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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2022
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from              to             
Commission File Number: 1-8929 
abm-20220430_g1.jpg
ABM INDUSTRIES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
abm-20220430_g2.jpg
94-1369354
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
__________________________
One Liberty Plaza, 7th Floor
New YorkNew York 10006
(Address of principal executive offices)

(212) 297-0200
(Registrant’s telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
__________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Common Stock, $0.01 par valueABMNew York Stock Exchange



Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes      No   
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No   
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes     No
Number of shares of the registrant’s common stock outstanding as of June 8, 2022: 66,788,132



ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
SIGNATURES



FORWARD-LOOKING STATEMENTS
This Form 10-Q contains both historical and forward-looking statements regarding ABM and its subsidiaries (collectively referred to as “ABM,” “we,” “us,” “our,” or the “Company”). We make forward-looking statements related to future expectations, estimates, and projections that are uncertain and often contain words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “outlook,” “plan,” “predict,” “should,” “target,” or other similar words or phrases. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties, and assumptions that are difficult to predict. Particular risks and uncertainties that could cause our actual results to be materially different from those expressed in our forward-looking statements include those listed below.
The novel coronavirus (“COVID-19”) pandemic (the “Pandemic”) has had and is expected to continue having a negative effect on the global economy and the U.S. economy. It has disrupted and is expected to continue disrupting our operations and our clients’ operations, which may adversely affect our business, results of operations, cash flows, and financial condition.
Our success depends on our ability to gain profitable business despite competitive market pressures.
Our business success depends on our ability to attract and retain qualified personnel and senior management and to manage labor costs.
Investments in and changes to our businesses, operating structure, financial reporting structure, or personnel relating to our multiyear strategic plan (“ELEVATE”), including the implementation of strategic transformations, enhanced business processes, and technology initiatives, may not have the desired effects on our financial condition and results of operations.
Our ability to preserve long-term client relationships is essential to our continued success.
Our international business involves risks different from those we face in the United States that could have an effect on our results of operations and financial condition.
Our use of subcontractors or joint venture partners to perform work under customer contracts exposes us to liability and financial risk.
Acquisitions, divestitures, and other strategic transactions could fail to achieve financial or strategic objectives, disrupt our ongoing business, and adversely impact our results of operations.
We may experience difficulties integrating our acquisition of Crown Building Maintenance Co. and Crown Energy Services, Inc. (collectively, “Able”) and may not realize the growth opportunities and cost synergies that are anticipated from the acquisition of Able.
We manage our insurable risks through a combination of third-party purchased policies and self-insurance, and we retain a substantial portion of the risk associated with expected losses under these programs, which exposes us to volatility associated with those risks, including the possibility that changes in estimates to our ultimate insurance loss reserves could result in material charges against our earnings.
Our risk management and safety programs may not have the intended effect of reducing our liability for personal injury or property loss.
We may experience breaches of, or disruptions to, our information technology systems or those of our third-party providers or clients, or other compromises of our data that could adversely affect our business.
Unfavorable developments in our class and representative actions and other lawsuits alleging various claims could cause us to incur substantial liabilities.
A significant number of our employees are covered by collective bargaining agreements that could expose us to potential liabilities in relation to our participation in multiemployer pension plans, requirements to make contributions to other benefit plans, and the potential for strikes, work slowdowns or similar activities, and union organizing drives.
Our business may be materially affected by changes to fiscal and tax policies. Negative or unexpected tax consequences could adversely affect our results of operations.
Changes in general economic conditions, such as changes in energy prices, government regulations, or consumer preferences, could reduce the demand for facility services and, as a result, reduce our earnings and adversely affect our financial condition.
Future increases in the level of our borrowings or in interest rates could affect our results of operations.
Impairment of goodwill and long-lived assets could have a material adverse effect on our financial condition and results of operations.
1


