it very clear in the last response, B&I is the area where you're seeing the most pressure. These other areas seem like pretty good, with ATS maybe being very good on a year-over-year basis next year. So I guess the, the one area that I'm—I, I want to get a better sense on is this M&D segment, please. Yeah, that's, that's great. Great, Andy. And like, you know, you know, I'm in a weird position, right? Because we're so—we're, we're in advance of- Yeah ... 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, you know. And, you know, we're a little bit of a victim of our own success here because we have one, you know, 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, you know, 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 gonna put pressure on the M&D. But, you know, if you kind of segment that outside of M&D, M&D as a whole is still gonna grow high single digit, low double digit. It still has all the compelling factors about it. It's just we have to think about kinda 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 gonna be margin accretive next year. It's gonna be flat, but we do think there's gonna be some pressure on the revenue side. But, you know, again, just reaffirming, it's just such a terrific segment for us. 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 b usiness, 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, you mentioned interest rates, but, but is there this, other effect as well, or, or do you not see that as being one of the reasons for some of the pressure you're seeing today there? Yeah, I think, I think it's like, you know, I don't want to oversimplify it, but so much of this is, is weighted towards interest rates, because what happens, Andy, is that these are all highly financed, almost 100% financed, right? So when, when, when a school is looking at their infrastructure and, and a large-scale project that they, they want to, you know, put forward, they do that against the interest rate environment and the ROI against it. And when interest rates go up like this, you know, it just puts pressure on those ROIs. And then what, what starts happening is you start going through this triage process where there are some schools that, regardless 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 2024. But the BES segment is kind of alive and well, and, you know, 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, they'll have pressure. And now, you know, as we look at it, just to finish it up, you know, as we start hunting again, we're now hunting for projects where it's not necessarily just about ROI or on the fringe. We're looking at school districts where it's like, you know, they have to do these projects. You know, 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 Nicholas Breckenridge on for, for Sean today. Yeah, I just wanted to sort of ask more about some of those prepared remarks you made, Scott, particularly the—that comment about how, how the, the CRE conditions are going to flow through in the model in 2024. Just if you could give more, more color into the sort of how that labor market tightness, would that improve visibility on, on the outyear margin trends with just being sort of less, I mean, less occupancy rates are going to drive, I mean, maybe less, more, I guess, just, yeah, more, more flexibility? Could you just provide more in 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, I'll just put it in like, you know, simplistic terms, right? You know, if a tenant's got five floors in a building and they go down to four floors, what happens to 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 you know, we think, we think there's some positive trends, believe it or not, in terms of people coming back to work. But, you know, there is still this macroeconomic environment that's happening, and clients are taking less space, so we are going to see a 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. Okay, awesome. Thanks for that. And then just one more sort of follow-up around ATS. Just sort of going forward and assuming that everything sort of starts to flow through, in terms of projects getting sort of taken out of backlog, sort of the BES coming back, 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. We, you know, as we look, 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, you know, growth and bottom-line double-digit, growth there as well. So, this is, 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. Morning. Good morning. 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, you know, if there are some things out there that might make sense in this environment. Yeah, 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 2024, Marc, which we're excited about. And, you know, 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's stuff that we're working on, and, we'll update you as that happens. But, you know, 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, you know, be it technology, personnel, the like, I know there's been clearly some of that, as you prepare for some future opportunities. Are there any areas that you feel as though has 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, you know, more so than maybe what you may have thought a year ago? No, I think we're still... You know, we have our Elevate plan, we have our cadence. You know, 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 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, is always kind of a, you know, can be, be a little tricky. I was wondering if you talk a little bit about, just and 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, it's not. You know, I'm glad you asked that question because I probably should have addressed that. You know, 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. 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. You know, it was. We were in, like, the 3% range, so to be kind of at 5% now is it's a big deal. But, our operations teams have done such an amazing job on price increases and recovery, and we've said we've been in that 75%-80% recovery range, which is, you know, best in class. So, you know, the good news is better candidate 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, Mark. 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. Sure, um. Hi. 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 APS recovery and a couple of small items could at least give you some EPS growth next year. Yeah, I don't think that necessarily means that our total revenue as an enterprise is going to be down. Certainly, it'll be impeded, you know, but I think you gotta—where we got to focus, Josh, is on the mix of business, right? And when B&I is gonna 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, you know, 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? ... Yeah, I think it's early to tell right now. We haven't, we haven't formed our, our 2024 guidance, but, you know, again, you, you hit it on the head, you know, with our flexible labor model, you know, we are able to protect margins in each segment. And, again, I just don't-- I don't wanna come out and, and give margin guidance now. But again, on, on top of... And I, 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, of labor and, you know, and, and I guess the grounding point is we still firmly believe we're gonna be at 7.2% as our Elevate goal in the future. So we, you know, we've always said that it wasn't gonna 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, Scott. 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, you know, in this quarter, there were a couple of big, you know, 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 you know, 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. You know, it's an incentive-laden, purchase structure that was established, and I think this I, I asked this question last time when the adjustment was smaller. But, is this the case where, you know, 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, you know, 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. Yeah, so let me start with the question with regards to the ERC. So yeah, the majority of the credit has come in. We've actually applied for all eligible credits. The majority has come in. We'll probably maybe see, you know, some more trickle in, but nothing, significant. With regards to the contingent liability, you know, as Scott mentioned earlier, you know, a lot of the, you know, what we've actually seen within RavenVolt this year has been a result of the delays, most notably based on delays in just permitting. You know, so when you look at kinda like the first year, that's gonna result in, you know, 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, then 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, you know, this acquisition is going to create. One thing I do wanna note is that, you know, when we did the deal model for RavenVolt, it did not assume an earn out, and it actually has a significant payback. So when you look long term, I think it's still gonna be value accretive, and we see, you know, great opportunities long term. Okay, great. I'd like to go back to maybe the comment about the ATS backlog, $450 million, as of, you know, 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 twelve months ago? Just how should we think about the growth in that backlog, you know, over, like, I guess, the medium term? Thank you. Yeah, I mean, it's as high as it's been. You know, 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's some issues, you know, 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, you know, better labor procurement and evaluation? Is it a bundled service offering? So in your core kind of bread-and-butter, you know, organic segments where, you know, you're not affected by, let's say, the commercial real estate woes, I mean, what, what is the, the recipe that's kind of driving that historically well above average organic growth? Yeah, I think it's more about a strong focus on business development. A strong focus on business development, where you have, you know, a whole sales effectiveness area, utilizing tools like Salesforce and, and a CRM model, our hyper-targeting tool that we invested in with Elevate, where you can kind of zero in on opportunities and, and go after them with focus. It's just been a very strategic approach to business development and figuring out where we... You know, 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. Yeah, I just wanna thank everybody for participating today. You know, again, we've talked about some of the impediments, but you know, we're 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.