Greetings, and welcome to the ABM Industries Q4 2023 Earnings 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. Please note, this conference is being recorded. I will now turn the conference over to your host, Paul Goldberg, Head of Investor Relations for ABM. Thank you. You may begin. Good morning, everyone, and welcome to ABM's Q4 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 Q4 and full year 2023 financial results. A copy of that release and an accompanying slide presentation can be found on our website, abm.com. After Scott and Earl's prepared remarks, we will host the Q&A session. But before we begin, I would like to remind you that our call and presentation today contains predictions, estimates, and other forward-looking statements. Our use of the words 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 our filings with the SEC. During the course of this call, certain non-GAAP financial information will be presented. A reconciliation of historical non-GAAP numbers to GAAP financial measures is available at the end of the presentation and on the company's website under the Investor tab. With that, I'd like to turn the call over to Scott. Thanks, Paul. Good morning, and thank you all for joining us today to discuss our Q4 results. Q4 revenue grew 4.1% to $2.1 billion, including 3.8% organic growth. All segments grew organically in the quarter, led by double-digit growth in our Aviation segment, driven by healthy airport activity and the addition of new clients. Our Technical Solutions, Education, and Manufacturing & Distribution segments also posted solid growth, reflecting several project closeouts in Technical Solutions, new Education clients, and our strong positioning in M&D. We also recorded modest organic growth in B&I, where robust sports and entertainment and special event activity helped to offset continued softness in the commercial real estate market. Additionally, our team set another sales record in 2023 with new sales bookings of $1.6 billion, which is a great accomplishment. I'm pleased with our progress in resolving certain microgrid project delays in Technical Solutions, as well as our ability to win new clients, push price increases, and effectively manage our cost structure. As a result, ABM generated double-digit increases in net income, adjusted net income, and Adjusted EBITDA, and achieved an Adjusted EBITDA margin of 7.2%. 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 Q4 at around 50% on a blended basis, with the commercial office vacancy rate near 20%. These factors directly impacted demand for our janitorial services in B&I. Although the hybrid work model remains prevalent, we expect to see a continued gradual increase in the time employees spend at the office in the next couple of years. We expect as office leases expire in 2024, many clients will move forward with their plans to downsize their office footprints to match their density, which will put pressure on demand for janitorial services until vacant floors are re-leased and reoccupied. If companies become more proactive in requiring their employees to return to the office, the impact may be more muted than our current expectations. Given our flexible labor model, ABM remains well positioned to navigate the challenges of commercial real estate. As a reminder, our multi-tenant commercial real estate profile largely consists of Class A and newer buildings, which we believe are far more resilient than lower-quality buildings. In addition to janitorial services, our B&I segment provides engineering services and has clients in submarkets like sports and entertainment and healthcare, all of which are influenced by demand drivers that are far less correlated to office density. That's an important reason why B&I's full-year revenue declined less than 1% despite softness in the commercial real estate market. In summary, while the pressure in commercial real estate is tangible and will impact B&I's performance next year, we plan to mitigate a portion of the impact through our flexible labor model, cost management, and the diversity of our end markets and mix of service lines. Moving to Aviation. The leisure and business travel markets, including international travel, remain quite strong and should be solid in 2024, although we face tougher year-over-year comparisons due to the large 2022 parking project that carried over into Q1 of 2023.... Our Aviation team has executed extremely well, managing through a historically tight labor market while ramping up service volumes to above pre-pandemic levels. They also continue to win new business, including two large airport janitorial contracts, pending final approval, along with two core airline projects, all of which kick in in the first half of the year. Demand within our Manufacturing & Distribution segment has remained strong, 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. The newer end markets continue to offer exciting growth opportunities as clients increasingly outsource support services in order to focus on their core business operations. In addition, we see growing momentum from the onshoring of manufacturing. As we mentioned last quarter, we expect a large and valued M&D client to rebid and rebalance their work needs in 2024 as part of their normal procurement process. Our team has been working to offset the anticipated revenue reduction through expansion with other clients and pursuing new opportunities in other end markets. Over the midterm, we expect M&D to grow revenue in the high single digits. However, the 2024 growth rate will be impacted by the rebalancing. Moving to Education, we generated 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 year. We expect 2024 to be another year of solid growth and stability. Moving to Technical Solutions. Segment backlog now exceeds $410 million, even after several completions of projects in the Q4, with EV and microgrid services representing nearly 60% of the segment total. Conversely, we continue to experience soft market conditions in Bundled Energy Solutions, which includes HVAC, lighting, and electrical system retrofits, primarily due to the impact of higher interest rates on project ROIs and the availability of government funding through legacy COVID legislations. We believe projects will pick up once return expectations get reset and the government funding projects sunset. The timing of this is hard to predict, which is why