If we fail to maintain proper and effective internal control over financial reporting in the future, our ability to produce accurate and timely financial statements could be negatively impacted, which could harm our operating results and investor perceptions of our Company and, as a result, may have a material adverse effect on the value of our common stock.
Our business may be negatively impacted by adverse weather conditions.
Catastrophic events, disasters, and terrorist attacks could disrupt our services.
Actions of activist investors could disrupt our business.
The list of factors above is illustrative and by no means exhaustive. Additional information regarding these and other risks and uncertainties we face is contained in our Annual Report on Form 10-K for the year ended October 31, 2021, and in other reports (including all amendments to those reports) we file from time to time with the Securities and Exchange Commission (“SEC”).
We urge readers to consider these risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.
2


PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS.
ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(in millions, except share and per share amounts)April 30, 2022October 31, 2021
ASSETS
Current assets
Cash and cash equivalents$48.9 $62.8 
Trade accounts receivable, net of allowances of $28.4 and $32.7
   at April 30, 2022 and October 31, 2021, respectively
1,224.7 1,137.1 
Costs incurred in excess of amounts billed72.3 52.5 
Prepaid expenses98.2 88.7 
Other current assets64.0 60.0 
Total current assets1,508.2 1,401.2 
Other investments15.8 11.8 
Property, plant and equipment, net of accumulated depreciation of $288.5 and $274.7
    at April 30, 2022 and October 31, 2021, respectively
106.9 111.9 
Right-of-use assets115.4 126.5 
Other intangible assets, net of accumulated amortization of $423.5 and $389.3
    at April 30, 2022 and October 31, 2021, respectively
399.5 424.8 
Goodwill2,292.2 2,228.9 
Other noncurrent assets148.2 131.2 
Total assets$4,586.3 $4,436.2 
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of debt, net$181.5 $31.4 
Trade accounts payable263.3 289.4 
Accrued compensation205.3 238.0 
Accrued taxes — other than income127.5 124.9 
Insurance claims170.3 171.4 
Income taxes payable6.2 11.4 
Current portion of lease liabilities30.0 31.8 
Other accrued liabilities296.7 387.4 
Total current liabilities1,280.7 1,285.8 
Long-term debt, net986.6 852.8 
Long-term lease liabilities106.0 116.6 
Deferred income tax liability, net65.6 22.5 
Noncurrent insurance claims409.5 413.3 
Other noncurrent liabilities59.5 123.5 
Noncurrent income taxes payable8.8 12.5 
Total liabilities2,916.7 2,827.0 
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.01 par value; 500,000 shares authorized; none issued
  
Common stock, $0.01 par value; 100,000,000 shares authorized;
66,780,022 and 67,302,449 shares issued and outstanding at
April 30, 2022 and October 31, 2021, respectively
0.7 0.7 
Additional paid-in capital716.4 750.9 
Accumulated other comprehensive loss, net of taxes(25.2)(22.5)
Retained earnings977.7 880.2 
Total stockholders’ equity1,669.6 1,609.2 
Total liabilities and stockholders’ equity$4,586.3 $4,436.2 
See accompanying notes to unaudited consolidated financial statements.
3


ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(UNAUDITED)
Three Months Ended April 30,Six Months Ended April 30,
(in millions, except per share amounts)2022202120222021
Revenues $1,897.8 $1,497.4 $3,834.1 $2,989.8 
Operating expenses 1,648.3 1,274.5 3,307.9 2,523.8 
Selling, general and administrative expenses156.8 161.9 309.9 284.5 
Amortization of intangible assets17.6 10.7 35.2 21.5 
Operating profit75.0 50.3 181.0 160.1 
Income from unconsolidated affiliates0.6 0.2 1.0 0.8 
Interest expense(7.8)(7.8)(14.1)(16.3)
Income before income taxes67.8 42.8 168.0 144.6 
Income tax provision(19.0)(11.7)(43.2)(38.9)
Net income48.8 31.1 124.8 105.7 
Other comprehensive income (loss)
Interest rate swaps11.3 1.6 11.9 2.8 
Foreign currency translation and other(8.9)1.2 (11.4)5.2 
Income tax provision(3.0)(0.4)(3.2)(0.8)
Comprehensive income$48.1 $33.4 $122.1 $112.9 
Net income per common share
Basic $0.73 $0.46 $1.85 $1.57 
Diluted$0.72 $0.46 $1.84 $1.56 
Weighted-average common and common equivalent
   shares outstanding
Basic67.2 67.3 67.5 67.2 
Diluted67.5 67.8 67.9 67.7 
See accompanying notes to unaudited consolidated financial statements.

