ABM Industries Inc Q4 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Joshua Chan - UBS AG - Analyst : I guess I was -- I'm going to ask about the margin trajectory of the business. I think you introduced the segment operating margin metric. I was just wondering, I guess, what are the drivers between what seems like a relatively flat margin outlook for '26 despite some restructuring savings coming into the business? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, ABM.N - Q4 2025 ABM Industries Inc Earnings Call

Question: Joshua Chan - UBS AG - Analyst : Okay. Great. Thank you for that. And then maybe a question on the deal. Could you just talk about sort of the strategic attraction of the deal, kind of why you pursue the deal? And then also from a financial perspective, the switch from being dilutive in '26 to accretive in '27. Could you just kind of talk a little bit about whether that's because amortization goes down or whether that's just pure business growth and margin expansion?

Question: Joshua Chan - UBS AG - Analyst : Very clear. Thank you, both, for the color and the time.

Question: Jasper Bibb - Truist Securities - Analyst : I wanted to ask about your experience with pricing concessions and some of the more challenged US office markets you talked about last quarter. Just hoping you could clarify if you've seen any more customer concessions in the B&I business? Or has that slowed down?

Question: Jasper Bibb - Truist Securities - Analyst : Yeah, that's helpful. And then I guess, just hoping you could provide a bit more detail on the remaining pieces of the ERP road map that are coming in '26, and how that factors and how you're thinking about the free cash flow outlook for the year?

Question: Jasper Bibb - Truist Securities - Analyst : All right. Thanks for taking my questions.

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : Maybe David, can you just keep going a little bit more on the free cash flow. The $250 million normalized, can you call out what the items that are unusual onetime items that we should be considering in the year? Obviously, some of the restructuring is going to have probably some cash cost. Although it sounds like you got to a lot of that. Maybe if you could just bridge us to what the actual number will be [ex] fee items, just so we have an understanding of some of those ins and outs?

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : Super helpful for those clarifications. Just speaking of earn-outs and payouts, does the WGNSTAR -- is this cash payout that's expected in your fiscal second quarter each or does this one also have some contingencies, earnouts, what have you associated with that? And if you can, if there are any, just -- what can you tell us about those recognizing that that deal has not yet closed? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, ABM.N - Q4 2025 ABM Industries Inc Earnings Call

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : Got it. Let's see. Maybe one other one. Can you -- maybe, David, just for understanding here, what is -- what was the segment operating profit in fiscal 2025? I just want to make sure that I understand kind of where you are on the metric, so I can understand the guidance.

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : Got it. And then just maybe a final question for me. Obviously, again, you said that the restructuring program has been substantially activated here already. Can you talk about -- how much is left to go and how the rest of it stays [within] during the course of fiscal 2026? And where the benefits should accrue, I guess, there's some accrual to '27 here?

Question: Andrew Wittmann - Robert W. Baird & Co Inc - Analyst : Got it. Okay. I think that's it. Just those clarification. Thank you so much.

Question: Faiza Alwy - Deutsche Bank AG - Analyst : I wanted to ask more about the WGNSTAR acquisition. I think, Scott, you mentioned that there's a very small level of business that is outsourced in that sector right now. I guess I'm curious why that is? And are you anticipating that there's going to be -- I assume you're anticipating that there's going to be more of a shift towards outsourcing? And so give us some color around why that is? And I guess related to that, talk a bit about the underlying competitive environment. Is there a potential additional roll-up opportunity? How should we think about future M&A in this space?

Question: Faiza Alwy - Deutsche Bank AG - Analyst : Great. And then just wondering if you can be a bit more specific around just again, the dilution in '26 and the accretion in '27. Maybe give us a sense of what your -- like what the margins or EBITDA margins are in the business, or the segment operating margin, if you want to put it that way? And then I guess what you're assuming for interest expense and amortization for '26? And then how should we think about -- what goes into the synergies as we think about that accretion in 27? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, ABM.N - Q4 2025 ABM Industries Inc Earnings Call

Question: Faiza Alwy - Deutsche Bank AG - Analyst : Great. That's all very helpful. Maybe if I can just ask a question on Technical Solutions. Give us your -- how should we think about the lay of the land there? I know that business can be pretty lumpy. So if there's any additional perspective you can provide around the go-forward and the underlying environment and pipeline, that would be really helpful.

Question: Faiza Alwy - Deutsche Bank AG - Analyst : Great. Thank you so much.

Question: Marc Riddick - Sidoti & Company LLC - Analyst : I just wanted to sort of touch maybe a little bit on the potential acquisition pipeline following this purchase. Maybe what we're looking at as far as leverage levels post-transaction? I'm assuming it looks like we might be approaching around two or so. So maybe you can talk about your comfort level on leverage range and maybe what the acquisition pipeline looks like currently? And then I have a follow up on the acquisition. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 17, 2025 / 1:30PM, ABM.N - Q4 2025 ABM Industries Inc Earnings Call

Question: Marc Riddick - Sidoti & Company LLC - Analyst : And then the press release [said] the details as far as trailing revenue and the like. Is there any particular seasonality we should be thinking about for acquisition or whether -- or any sort of particular SKU either from a seasonality standpoint or a geographic standpoint?

Question: Marc Riddick - Sidoti & Company LLC - Analyst : Okay. Thank you very much.