we are tempering 2024 expectations for Bundled Energy Solutions. Technical Solutions as a whole performed better in the Q4 as we were able to close out several legacy projects and make progress on certain microgrid projects following supply chain and permitting delays earlier in the year. Looking forward, we expect to advance microgrid projects during the year. Also, the level of interest in bidding activity for microgrid systems and large EV infrastructure projects, including the opportunity for recurring revenue, remains high. We expect 2024 to be a year of solid growth in Technical Solutions. Now turning to our ELEVATE initiatives. Following the successful financial close on our new cloud-based ERP system for the Education segment, we achieved 2 more milestones in the Q4. First, we launched a new workforce management solution for pilot sites in the Education segment. This tool allows for a more modern approach to time and attendance and scheduling, providing managers with improved visibility. By pairing this tool with the workforce productivity and optimization tool we released last year, we are now entering a new phase of efficiency that provides operators with enhanced insights. We expect to complete the rollout of this tool to our education segment in 2024 and further expand deployment thereafter. The second milestone is the initial release of our new team member mobile app, called Team Connect. The app is currently in the hands of more than 500 frontline team members. Over the next year, this app will deliver on-demand training, safety moments, clock-in and clock-out integrations, and task management features, among other capabilities. These tools will create a digital connection to the front line, driving a higher level of engagement and delivering real-time updates to our clients that provide more transparency on services performed. Over the next couple of years, we plan to scale this ecosystem to deliver the outcomes we initially shared during Investor Day in late 2021. We've also had a lot of learnings from the successful initial deployment of our cloud-based ERP system in our education industry group earlier this year. We are applying those learnings to future segment ERP rollouts to ensure we minimize any potential disruptions to our clients and our internal operations. As a result, we expect the full deployment may take about a year longer than first anticipated, and the total program cost will likely be about $200 million-$215 million, which is modestly higher than we said in 2021. We could not be more excited about the positive impact that our transformation initiatives are having on our clients and team members.... Our expectation is that these capabilities will be game-changing in our industry. Looking back at our performance in 2023, we did a terrific job winning large new contracts in Aviation, Education, and M&D, where we continue to expand. Although we experienced some project delays in Technical Solutions, our performance improved in the Q4, and we expect further progress as the nascent markets mature. In B&I, we are effectively navigating this challenging market, benefiting from the flexibility in our labor model and our real estate portfolio that remains heavily weighted towards better-performing Class A properties. In 2024, we expect generally healthy market activity for Technical Solutions, Aviation, Education, and M&D. At the same time, we anticipate that the conditions will remain challenging in the commercial real estate office market and that we will be impacted by some business rebalancing in M&D. We expect these factors, along with projected labor inflation, will likely mute our revenue growth and cause our margins to incrementally tick lower when compared to the strong levels we achieved in 2023. Our overall outlook for 2024, therefore, is essentially unchanged from the comments we shared last quarter. Earl will walk you through the specifics of our 2024 outlook in his comments. As we look forward, we expect our teams to set another new sales record in 2024 after record sales in 2023. Through our ELEVATE initiative, we are leveraging our scale, depth of service offerings, and technology. In addition, we will continue to carefully manage costs and proactively make changes to our cost base if necessary, just as we did in 2023. Of course, our anticipated strong Free Cash Flow will enable us to continue to invest for the long term while regularly returning cash to our shareholders. Now I'll turn it over to Earl. Thank you, Scott, and good morning, everyone. For those of you following along with our earnings presentation, please turn to slide 5. Q4 revenue of $2.1 billion increased 4.1%, comprised of organic revenue growth of 3.8% and a 1-month contribution from RavenVolt. Moving on to slide 6. Net income in the Q4 was $62.8 million, or $0.96 per diluted share, up 29% and 32% respectively versus last year. These increases were largely driven by higher segment earnings on higher revenue, the benefits of the prior year self-insurance adjustments, and lower ELEVATE costs, partially offset by higher interest expenses and labor costs. Adjusted net income of $66.2 million increased 11%, and adjusted earnings per diluted share of $1.01 was up 13% over the prior year period. These year-over-year increases primarily reflect higher segment earnings, including the benefits from price increases and our cost management efforts, partially offset by higher interest expense and labor costs. Adjusted EBITDA grew 10% over the prior year to $144.2 million, and adjusted EBITDA margin increased 40 basis points to 7.2%. These year-over-year improvements were driven by higher segment earnings, including several project closeouts in Technical Solutions and normalized performance in Aviation as compared to the prior year, which was impacted by adverse project timing. Now turning to our segment results, beginning on slide 7. B&I revenue increased modestly to $1 billion, partly due to strong sport and special event demand, which helped to offset reduced demand in the commercial real estate market. Operating profit in B&I decreased to $84.6 million, and operating margin declined to 8.2%, as adverse service mix was partially offset by price increases and cost actions. Aviation grew 16% to $248.2 million, once again driven by strong demand for leisure and business travel and new business wins. We expect demand within our Aviation segment