4


ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(UNAUDITED)
Three Months Ended April 30,Six Months Ended April 30,
2022202120222021
(in millions, except per share amounts)SharesAmountSharesAmountSharesAmountSharesAmount
Common Stock
Balance, beginning of period67.4 $0.7 67.1 $0.7 67.3 $0.7 66.7 $0.7 
Stock issued under employee stock purchase and share-based compensation plans
    0.5  0.4  
Repurchase of common stock(0.7)   (1.0)   
Balance, end of period66.8 0.7 67.1 0.7 66.8 0.7 67.1 0.7 
Additional Paid-in Capital
Balance, beginning of period737.0 726.9 750.9 724.1 
Stock issued (taxes withheld) under employee stock purchase and share-based compensation plans, net1.0 1.1 (8.1)(4.6)
Share-based compensation expense 8.4 9.1 16.8 17.6 
Repurchase of common stock(30.0) (43.3) 
Balance, end of period716.4 737.1 716.4 737.1 
Accumulated Other Comprehensive Loss, Net of Taxes
Balance, beginning of period(24.6)(25.9)(22.5)(30.8)
Other comprehensive (loss) income(0.6)2.3 (2.6)7.2 
Balance, end of period(25.2)(23.6)(25.2)(23.6)
Retained Earnings
Balance, beginning of period942.1 867.5 880.2 806.4 
Net income48.8 31.1 124.8 105.7 
Dividends
Common stock ($0.195, $0.190, $0.390, and $0.380 per share)
(13.0)(12.7)(26.2)(25.4)
Stock issued under share-based compensation
    plans
(0.2)(0.2)(1.1)(1.0)
Balance, end of period977.7 885.6 977.7 885.6 
Total Stockholders’ Equity$1,669.6 $1,599.8 $1,669.6 $1,599.8 
See accompanying notes to unaudited consolidated financial statements.
5


ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
Six Months Ended April 30,
(in millions)20222021
Cash flows from operating activities
Net income$124.8 $105.7 
Adjustments to reconcile net income to net cash provided by operating
    activities
Depreciation and amortization55.1 44.3 
Deferred income taxes39.0 (23.0)
Share-based compensation expense16.8 17.6 
(Recovery of)/Provision for bad debt(2.9)1.2 
Amortization of accumulated other comprehensive gain on interest rate swaps (2.9)(3.2)
(Gain)/Loss on sale of assets(0.3)1.1 
Income from unconsolidated affiliates(1.0)(0.8)
Changes in operating assets and liabilities
Trade accounts receivable and costs incurred in excess of amounts billed(93.7)(10.9)
Prepaid expenses and other current assets(7.1)(5.8)
Right-of-use assets11.1 11.2 
Other noncurrent assets(7.3)15.2 
Trade accounts payable and other accrued liabilities(163.3)55.3 
Long-term lease liabilities(10.6)(10.0)
Insurance claims(11.5)(2.4)
Income taxes payable(17.1)11.5 
Other noncurrent liabilities(66.6)(36.0)
Total adjustments(262.3)65.5 
Net cash (used in) provided by operating activities(137.5)171.2 
Cash flows from investing activities
Additions to property, plant and equipment(19.6)(14.9)
Proceeds from sale of assets3.9 1.5 
Purchase of businesses, net of cash acquired(56.7) 
Investments in equity securities(3.0) 
Net cash used in investing activities(75.5)(13.4)
Cash flows from financing activities
Taxes withheld from issuance of share-based compensation awards, net (9.2)(5.6)
Repurchases of common stock(43.3) 
Dividends paid(26.2)(25.4)
Borrowings from debt720.6 2.6 
Repayment of borrowings from debt(437.3)(82.8)
Changes in book cash overdrafts(9.1)(13.3)
Financing of energy savings performance contracts6.6 7.5 
Repayment of finance lease obligations(1.0)(1.5)
Net cash provided by (used in) financing activities201.2 (118.5)
Effect of exchange rate changes on cash and cash equivalents(2.2)2.2 
Net (decrease) increase in cash and cash equivalents(14.0)41.5 
Cash and cash equivalents at beginning of year62.8 394.2 
Cash and cash equivalents at end of period$48.9 $435.7 
See accompanying notes to unaudited consolidated financial statements.
6


