Q3 2025 ABM Industries Inc Earnings Call

Speaker #1: Greetings. Welcome to ABM Industries' third-quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. For the question-and-answer session, we'll follow the formal presentation.

Operator: Greetings. Welcome to ABM Industries' third quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. The 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. At this time, I'll hand the conference over to Paul Goldberg, Senior Vice President, Investor Relations. Paul, you may begin.

Speaker #1: If anyone should require operator assistance during the conference, please press *0 on your telephone keypad. Please note, this conference is being recorded. At this time, I'll hand the conference over to Paul Goldberg, Senior Vice President of Investor Relations.

Speaker #1: Paul, you may begin.

Speaker #2: Good morning, everyone, and welcome to ABM's third quarter 2025 earnings call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM.

Scott Salmirs: Good morning, everyone, and welcome to ABM Industries' third quarter 2025 earnings call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM Industries. With me today are Scott Salmirs, our President and Chief Executive Officer, and David Orr, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our third quarter 2025 financial results and outlook. A copy of that release and an accompanying slide presentation can be found on our website, abm.com. After Scott and David's prepared remarks, we will host a Q&A session. Before we begin, I would like to remind you that our call and presentation today contain predictions, estimates, and other forward-looking statements.

Speaker #2: With me today are Scott Salmirs, our President and Chief Executive Officer, and David Orr, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our third quarter 2025 financial results and outlook.

Speaker #2: A copy of that release and an accompanying slide presentation can be found on our website, abm.com. After Scott and David's prepared remarks, we will host a Q&A session.

Speaker #2: But before we begin, I would like to remind you that our call and presentation today contain predictions, estimates, and other forward-looking statements. I will use the words "estimate," "expect," and similar expressions to identify these statements, and they represent our current judgment of what the future holds.

Scott Salmirs: 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 would now like to turn the call over to Scott.

Speaker #2: 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.

Speaker #2: These factors are described in the slide that accompanies our presentation, as well as in our filings with the SEC. During the course of this call, certain non-GAAP financial information will be presented.

Speaker #2: 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.

Speaker #2: With that, I would now like to turn the call over to Scott.

Speaker #3: Good morning, everyone, and thank you for joining us to review ABM's third quarter results. I'm especially pleased to be joined today by our new CFO, David Orr.

Operator: Good morning, everyone, and thank you for joining us to review ABM Industries' third quarter results. I'm especially pleased to be joined today by our new CFO, David Orr. David has been in the room on many previous earnings calls, but this is his first time as CFO, and I couldn't be happier. David brings tremendous experience, strong relationships, and deep industry knowledge, and we are already seeing the benefits of his leadership, highlighted by our cash flow performance in Q3. On behalf of the entire team, I'd like to welcome him publicly and wish him great success. Our quarterly performance demonstrated solid momentum in many areas. We delivered 5% organic revenue growth, generated strong free cash flow, and continued to win new business despite an uncertain macro environment.

Speaker #3: David has been in the room on many previous earnings calls, but this is his first time as CFO, and I couldn't be happier. David brings tremendous experience, strong relationships, and deep industry knowledge.

Speaker #3: And we were already seeing the benefits of his leadership, highlighted by our cash flow performance in Q3. On behalf of the entire team, I'd like to welcome him publicly and wish him great success.

Speaker #3: Our quarterly performance demonstrated solid momentum in many areas. We delivered 5% organic revenue growth, generated strong free cash flow, and continued to win new business despite an uncertain macro environment.

Speaker #3: Each of our segments once again contributed to organic growth, and we generated over $150 million in free cash flow driven by disciplined cash collection, resulting in a meaningful reduction in days sales outstanding.

Operator: Each of our segments once again contributed to organic growth, and we generated over $150 million in free cash flow, driven by disciplined cash collection, resulting in a meaningful reduction in day sales outstanding. Bookings performance was another highlight. Through the first three quarters, we have secured over $1.5 billion in new business, a 15% increase year over year, positioning us well for revenue and earnings growth in the year ahead. This success reflects both favorable conditions in most of our markets and our deliberate strategy to strengthen our presence in core markets and build lasting partnerships through thoughtful pricing decisions. We have robust pipelines across Technical Solutions, Manufacturing & Distribution, and Business & Industry, particularly in several attractive geographic markets. At the same time, certain commercial office markets, especially in select West Coast, Midwest, and Mid-Atlantic metro areas, are slower to recover.

Speaker #3: Bookings performance was another highlight. Through the first three quarters, we have secured over $1.5 billion in new business, a 15% increase year over year, positioning us well for revenue and earnings growth in the year ahead.