to remain robust going forward. Aviation's operating profit was $16.4 million versus $1.3 million in the prior year period, and operating margin expanded significantly to 6.6%. These increases reflected the absence of the adverse project timing, which negatively impacted the prior year period, as well as benefits of higher volume and price increases. Turning to slide eight, Manufacturing and Distribution revenue grew 5% to $391.2 million, reflecting broad-based demand. Operating profit increased to $42 million, while operating margin declined 40 basis points to 10.7%. Profit and margin performance was largely due to customer mix. Education revenue increased 6% to $229.8 million, benefiting from the addition of new clients earlier in the year. Education operating profit was $10.2 million, up 23% over the prior year period, while margin increased 60 basis points to 4.4%. These increases were largely attributable to increased organic revenue growth and a modestly improved labor market. Technical Solutions grew 6% over the prior year period to $190.8 million, comprised of an even split between organic growth and acquisition contribution. This performance, largely reflecting the closeout of several legacy projects and progress on battery storage system projects. Of note, RavenVolt contributed to organic growth beginning in September. After these project closeouts, as Scott noted, Technical Solutions backlog now exceeds $410 million, a large portion of which is scheduled to convert to revenue in 2024. Technical Solutions operating profit was $24.4 million, and margin was 12.8%, compared to operating profit of $20.9 million and margin of 11.7% last year. These increases were largely due to higher volume and approximately $2 million of one-time gains related to certain contracts. Moving on to slide nine. We ended the Q4 with total indebtedness of $1.4 billion, including $58.2 million of standby letters of credit, resulting in a total debt to pro forma adjusted EBITDA ratio of 2.3 times. At the end of Q4, we had available liquidity of $552.5 million, including cash and cash equivalents of $69.5 million. Free cash flow was strong in the Q4 at $121 million and was $191 million for the year. Excluding full-year ELEVATE and integration costs of $71 million, our CARES Act repayment of $66 million, and employee retention credits received of $24 million, normalized free cash flow was $303 million in 2023. We repurchased 2.7 million shares of common stock in the Q4 at an average price of $40.82 per share, for a total cost of $110 million. For the full year, we repurchased 3.3 million shares for $137.1 million, excluding excise taxes, and reduced our share count by 5%. Also, subsequent to the year-end, our board approved a $150 million expansion of our share repurchase authorization. The total current authorization is now $210 million. Interest expense was $20.5 million, up $4.5 million from the prior year period. Now let's move on to the full year fiscal 2024 outlook, as shown on slide 10. As Scott mentioned, our view for 2024 is consistent with the comments we made on the Q3 earnings call. We expect full 2024 adjusted EPS to be in the range of $3.20-$3.40. Adjusted EBITDA margin is expected to be 6.2%-6.5%, largely driven by a shift in business mix. This includes expected lower B&I janitorial activity, a change in revenue mix in M&D, and continued labor cost pressure, partially offset by ELEVATE and cost initiatives as well as price increases. Interest expense is estimated to be in the range of $82 million-$86 million. The tax rate before discrete items is expected to be between 29%-30%. Lastly, full-year normalized Free Cash Flow is expected to be in the range of $240 million-$270 million, excluding the estimated $45 million of ELEVATE and integration costs, the majority being ELEVATE investments. With that, let me turn it back to Scott for closing comments. Thanks, Earl. I want to thank our teams for their incredible efforts and dedication throughout the year. Despite challenging commercial real estate and labor markets, and through the introduction of new technology and processes, our teams never took their eyes off our clients and delivered solid performance. I wish you and your loved ones a very happy and healthy holiday season and a happy New Year. With that, let's take some questions. Thank you. We will now be conducting a question-and-answer session. If you would 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 would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for your questions. Our first questions come from the line of Jasper Bibb with Truist. Please proceed with your questions. Hey, good morning, guys. Wanted to ask what you're seeing from a labor inflation and pricing perspective, and if you could kind of provide the underlying assumptions for 2024 guidance with respect to labor cost inflation and recovery rate there, that would definitely be helpful. Thanks. Sure. So you know, for us, we're thinking it's going to be in the 4%-5% range. A lot of the collective bargaining agreements for the janitorial workers across the country are in process right now, and we feel encouraged that they're going to end in that range. So our guesses on the collective bargaining agreements, which are the union-based agreements, they're going to be in that 4% range, and it will be a little higher for the non-union, you know, as we look to those markets with the lower labor rates. So, again, that 4%-5% range. And, you know, just as a reminder, we've been successful over the last few years of recovering 75%-80% of that. So, kind of that's what we're thinking. Okay. Makes sense. And then was hoping to get an update on the ELEVATE progress. I think on the last call you mentioned. You had already captured about 50% of the cost benefit there. Any color on where you expect to be from a cost capture perspective by the end of fiscal 2024? And are there any kind of key deliverables like ERP deployments we should be aware of over the next 12 months? Yeah. So we're probably, I think we're in the kind of that 30% range, a third of the benefits that we've captured to date. And, you know, it's something that escalates over time. As we actually execute on the different industry group segments, then we can put in some of the tools. So I think it's just gonna be a normal ramping up to that range that we laid out of $110 million-$130 million over time. So we're right