ABM INDUSTRIES INCORPORATED AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. THE COMPANY AND NATURE OF OPERATIONS
ABM is a leading provider of integrated facility services with a mission to make a difference, every person, every day. We are organized into four industry groups and one Technical Solutions segment:
abm-20220430_g3.jpg
Through these groups, we offer janitorial, facilities engineering, parking, and specialized mechanical and electrical technical solutions, on a standalone basis or in combination with other services.
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with (i) United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and (ii) the instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of our management, our unaudited consolidated financial statements and accompanying notes (the “Financial Statements”) include all normal recurring adjustments that are necessary for the fair statement of the interim periods presented. Interim results of operations are not necessarily indicative of results for the full year. The Financial Statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) in our Annual Report on Form 10-K for the year ended October 31, 2021. Unless otherwise indicated, all references to years are to our fiscal years, which end on October 31.
Reorganization of Our Business
Effective November 1, 2021, the Manufacturing & Distribution (“M&D”) industry group replaced our Technology and Manufacturing (“T&M”) industry group as part of our strategic transformation initiative ELEVATE. M&D retained our large manufacturing clients from T&M and added clients in the distribution sector from our Business and Industry (“B&I”) group. Technology clients with commercial real estate properties serviced by T&M shifted into B&I. Additionally, we have modified the presentation of segment revenues as inter-segment revenues are now allocated at the segment level. Our prior period segment data in Note 4, “Revenues,” and Note 12, “Segment Information,” has been reclassified to conform with our current period presentation. These changes had no impact on our previously reported consolidated financial statements.
Rounding
We round amounts in the Financial Statements to millions and calculate all percentages and per-share data from the underlying whole-dollar amounts. Thus, certain amounts may not foot, crossfoot, or recalculate based on reported numbers due to rounding.
Management Reimbursement Revenue by Segment
We operate certain parking facilities under management reimbursement arrangements. Under these arrangements, we manage the parking facilities for management fees and pass through the revenues and expenses associated with the facilities to the owners. These revenues and expenses are reported in equal amounts as costs reimbursed from our managed locations:
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Three Months Ended April 30,Six Months Ended April 30,
(in millions)2022202120222021
Business & Industry$53.9 $43.2 $106.4 $86.6 
Aviation12.5 12.9 24.8 26.5 
Total $66.4 $56.1 $131.3 $113.1 
Recently Adopted Accounting Standards
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes (Topic 740). This accounting update simplifies the accounting for income taxes and clarifies and amends existing income tax guidance. Impacted areas include intraperiod tax allocations, interim period taxes, deferred tax liabilities with outside basis differences, franchise taxes, and transactions that result in the “step-up” of goodwill. We adopted this standard, effective November 1, 2021, on a prospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, Investments–Equity Securities (Topic 321), Investments–Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815). This accounting update clarifies the interaction between the accounting for investments in equity securities under Topic 321, investments accounted for under the equity method under Topic 323, and certain derivatives instruments under Topic 815. We adopted this standard, effective November 1, 2021, on a prospective basis. The adoption of this guidance did not have a material impact on our consolidated financial statements.
No other recently adopted accounting standards have had a significant impact on our fiscal 2022 consolidated financial statements.