Speaker #3: This success reflects both favorable conditions in most of our markets and our deliberate strategy to strengthen our presence in core markets and build lasting partnerships through thoughtful pricing decisions.

Speaker #3: We have robust pipelines across technical solutions, manufacturing and distribution, and business in industry, particularly in several attractive geographic markets. At the same time, certain commercial office markets—especially in select West Coast, Midwest, and Mid-Atlantic metro areas—are slower to recover.

Speaker #3: In these areas, we're pushing long-term growth by strategically pricing rebates and extensions, and by managing the timing of escalations to protect and expand our footprint.

Operator: In these areas, we're pushing long-term growth by strategically pricing rebates and extensions and by managing the timing of escalations to protect and expand our footprint. A similar approach is being applied to competitive end markets such as semiconductors and e-commerce, where there are terrific opportunities for new business to be won. While these choices did pressure margins and adjusted EPS, we were able to win multi-year contracts and extensions and protect long-term clients, which will support stronger and more sustainable growth over time. It is important to recognize that our strategy is working. While some peers with comparable U.S. cleaning and maintenance exposure have recently reported meaningful organic revenue declines, we delivered mid-single-digit organic growth this quarter. We're also acting decisively to address the near-term margin impact of our choices. Our teams are implementing labor efficiency measures, and we are tightly managing discretionary costs across the company.

Speaker #3: A similar approach is being applied to competitive end markets such as semiconductors and e-commerce, where there are terrific opportunities for new business to be won.

Speaker #3: While these choices did pressure margins and adjusted EPS, we were able to win multi-year contracts and extensions and protect long-term clients, which will support stronger and more sustainable growth over time.

Speaker #3: It is important to recognize that our strategy is working. While some peers with comparable U.S. cleaning and maintenance exposure have recently reported meaningful organic revenue declines, we delivered mid-single-digit organic growth this quarter.

Speaker #3: We're also acting decisively to address the near-term margin impact of our choices. Our teams are implementing labor efficiency measures, and we are tightly managing discretionary costs across the company.

Speaker #3: In addition, we've launched a company-wide restructuring program, which is already well underway. This program is designed to better align our core structure and operating model with our growth priorities.

Operator: In addition, we've launched a company-wide restructuring program, which is already well underway. This program is designed to better align our core structure and operating model with our growth priorities. When fully implemented by year-end, this program is expected to generate at least $35 million in annual run-rate savings. Our actions to boost growth and improve margins, combined with our highly cash-generative business model, reinforce our confidence in ABM Industries' long-term growth trajectory. Reflecting that confidence, we purchased shares in the third quarter and early into Q4, buying more than 1 million shares during July and August, and nearly 1.5 million shares year to date for $71.3 million. I'm also pleased to report that our board increased our share repurchase authorization by $150 million after the quarter close, giving us added flexibility in capital allocation going forward.

Speaker #3: When fully implemented by year-end, this program is expected to generate at least $35 million in annual run-rate savings. Our actions to boost growth and improve margins, combined with our highly cash-generative business model, reinforce our confidence in ABM's long-term growth trajectory.

Speaker #3: Reflecting that confidence, we purchased shares in the third quarter and early into Q4, buying more than 1 million shares during July and August and nearly 1.5 million shares year to date, for $71.3 million.

Speaker #3: I'm also pleased to report that our board increased our share repurchase authorization by $150 million after the quarter closed, giving us added flexibility in capital allocation going forward.

Speaker #3: We also continue to invest for the long term, with AI being an important part of that journey. In fact, we've invested in AI tools that enhance the way our teams work today.

Operator: We also continue to invest for the long term, with artificial intelligence solutions being an important part of that journey. In fact, we've invested in artificial intelligence tools that enhance the way our teams work today, such as automated and more robust RFP responses and improved HR support services. We are exploring using agentic artificial intelligence to supplement client-facing service and operational support. Looking forward, we see opportunities to leverage artificial intelligence to uncover new revenue streams, introduce robotics at client sites where it makes sense, and drive efficiencies within our finance organization. The benefits will be clear and enhance client and team member experience alongside greater efficiency and scale. Importantly, artificial intelligence will not disintermediate ABM Industries.

Speaker #3: Such as automated and more robust RFP responses and improved HR support services. We're exploring using agentic AI to supplement client-facing service and operational support.

Speaker #3: Looking forward, we see opportunities to leverage AI to uncover new revenue streams, introduce robotics at client sites where it makes sense, and drive efficiencies within our finance organization.