on track with our cadence on that. So everything is going as planned right now. Got it. Last question for me. The company really stepped up the repurchase this quarter. How should we think about the pace of capital deployment into 2024? Yeah, no, thanks for the question, Jasper. I would say that, you know, we're really pleased that we were able to, you know, return capital back to our shareholders over Q4, especially, you know, in light of the compression in our share price that we saw after our Q3. And as we look to the future, you know, within FY 2024, at a minimum, you know, we'll buy back shares against the dilutive share-based compensation. You know, we have board authorization now for about $210 million worth of shares, and so we'll be opportunistic where it makes sense. Makes sense. Thanks for taking the questions, guys. Thanks. Thank you. Our next question has come from the line of Faiza Alwy with Deutsche Bank. Please proceed with your questions. Yes. Hi, good morning. So I wanted to ask about Technical Solutions. I know you don't guide to revenues, but it sounds like, you know, the range of alternatives or the range of scenarios on Technical Solutions is quite wide, just given timing. So give us a bit more color on, you know, how do you expect the, you know, pacing of these new projects, project revenues to be realized, and how do you expect sort of the underlying business to perform within Technical Solutions? It's great. Thanks for the question. So, well, look, we feel as strongly about Technical Solutions as we ever have. We love kind of the end markets that we're serving here, and we think it's gonna be, it's gonna be a strong year for Technical Solutions in 2024. You know, they continually post high single-digit margins. We're expecting that again. And remember, Faiza, the cadence of Technical Solutions, it starts off a little soft and then progresses through the year from a margin standpoint, 'cause it is quite seasonal. In the summer, you do a lot of the work, right? So, we're excited about that. You know, we don't guide to revenue, but we're excited about the potential for growth this year. And we have the strongest backlog that we've ever had in... You know, just as a reminder, backlog are the contracts that are signed, signed and locked, and it's just a question of starting the work. So we're feeling really good about Technical Solutions this year. Just a follow-up on that. Now that you've ended, you know, fiscal 2023, could you give us a bit of a breakdown? Because I know there's a bunch of different, you know, items underneath Technical Solutions. There's the, there's the Bundled Energy, there's other things. There's, you know, the EV charging segment. Can you give us just a breakdown of the, you know, the revenues in fiscal 2023? Sure. So yeah, there's really three core areas. There's Bundled Energy Solutions, EV, and RavenVolt. And, you know, I guess the best way to describe it is our sentiment on those different industries, in, you know, those sub-industries. And we just feel really strong about EV. You know, EV all the, all the signs are pointing to strong growth there. 'Cause if you remember, like, there's been some news coverage lately that EV is, you know, maybe taking a step back or is not as exciting as it was, but that's all in context to the crazy growth rates that they've had in the past. The truth is, what a lot of the car dealers are realizing is the impediment to this excitement is, you know, they call it range fear, that people feel like they're gonna run out of power, and that's because there's not a lot of infrastructure. So for us, the catalyst, you know, the way we see EV, the catalyst for our growth is gonna be the fact that infrastructure is so light. So we're really happy about our backlog. So EV is gonna be a really strong segment for us. And RavenVolt, you know, we're really excited about. We have a very strong backlog. Probably close to half of our backlog in Technical Solutions is around RavenVolt and these big projects. You know, the frustrating part, frankly, is the fact that it's really hard to time these quarter by quarter. Because the way you got to think about it, Faiza, it's not, you know, they're basically battery backup projects, right? And it's not like you're going in and installing one battery. These are battery fields, some of them are the size of a football field, right? So it's almost like a construction project and timing a construction project, getting the permits, getting the equipment. So when you look across a year, we feel really confident that RavenVolt's gonna perform. But, you know, can I tell you whether or not, you know, Q2 is gonna be stronger than Q1? It's hard to get that insight, but we're getting better at it, frankly. We think the back half of the year is gonna be stronger than the first half of the year right now, but RavenVolt is gonna be another big, strong performer for ATS. Then the last piece is Bundled Energy Solutions, and that's the one that's gonna be most pressured. The way, the way I want you to think about it, think about these big projects where you go in and retrofit a school, and it's a $15 million project, changing out the lighting, the air conditioning equipment, the heating equipment. What ends up happening there is it's, it's high capital for these schools, and the IRRs were typically really strong when interest rates are low. But now that interest rates are higher, it's, it's causing them to, to push and to see, well, will interest rates come down? What's gonna happen? That's why you're seeing a little bit of a setback in Bundled Energy Solutions. Plus, there's been a lot of government funding through the CARES Act, and so there's been a lot of free money out there for schools. So we think that's gonna be sunsetting towards the end of this year. So I would suggest that Bundled Energy Solutions will be soft in 2024, more excited about 2025. But that being said, they'll still perform, just not at their kind of run rate that they used to be at, where it was over $200 million in projects. It'll probably be around $100 million this year, which is still fairly strong, but not what we're used to. So hopefully that gives you more color. Yes, thanks. Thanks, thanks a lot for that. And then just a quick one for Earl. On your interest expense guide, are you assuming any debt paydown? And, you know, just talk a little bit more about your, you