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3. ACQUISITIONS AND DISPOSITIONS
Acquisition of Able
On September 30, 2021, we acquired Able, a leading facilities services company headquartered in San Francisco, California, for a net cash purchase price of $747.5 million (the “Able Acquisition”). The purchase price was revised during the second quarter of 2022 to reflect a post-close purchase price adjustment related to a net working capital settlement. Pursuant to the terms of the purchase agreement, approximately $12.1 million of the cash consideration was placed into escrow accounts, of which approximately $8.2 million satisfies any applicable indemnification claims for a period of 12 months.
Preliminary Purchase Price Allocation
Our preliminary purchase price allocation is based on information that is currently available, and we are continuing to evaluate the underlying inputs and assumptions used in our valuations. Accordingly, the purchase price allocation is subject to, among other items: further analysis of tax accounts, legal matters, and the final valuation of insurance claims reserves. During the six months ended April 30, 2022, we adjusted the purchase price allocation for a working capital adjustment, probable litigation losses (as described below), and refined certain other estimates.
The following table summarizes the preliminary acquisition accounting on the date of acquisition as previously reported at year-end 2021 and at the end of the second quarter of 2022:
(in millions)Preliminary Purchase Price AllocationAdjustmentsUpdated Preliminary Purchase Price Allocation
Cash and cash equivalents$31.5 $— $31.5 
Trade accounts receivable(1)
159.3 (0.7)158.5 
Other assets24.9 (4.4)20.5 
Customer relationships(2)
220.0 — 220.0 
Trade names(2)
10.0 — 10.0 
Goodwill(3)
554.0 29.0 583.0 
Trade accounts payable(27.0)(0.5)(27.5)
Accrued compensation(38.2)(2.1)(40.3)
Insurance claims(91.6)(1.1)(92.7)
Other liabilities(41.7)(14.6)(56.3)
Deferred income tax liability, net(59.5)0.3 (59.3)
Net assets acquired$741.7 $5.8 $747.5 
(1) The gross amount of trade accounts receivable was $160.5 million, of which $1.9 million was deemed uncollectible.
(2) The amortization periods for the acquired intangible assets are 15 years for customer relationships and two years for trade names.
(3) Goodwill is largely attributable to value we expect to obtain from long-term business growth, the established workforce, and buyer-specific synergies. This goodwill is not deductible for income tax purposes.
Financial Information
The unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended April 30, 2022, include revenue attributable to Able of $282.7 million and $590.6 million, respectively, and operating profit of $11.5 million and $26.0 million, respectively. For the three and six months ended April 30, 2022, we also incurred acquisition-related and integration costs of $0.5 million and $8.8 million, respectively, which are included in selling, general and administrative expenses in the accompanying unaudited Consolidated Statements of Comprehensive Income (Loss).
The following table presents our unaudited pro forma results as though the acquisition occurred on November 1, 2020. These results include adjustments for the estimated amortization of intangible assets, interest
9


