ABM Industries Incorporated (NYSE:ABM) Q3 2020 Earnings Conference Call - Final Transcript

Sep 09, 2020 • 08:30 am ET

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ABM Industries Incorporated (NYSE:ABM) Q3 2020 Earnings Conference Call - Final Transcript

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Executive
Scott Salmirs

instituted temporary reductions in salary across certain staff and management, which included the executive team and the Board. We also temporarily furloughed and reduced hours for certain corporate staff. Unlike many firms, we reduced or suspended benefits such as our 401(k) matchings. These were really hard decisions that had to be made, but necessary to potentially protect liquidity and ensure business continuity during very uncertain times.

The combined impact of higher margin work orders, labor efficiencies and corporate actions led to our significant year-over-year expansion in profit. Income from continuing operations grew to $56 million or $0.83 per share and on an adjusted basis $50.1 million or $0.75 per share. Adjusted EBITDA margin rose to 7.9% versus 5.6% last year. So we couldn't be more pleased with our performance. And we continued being disciplined on collections and payables during the quarter. Cash flow from operations was approximately $130 million or $121 million on a free cash flow basis. This is one of our all-time highs and enabled us to achieve leverage of 2.2 times. Our team understood how much of a priority this was and the results speak for themselves.

Now that we successfully managed during the past six months, we've reversed many of the temporary cost reductions occurring during the third quarter. Of course, this doesn't mean our intense focus on managing the business through changing conditions will relax in anyway. In fact, much of the discipline we invoked during the past few months is now incorporated into our standard operating procedures.

The health and safety of our team members and our clients has been our top priority and I'm so proud of the determination our people have shown during this time. We quickly adapted our standard operating practices to follow the guidelines of the CDC and other government authorities as well as our own advisory council and as an essential service provider, our team members were tasked with being agile and responsive to the rapidly changing needs of our clients as they work to protect their employees, their customers and their facilities. The feedback has been overwhelming and we believe this will have a lasting impact on retention.

Now, I could spend hours on this call highlighting example after example of how our team members have made a difference during this stressful time. In the Northwest Independent School District of Fort Worth, Texas, our education team members helped the district conduct four modified graduation ceremonies by cleaning and disinfecting throughout the events. Administrators were able to preserve the special occasion for nearly 1,500 students and create a celebratory safe and sanitized environment.

In the UK, our ABM team members were among those recognized by Prince Charles and London's Mayor Sadiq Khan for our contributions in keeping the city's transit system, the Transport for London clean and hygienic. And as you most likely have seen, our frontline workers have been featured by numerous media outlets for our critical disinfection work across airports and airlines as the aviation industry continues