know, capital allocation. I know you've talked about the share buyback, but is any sort of debt paydown, or are you thinking about that at all? Yeah, it anticipates marginal paydown in debt. So if you think about we have a term loan that amortizes, you know, probably about $30 million a year, and then we'll use some of the, you know, excess cash to pay down a bit of the revolver. But nothing material in that. When you look at our leverage of 2.3x, we feel very comfortable there, and we're looking to maintain that level of leverage into next year. You know, when it comes to, you know, capital allocation, you know, our plan is still consistent. We'll continue to invest in you know, our organic growth through the ELEVATE program, investing in talent, et cetera. And again, based on our strong projected cash flows, relatively low leverage, it continues to provide us with the flexibility to allocate capital, whether it's to, M&A opportunities or returning back to shareholders. Great. Thank you so much. Thanks, Faiza. Thank you. Our next question has come from the line of Andy Wittman with Baird. Please proceed with your questions. Oh, great! Thanks for taking my questions, guys, and good morning. I guess I just want to understand the quarter a little bit better, particularly in the Technical Solutions segment. And so for Earl, so you talked about how there were several closeouts in the quarter. Oftentimes, but not always, closeouts are basically accounting adjustments when projects that you've been working on come in better than expected after you finish them, and then you recognize a whole bunch of revenue and basically almost 100% profit against that revenue in the quarter. Is that what you mean by saying—by attributing the revenue growth year-over-year significantly to that kind of performance, or were you saying something different? I just want to make sure we're clear about what you're saying on the project closeouts and how that contributed to revenue and profits. Yeah, no, I think you got it spot on, Andy. You know, there were a number of projects that, you know, closed out, and as a result of that, you're actually able to, you know, do your final billings. You know, any holdouts that you actually had, you're now able to capture that. And in the quarter, that amounted to about, you know, $2 million. When we talk about you know, the profitability in Q4, remember, Q4 is... You know, this is a seasonal business and typically back half, with Q4 being our largest quarter. So keep that in mind. That by no means would be a run rate into Q1, which we know, you know, typically would be a lower quarter than others. Okay, but your revenue growth was like $11 million or $12 million in the quarter for Technical Solutions. The gain was only $2 million. I guess it sounded like the other, whatever, 9-ish million dollars of revenue might also be attributable to closeouts. Is that true or not? Trying to—sorry, just trying to understand that. No, that would be the regular. If you think about on RavenVolt, where you know, throughout the first half of the year, you know, we actually had delays on certain battery storage projects as we're, you know, waiting for not only inventory supplies, but getting a lot of the authorizations finalized. So we actually were able to close out on a number of those deals in Q4, and as a result, you're seeing the revenue and the associated profit. ... Okay, that's helpful. And then, Scott, just on the B&I segment, I guess you mentioned in your press release or your report here, your slide deck, you talked about kind of diversification. I just wanna make sure I'm understanding what you're saying there as well. Is that meaning you had the good entertainment and sports and diversified in that way, from, I don't know, let's call it the traditional janitorial services? Or is there some other dynamic there that we should be aware of, that- Yeah, no- You're referring to, that you're referring to in diversification? Yeah, no, no, that's a great question. Yeah. It's partly, it's partly that. It's partly we have a little healthcare in there, but it's more importantly, the engineering segment. So if you think about, especially with, with the Able acquisition, where between Able and the legacy ABM, we had a lot of stationary engineers, and that's about, you know, 25% of our business is just engineering, and that doesn't change with office occupancy or density. You know, if you have eight engineers in an engine room, whether you're 80% occupied or 95%, that's really not gonna change. And we have parking in that segment as well, and that's been relatively stable since we've come out of the pandemic. So that moderates the janitorial, which is the piece of it that becomes more variable. So, you know, you know, I guess, Andy, I'm so glad you brought up this question because, like, when we look at B&I, we wouldn't want you to look at that as just purely janitorial and having all that kind of variability, so to speak, based on density, 'cause the truth of it is, it's so mitigated by, again, the engineering specifically. Yeah. Okay. Just wanted to make sure I understood that, and now we do. And then just on the, I guess, the ELEVATE program here. So you said it's taking about a year longer. The new number is what? Two, 215, I think I heard. 200 to 215. I think previously the high end of the total ELEVATE spend was 175. So, so that's, that's the delta. Looks like... I guess you were always planning for, like, around, I think, $15 million of spend in 2024. So, am I doing the math here? Like, the extra $30 million bucks with, with the extra year, is the delta that takes you from that 175 number into the, into the low twos. Earl, is that-- am I thinking about that correctly? Is that, is that what you're saying here today? Yeah, yeah, you are. So it's a spillover. We'll have an extra year. You remember, for FY 2024, we were actually planning on that being a bit higher as it tails down throughout the... So you could almost think of, you know, rough numbers, you know, probably about $35 million in 2024, followed by, you know, 25 for the next two years. Okay. And then, Scott, can you just talk a little bit about kind of what you've learned along the way, that's causing the extra year and the extra cost here? What are some of the technical challenges or, or maybe operational challenges that go along with, the extension of the program? Sure, Andy. And, you