expense, and the income tax impact of the pro forma adjustments at the statutory rate of 28%. These unaudited pro forma results do not reflect the cost of integration activities or benefits from expected revenue enhancements and synergies.
(in millions)Three Months Ended April 30, 2021Six Months Ended
April 30, 2021
Pro forma revenue$1,759.5 $3,527.7 
Pro forma income from operations31.2 107.3 
Legal Matters Related to Legacy Able
Able is a party to a number of lawsuits, claims, and proceedings incident to the operation of the business, including those pertaining to labor and employment, contracts, personal injury, and other matters, some of which allege substantial monetary damages. Some of these actions may be brought as class actions on behalf of a class or purported class of employees.
If, during the purchase price allocation period, we can reasonably determine the fair values of a pre-acquisition contingency, then we will include that amount in the purchase price allocation. Any adjustment to amounts recorded for a pre-acquisition contingency subsequent to the end of the measurement period will be included within selling, general and administrative expenses in the period in which the adjustment is determined.
During the six months ended April 30, 2022, we adjusted our purchase price allocation for probable litigation losses in Able legal matters where a reasonable estimate of the loss could be made from $0.9 million to $18.1 million. We do not accrue for contingent losses that, in our judgment, are considered to be reasonably possible but not probable. The estimation of reasonably possible losses also requires the analysis of multiple possible outcomes that often depend on judgments about potential actions by third parties. Our management currently estimates the range of loss for all reasonably possible losses for which a reasonable estimate of the loss can be made for Able legal matters is between zero and $2.6 million. In some cases, although a loss is probable or reasonably possible, we cannot reasonably estimate the maximum potential losses for probable matters or the range of losses for reasonably possible matters. Therefore, our accrual for probable losses and our estimated range of loss for reasonably possible losses do not represent our maximum possible exposure.
Acquisition of Momentum
Effective April 7, 2022, we acquired Maybin Support Services Limited, Momentum Support Limited (UK), and Momentum Property Support Services Limited (collectively “Momentum”), a leading independent provider of facility services, primarily janitorial, across the Republic of Ireland and Northern Ireland, for a purchase price of approximately $54.8 million. The acquisition was accounted for under the acquisition method. Accordingly, the assets acquired and liabilities assumed were recognized on the date of acquisition at their estimated fair values, with the excess of the purchase price recorded as goodwill, which is not deductible for income tax purposes. As of April 30, 2022, we recorded preliminary goodwill and intangibles of $41.6 million and $10.4 million, respectively. The purchase price allocation is subject to adjustments within the measurement period not to exceed one year from the acquisition date.
The unaudited Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended April 30, 2022, include revenues of $4.9 million and operating profit of $0.3 million attributable to Momentum, which are included in our B&I segment.
Disposition of Assets
On January 31, 2022, the Company sold a group of customer contracts for healthcare technology management within our Technical Solutions segment for $8.5 million and recognized a gain of $7.7 million during the six months ended April 30, 2022, which is included in selling, general and administrative expenses in the accompanying unaudited Consolidated Statements of Comprehensive Income (Loss).
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4. REVENUES
Disaggregation of Revenues
We generate revenues under several types of contracts, which are further explained below. Generally, the type of contract is determined by the nature of the services provided by each of our major service lines throughout our reportable segments; therefore, we disaggregate revenues from contracts with customers into major service lines. We have determined that disaggregating revenues into these categories best depicts how the nature, amount, timing, and uncertainty of revenues and cash flows are affected by economic factors. Our reportable segments are B&I, M&D, Education, Aviation, and Technical Solutions, as described in Note 12, “Segment Information.”
Three Months Ended April 30, 2022Six Months Ended April 30, 2022
(in millions)B&IM&DEducationAviationTechnical
Solutions
TotalB&IM&DEducationAviationTechnical
Solutions
Total
Major Service Line
Janitorial(1)
$676.7 $307.2 $177.9 $26.4 $ $1,188.2 $1,354.6 $611.3 $356.2 $56.2 $ $2,378.4 
Parking(2)
85.1 8.8 0.3 77.1  171.2 168.4 19.5 0.5 154.8  343.2 
Facility Services(3)
241.8 41.0 26.3 6.8  315.8 510.2 85.2 53.3 13.3  661.9 
Building & Energy Solutions(4)
    147.0 147.0     288.8 288.8 
Airline Services(5)
   75.5  75.5    161.8  161.8 
Total$1,003.6 $356.9 $204.4 $185.9 $147.0 $1,897.8 $2,033.1 $716.0 $410.1 $386.1 $288.8 $3,834.1 
Three Months Ended April 30, 2021Six Months Ended April 30, 2021
(in millions)B&IM&DEducationAviationTechnical
Solutions