know, these things are so complex, right? And, the way I would think about it is, when you think about deploying an ERP, like, the easiest part of it is putting a financial system in. It's all the other systems that talk to it, right? Whether it's your payroll system, your T&E system, your procurement system, and the data has to flow in and out through a pipe. It's almost like a Lego, where you got the middle of the Lego is the ERP, and then you have all these systems coming around it, creating a wheel. As part of that, you know, what we learned with education is it's just gonna take longer to get that data flow right and clean, and to set up all the processes to go in and out of the ERP. Then, once you launch the system, all the... We call it Hypercare internally, which is basically all the training, all the answering of questions of the field as they start using the new system. It's just taking longer than we originally expected, because we had no frame of reference, right? So I think the strong point here, Andy, more than anything, is this isn't, it's not a system that's off the rails. It's not like, "Hey, we were going with Oracle, and we ditched that, and now we're going to SAP." It's not like we had a specific consulting group that was helping us with some process work, and we had to change them and scrap it and start over again. So none of this is about really missteps. It's really about the fact that risk mitigation is the most important thing to us internally and, and to our shareholders, right? So we just have to make sure we do everything we can so that our invoices are right, our payables are right, and our payroll is right, and it's just gonna take a year longer. But it's all for, like, good reason. Okay, great. Thank you for that context. Have a good day, guys. Thanks, Andy. Thank you. Thank you. Our next question has come from the line of Josh Chan with UBS. Please proceed with your questions. Hi, good morning, Scott, Earl, and Paul. Good morning. Good morning. So you mentioned the margin guidance for 2024. I appreciate the drivers behind that. So I guess, as you think about going beyond 2024, how should we think about the trajectory of margins, and what are some of the factors that will drive it up or down, beyond this year? Sure, thanks. Look, we think there's gonna be—there is gonna be a cadence up to our 7.2%. I think, you know, 2025 will be one of the more challenging years for us to predict, right? Because so much of kind of the, I don't wanna say setback, but the stall in our trajectory is because of commercial real estate, and we kinda think that's a two-year overhang, 2024 and 2025. So I think, you know, once we get out of that trough, it'll be a normal cadence up. But, you know, at the same time, we're not sitting around and just admiring the problem, right? We've made some changes to our cost structure, and then, you know, the ELEVATE benefits start kicking in as we start lighting up these industry segments and put our new financial system in, and overlay the tools that, you know, I talked about in my prepared remarks, like workforce management and this app. That's gonna be a game changer because we're gonna be able to communicate with all of our frontline employees and ultimately help them manage labor during the day and night. It's just gonna be phenomenal. So I think, again, it won't be a straight line up, but the, the key thing will be: When do we think we're gonna get past the commercial real estate, you know, trough? And we're suggesting that, it's probably just another year or two. Okay. Thank you for the color there, Scott. Then I wanted to follow up on the repurchase. I guess, could you just talk to the amount of repurchase and, you know, it's obviously a lot higher than what you normally do, and so I just wonder if there's any change in philosophy in terms of how you think about the stock versus other means of deployment, mainly M&A, I suppose. Yeah, no, no change in philosophy. You know, as we mentioned, you know, we're You know, when we look at capital allocation, first and foremost, we wanna ensure that we're actually investing in our organic growth, and we feel that we actually have sufficient investments there with ELEVATE and other key investments. You know, when you look at the fact that, you know, after looking at you know, organic growth, M&A opportunities, you know, when we actually have excess cash, we look at how is the best way to deploy that back to shareholders. And after Q3, with the compression that we saw in the share price, we thought that, it was prudent to actually take actions. But going forward, we'll actually take a balanced approach. You know, we manage our leverage. You know, currently, right now, it's 2.3 times, and we anticipate that that's going to be consistent going through the next year. So we'll continue to look at opportunities, and allocate accordingly. Great. Thank you, Earl, and thank you both for your time. Thank you. Thanks. Thank you. Our next questions come from the line of Sam Kusswurm with William Blair. Please proceed with your questions. Thanks, Scott, Earl. Hope you both are doing well. Thanks for it. I guess let's start here. You mentioned last quarter that B&I could be down 2%-3% in 2024, and today's outlook commentary calls for a challenging B&I market. I guess I wanna see first if down 2%-3% is the right way to think about this business for next year still. And then I'd also like to get your thoughts on how long this type of challenging environment could last. I think you just mentioned that maybe into 2025 is where it goes to, but is there a chance that it goes beyond that? Just trying to get your broad kind of commentary there. Sure. So I think you're kind of spot on, on how you're thinking about 2024 from, from that revenue perspective on, on the growth side. So I think you hit that. And yeah, we do think it's gonna go into 2025. And it... And the, the reason we're more optimistic about 2026 and beyond, so just from a pure statistics standpoint, I think they're saying that 50% of all leases are coming due in 2024 and 2025. So you're gonna see that volatility with some of the compression, you know, because opportunistically, when your lease comes up, you have a chance to kind of, you know, narrow your density a bit. So, so that's why we think it's gonna be more of a two-year problem than extended. But more importantly than that, I have to tell you, and