TotalB&IM&DEducationAviationTechnical
Solutions
Total
Major Service Line
Janitorial(1)
$527.5 $289.5 $185.9 $28.8 $ $1,031.7 $1,060.5 $575.9 $369.0 $58.0 $ $2,063.3 
Parking(2)
68.1 10.0 0.2 60.8  139.1 137.0 21.7 0.4 114.9  274.0 
Facility Services(3)
78.4 40.7 26.6 5.8  151.5 166.6 83.5 51.4 11.7  313.2 
Building & Energy Solutions(4)
    124.5 124.5     237.1 237.1 
Airline Services(5)
   50.5  50.5    102.2  102.2 
Total$673.9 $340.3 $212.8 $145.9 $124.5 $1,497.4 $1,364.1 $681.0 $420.8 $286.8 $237.1 $2,989.8 
(1) Janitorial arrangements provide a wide range of essential cleaning services for commercial office buildings, airports and other transportation centers, educational institutions, government buildings, health facilities, industrial buildings, retail stores, and stadiums and arenas. These arrangements are often structured as monthly fixed-price, square-foot, cost-plus, and work order contracts.
(2) Parking arrangements provide parking and transportation services for clients at various locations, including airports and other transportation centers, commercial office buildings, educational institutions, health facilities, hotels, and stadiums and arenas. These arrangements are structured as management reimbursement, leased location, and allowance contracts. Certain of these arrangements are considered service concession agreements. Rent is paid to the grantor, which is the customer in the arrangement; accordingly, rent expense related to these arrangements is recorded as a reduction of the related parking service revenues.
(3) Facility Services arrangements provide onsite mechanical engineering and technical services and solutions relating to a broad range of facilities and infrastructure systems that are designed to extend the useful life of facility fixed assets, improve equipment operating efficiencies, reduce energy consumption, lower overall operational costs for clients, and enhance the
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sustainability of client locations. These arrangements are generally structured as monthly fixed-price, cost-plus, and work order contracts.
(4) Building & Energy Solutions arrangements provide custom energy solutions, electrical, HVAC, lighting, electric vehicle charging station installation, and other general maintenance and repair services for clients in the public and private sectors and are generally structured as energy savings, fixed-price repair, and refurbishment contracts. We also franchise certain operations under franchise agreements relating to our Linc Network and TEGG brands, pursuant to franchise contracts.
(5) Airline Services arrangements support airlines and airports with services such as passenger assistance, catering logistics, and airplane cabin maintenance. These arrangements are often structured as monthly fixed-price, cost-plus, transaction price, and hourly contracts.
Contract Types
We have arrangements under various contract types, as described in Note 2, “Basis of Presentation and Significant Accounting Policies,” in our Annual Report on Form 10-K for the year ended October 31, 2021.
Certain arrangements involve variable consideration (primarily per transaction fees, reimbursable expenses, and sales-based royalties). We do not estimate the variable consideration for these arrangements; rather, we recognize these variable fees as they are earned. Some of our contracts, often related to Airline Services, may also include performance incentives based on variable performance measures that are ascertained exclusively by future performance and therefore cannot be estimated at contract inception and are recognized as revenue once known and mutually agreed upon. We include estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is resolved. Our estimates of variable consideration and determination of whether to include estimated amounts in the transaction price are based largely on an assessment of our anticipated performance and all information (historical, current, and forecasted) that is reasonably available to us.
The majority of our contracts include performance obligations that are primarily satisfied over time as we provide the related services. These contract types include: monthly fixed-price; square-foot; cost-plus; work orders; transaction-price; hourly; management reimbursement; leased location; allowance; energy savings contracts; and fixed-price repair and refurbishment contracts, as well as our franchise and royalty fee arrangements. We recognize revenue as the services are performed using a measure of progress that is determined by the contract type. Generally, most of our contracts are cancellable by either party without a substantive penalty, and the majority have a notification period of 30 to 60 days.
We primarily account for our performance obligations under the series guidance, using the as-invoiced practical expedient when applicable. We apply the as-invoiced practical expedient to record revenue as the services are provided, given the nature of the services provided and the frequency of billing under the customer contracts. Under this practical expedient, we recognize revenue in an amount that corresponds directly with the value to the customer of our performance completed to date and for which we have the right to invoice the customer.
Remaining Performance Obligations