I think you're probably seeing it and everybody on the call is seeing it too, like, the sentiment out there is really becoming stronger and stronger on return to work. I could tell you in my CEO peer networks, all we're talking about is getting people back to the office for collaboration. There's all these studies now that are being released on effectiveness of organizations by having people, you know, on-site and collaborating. And the macroeconomic environment, you know, frankly, are giving employers more power over saying, "You have to come into the office," versus where we were a year or two ago when the labor situation was different, right? So there's a bit of a power shift going on right now in favor of employers who wanna bring people back. So I think it's episodic. I think it's 2024 and 2025. I suspect 2025 won't even be as difficult as 2024. And that's our feeling, and it seems to be the general sentiment. Awesome. Very, very helpful color. Maybe sticking with B&I then, you know, maybe you could break out the growth rates between commercial cleaning and engineering services. I guess I'd just be curious how each of those are doing within the broader portfolio. Yeah, we don't, we don't really guide to revenue or anything like that, but I will tell you, I could give you some, some high-level color, right? Engineering is just a lot more stable, right? You do not see variability in, on the downside, because, again, if you have a, an office building and it requires 12 engineers to take care of the equipment between the day shift, the night shift, and the weekend shift. You know, that equipment has to be taken care of, and it, it doesn't matter what the occupancy is, right? Because you have to run that equipment. You're still delivering air conditioning to the building. You're still doing electrical and mechanical work. You know, pumps are still breaking that have to be fixed. So this stuff all happens, and that's why when you look at it being, like, 25% of B&I, you have that stability. It's the janitorial side that ends up being more, I guess, flexible, if you will, having more variability. Gotcha. Makes sense. Maybe a final one, related more to M&D. Maybe you could characterize the growth, across the end markets, you know, parsing out the e-commerce, logistics, I think biopharma and semiconductor. And not asking for any actual numbers here, just more curious how you'd rank these in, in terms of performance or, or maybe growth opportunities, as you head into 2024. Yeah. So look, I—we've done a really good job on the e-commerce side, and we'll see some good growth there, but probably more normalized. But it's really, you know, where we're focusing now, like semiconductors, biopharma, some of the manufacturing stuff that we're doing, we think those will be higher growth areas. You know, listen, I have to tell you, like, we'll have this little impediment in 2024 because of the rebalancing of one big client, but, you know, we have every confidence in the outer years after that, that this is gonna be a high single-digit grower, you know, one of our fastest-growing in all of ABM. So really enthusiastic about the Manufacturing and Distribution industry segment. Awesome. Thanks, guys. Appreciate it. Thank you. Thank you. Our next questions come from the line of David Silber with CL King. Please proceed with your questions. Yeah. Hi, thank you. I'd like to ask a question, firstly, on your Aviation segment. So clearly not your biggest segment, in terms of revenues or absolute profit, but it was the best performer by a wide margin this year, both in revenue growth and in, well, operating income growth, and especially margin improvement. So I know there's a number of initiatives that you've undertaken over the last couple of years, which I would say are starting to bear fruit, but, you know, on a scale of 1 to 10 or 0 to 100 or whatever, where do you think, ABM is in terms of fully, you know, exploiting the opportunities from your evolving strategies there? In other words, should we expect another, you know, meaningful improvement next year, you know, assuming that, I don't know, air flight or air travel trends continue as positively as they've been? Thank you. Sure. It's a good question. So, you know, there's so much going on in Aviation that we're excited about. Firstly, we've had a new management team in place for the last couple of years that have been phenomenal, both on the ability to operate the business and then on business development we've been really excited about. And, you know, you may remember, David, that we started a few years back, shifting our focus to airports or and less on airlines because we saw all the modernizations that were happening across the country. And the perfect example of that is LaGuardia. Just got named the best new airport in the world. Terminal B is like, I don't know, 80% of that airport. We do everything there. We just got a very large... We call it APS, which is ABM Performance Solutions, which is integrated facility services. Basically, where the client says, "Look, you self-perform a bunch of these services. In addition to that, why don't you take care of all our subcontracted services as well?" So basically bundling everything together and letting us run it. So we just got a massive contract at LaGuardia to handle all of Terminal B, also Providence School District we got. So we're excited about the ability to take this ABM Performance Solutions to airports around the country, and our pipeline is growing there. So, you know, air travel is up. It continues to be up. Aviation had a really, really great year. It was also helped, if you remember, in Q1 by the parking project that happened in 2022. A lot of the expenses happened in 2022, but we got paid in 2023, so the profit flow-through is about $11 million-$12 million. So that helped as well. But we're very, very enthusiastic about Aviation and its growth ability for next year, and again, loving the team. Okay, thank you for that. I just would like to ask for a clarification on the share repurchase activity this quarter. So there were a couple of comments, certainly already, but I'm just trying to sharpen my understanding. Should I assume that the bulk of the fourth quarter activity was kind of concentrated early in the quarter? In other words, you know, after your stock was quite volatile 90 days ago. Is that, you know, when the activity was concentrated, in