At April 30, 2022, performance obligations that were unsatisfied for which we expect to recognize revenue totaled $327.9 million. We expect to recognize revenue on approximately 76% of the remaining performance obligations over the next 12 months, with the remainder recognized thereafter, based on our estimates of project timing.
These amounts exclude variable consideration primarily related to: (i) contracts where we have determined that the contract consists of a series of distinct service periods and revenues are based on future performance that cannot be estimated at contract inception; (ii) parking contracts where we and the customer share the gross revenues or operating profit for the location; and (iii) contracts where transaction prices include performance incentives that are based on future performance and therefore cannot be estimated at contract inception. We apply the practical expedient that permits exclusion of information about the remaining performance obligations with original expected durations of one year or less.
Contract Balances
The timing of revenue recognition, billings, and cash collections results in contract assets and contract liabilities, as further explained below. The timing of revenue recognition may differ from the timing of invoicing to customers.
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Contract assets primarily consist of billed trade receivables, unbilled trade receivables, and costs incurred in excess of amounts billed. Billed and unbilled trade receivables represent amounts from work completed in which we have an unconditional right to bill our customer. Costs incurred in excess of amounts billed typically arise when the revenue recognized on projects exceeds the amount billed to the customer. These amounts are transferred to billed trade receivables when the rights become unconditional. Contract assets also include the capitalization of incremental costs of obtaining a contract with a customer, primarily commissions. Commissions expense is recognized on a straight-line basis over a weighted average expected customer relationship period.
Contract liabilities consist of deferred revenue and advance payments and billings in excess of revenue recognized. We generally classify contract liabilities as current since the related contracts are generally for a period of one year or less. Contract liabilities decrease as we recognize revenue from the satisfaction of the related performance obligation.
The following tables present the balances in our contract assets and contract liabilities:
(in millions)April 30, 2022October 31, 2021
Contract assets
Billed trade receivables(1)
$1,093.1 $1,057.6 
Unbilled trade receivables(1)
160.1 112.1 
Costs incurred in excess of amounts billed(2)
72.3 52.5 
Capitalized commissions(3)
29.2 27.8 
(1) Included in trade accounts receivable, net, on the unaudited Consolidated Balance Sheets. The fluctuations correlate directly to the execution of new customer contracts and to invoicing and collections from customers in the normal course of business.
(2) Fluctuation is primarily due to the timing of payments on our contracts measured using the cost-to-cost method of revenue recognition.
(3) Included in other current assets and other noncurrent assets on the unaudited Consolidated Balance Sheets. During the six months ended April 30, 2022, we capitalized $8.2 million of new costs and amortized $6.9 million of previously capitalized costs. There was no impairment loss recorded on the costs capitalized.
(in millions)Six Months Ended
April 30, 2022
Contract liabilities(1)
Balance at beginning of period$58.5 
Additional contract liabilities135.1 
Recognition of deferred revenue
(121.6)
Balance at end of period
$72.0 
(1) Included in other accrued liabilities on the unaudited Consolidated Balance Sheets.
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5. NET INCOME PER COMMON SHARE
Basic and Diluted Net Income Per Common Share Calculations
Three Months Ended April 30,Six Months Ended April 30,
(in millions, except per share amounts)2022202120222021
Net income$48.8 $31.1 $124.8 $105.7 
Weighted-average common and common
  equivalent shares outstanding — Basic
67.2 67.3 67.5 67.2 
Effect of dilutive securities(1)
Restricted stock units0.2 0.4 0.2 0.3 
Performance shares0.1  0.1 0.1 
Weighted-average common and common
  equivalent shares outstanding — Diluted
67.5 67.8 67.9 67.7 
Net income per common share
Basic $0.73 $0.46 $1.85 $1.57 
Diluted$0.72 $0.46 $1.84 $1.56 
(1) Excludes the impact of potentially dilutive outstanding share-based securities that are excluded from the calculation of diluted loss per share in periods when we have a loss, as their inclusion would have an anti-dilutive effect. Such impact is included in the table below.
Anti-Dilutive Outstanding Stock Awards Issued Under Share-Based Compensation Plans
Three Months Ended April 30,Six Months Ended April 30,
(in millions)2022202120222021
Anti-dilutive   0.1 

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6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair Value Hierarchy of Our Financial Instruments
Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis
(in millions)Fair Value HierarchyApril 30, 2022October 31, 2021
Cash and cash equivalents(1)
1$48.9 $62.8 
Insurance deposits(2)
10.9 0.7 
Assets held in funded deferred compensation plan(3)
14.4 4.9 
Debt facilities(4)
21,172.0 888.8 
Interest rate swap assets(5)
2