other words, more opportunistic, or would you say it was spread a little more evenly and hence maybe more, I don't know, programmatic or, you know, more balanced through the quarter? Thank you. Yeah, no, it was definitely more front-end loaded. And hence, you know, when we look at the average price, which was $40.82- ... That is emblematic of kind of like where it was trading shortly after, you know, the Q3 earnings call. Okay, great. Thank you for that. And then last question would be, for Scott, I guess. And Scott, I'd, I'd like you to maybe look back a few years and then, you know, compare it to today. But in the immediate aftermath of the pandemic, and I'm sorry, I should say this is kind of related to your advantage, competitive advantages and your ability to gain, gain new business. But in the immediate aftermath of when the pandemic began, you know, your company was kind of in a very strong position in some ways to capture new business 'cause of your scale, 'cause of your ability to source, you know, scarce equipment, better purchasing power, et cetera, as well as staffing, a number of advantages. You know, we're kind of in the post-pandemic, and at least in some parts of your business, commercial real estate, you know, things are structurally a little softer. But my sense is that, you know, your go-to-market strategy or your, you know, your value proposition to your core, like, bread-and-butter, industrial or commercial customer, is probably, you know, a little bit stronger even than it was a few years ago, just in terms of, maybe the enhancements from, you know, your internal, ELEVATE program and whatnot. But, you know, how would you think about just for the core kind of bread-and-butter clientele across, you know, education, manufacturing, et cetera, you know, how has your value proposition kind of shifted, let's say, over the last couple of years, and in particular, as you kind of look at the post-pandemic environment? Maybe if you could comment on that, that would be helpful. Yeah, sure. Yeah, look, I think for us, as a brand, we, it's certainly... I guess our positioning has changed a great deal. I mean, as we came through this pandemic different than our competitors, and, you know, I think our competitors would admit that, too, you know, with developing our enhanced clean product, we got so much more exposure on social media. If you remember, we did a commercial. So, we've become more prevalent and, it's just a different swagger, I guess, if you will, when we're pursuing business development and talking to clients. And then you layer on top of that, David, all the investments that we're making in technology and, you know, to sit across from a client in a presentation and show them, you know, a digital dashboard and how we're monitoring their facilities and, you know, with this ABM Team Connect and how very shortly all of our team members in the field are gonna have an app that is gonna connect them to the client, to us, it's just gonna be game changer. So, I just feel like this momentum that we're having is very palpable, and I would close off the comment by saying, you know, we just had another record year of new sales. You know, we were... To give you context, a few years back, we put a true north of, you know, is it possible to possibly bring in $1 billion in new sales? And we were like, that was our, that was our, like, aspiration that, you know, was really far out there. And this year we did over $1.6 billion in new sales. I mean, what we brought in, in new sales is probably three times bigger than our nearest competitor in terms of total revenue, not what they brought in. I'm talking about their book of business. So, we feel like we have a really compelling value proposition. Thank you. Our final questions come from the line of Marc Riddick with Sidoti. Please proceed with your questions. Hey, good morning, everyone. I'll, I'll be brief on this. I know we've, we've gone deep into a lot of things. So I want you to talk a little bit about what you're seeing with, with education, and the commentary was around the, you know, the, the strength that you saw there and, and some of the, the, the prior new business wins, the benefits of that. Maybe you could bring us a little bit of an update as to maybe what you're seeing there on revenue visibility, the margin profile there, and, you know, the, the opportunity to continue to gain share in, in, in the space. Sure. You know, we're like so happy about our education positioning. We're, you know, we're the clear number one in education. We have and we're split between K through twelve and higher ed. We had great growth this year, brought in over $100 million in new business. You know, never done that before. And our margins are up since the pandemic, you know, we've held on to that. And then our what I said earlier, Mark, about our APS or our integrated solution that we not only got at LaGuardia, but Providence School District, that's something that we're pitching now to our educational clients, that, like, "Listen, we can do so many things in self-perform. Put everything under us, and we'll strategically manage it." Our pipeline is really growing there. We picked up George Washington University last year, so we're just really excited about that, that industry group. And, you know, we typically project like kind of GDP-ish growth, and hopefully we'll get to GDP plus. Usually, there, it's longer decision time frames in, in that segment, but, again, the proof's in the pudding, and we just had a, a tremendous year this year. So I, I appreciate you asking that question. Absolutely. Thank you. Thank you. Thank you. We have reached the end of our question-and-answer session. I would now like to turn the call back over to Scott Salmirs for any closing remarks. Hey, I just wanted to thank everybody for their interest and, you know, we were excited to close out the year the way we did. And, you know, 2024 will be a challenging year for everybody in the business environment. We know that, but I could just tell you that this team at ABM is gonna be attacking, attacking it with enthusiasm, and we're really excited about it. So have an amazing holiday, everybody. Hopefully, you get some time with your loved ones, and we look forward to giving you an update in Q1. So take care, everybody. Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect at this time. Enjoy the rest of your day.