Speaker #3: The benefits will be clear: an enhanced client and team member experience, alongside greater efficiency and scale. Importantly, AI will not disintermediate ABM. Our core business, whether cleaning, maintenance, or engineering, is fundamentally people-led, delivered in highly unique and dynamic environments that do not lend themselves to full automation.

Operator: Our core business, whether cleaning, maintenance, or engineering, is fundamentally people-led, delivered in highly unique and dynamic environments that do not lend themselves to full automation. Artificial intelligence is not a replacement for ABM Industries' core business, but a tool that strengthens our people, improves outcomes for our clients, and positions ABM Industries to build on our industry-leading position. Let me now give you a brief update across our segments. In Business & Industry, we're seeing the prime office market continue to get healthier overall, as evidenced by our return to organic growth in the last two quarters. CBRE's mid-year outlook shows prime vacancy trending down from about 14.5% today to closer to 13.6% by year-end. What's driving that is a real flight to quality. Tenants want the best buildings, and new supply in that segment is limited. That plays right into our sweet spot in Class A urban properties.

Speaker #3: AI is not a replacement for ABM's core business, but a tool that strengthens our people, improves outcomes for our clients, and positions ABM to build on our industry-leading position.

Speaker #3: Let me now give you a brief update across our segments. In B&I, we're seeing the prime office market continue to get healthier overall, as evidenced by our return to organic growth in the last two quarters.

Speaker #3: CBRE's mid-year outlook shows prime vacancy trending down from about 4.5% today to closer to 13.6% by year-end. What's driving that is a real flight to quality.

Speaker #3: Tenants want the best buildings, and new supply in that segment is limited. That plays right into our sweet spot in Class A urban properties.

Speaker #3: Now, it's not the same story everywhere. Some regions, particularly parts of the West Coast, Midwest, and Mid-Atlantic, are still under pressure, with softer leasing and higher vacancy than the national average.

Operator: Now, it's not the same story everywhere. Some regions, particularly parts of the West Coast, Midwest, and Mid-Atlantic, are still under pressure with softer leasing and higher vacancy than the national average. The recovery is happening in these markets, but at a slower pace. Stepping back, the overall trend in prime is clearly positive, and with our strong positioning in Class A, we're well aligned to capture the upside of that recovery while being selective and strategic in markets that remain more challenged. With regard to Manufacturing & Distribution, we see momentum driven by three key forces: technology investments spurred by artificial intelligence solutions, e-commerce growth, and the reshoring of U.S. manufacturing. Semiconductors continue to lead the way with more than $450 billion in private investments announced since 2020. E-commerce remains another steady tailwind, with U.S.

Speaker #3: The recovery is happening in these markets, but at a slower pace. Stepping back, the overall trend in prime is clearly positive, and with our strong positioning in Class A, we're well aligned to capture the upside of that recovery while being selective and strategic in markets that remain more challenged.

Speaker #3: With regard to M&D, we see momentum driven by three key forces: technology investment spurred by AI, e-commerce growth, and the reshoring of manufacturing. Semiconductors continue to lead the way, with more than $400 billion in private investments announced since 2020.

Speaker #3: E-commerce remains another steady tailwind, with U.S. online retail sales rising 5.3% year over year in Q2 of 2025 to over $300 billion. At the same time, the reshoring of U.S. manufacturing is accelerating, much of it concentrated in pharmaceuticals and automotive production.

Operator: online retail sales rising 5.3% year over year in Q2 of 2025 to over $300 billion. At the same time, the reshoring of U.S. manufacturing is accelerating, much of it concentrated in pharmaceuticals and automotive production. These are highly attractive markets where we have the clear right to win and where many service providers are eager to participate. ABM Industries' ability to integrate services, scale quickly, and execute complex solutions positions us to capture these opportunities. Just as importantly, our model enables us to enhance margins over time, turning wins in demanding high-growth sectors into durable and profitable growth. The aviation market continues to experience strength in passenger demand. TSA data shows daily checkpoint screenings routinely averaging above 2.8 million in July and August, up incrementally from 2024, underscoring healthy demand dynamics in domestic air travel. Airports themselves are also in a period of heavy reinvestment.

Speaker #3: These are highly attractive markets where we have the clear right to win and where many service providers are eager to participate. ABM's ability to integrate services, scale quickly, and execute complex solutions positions us to capture these opportunities.

Speaker #3: Just as importantly, our model enables us to enhance margins over time, turning wins in demanding, high-growth sectors into durable and profitable growth. The aviation market continues to experience strength in passenger demand. TSA data shows daily checkpoint screenings routinely averaging above 2.8 million in July and August, up incrementally from 2024, underscoring healthy demand dynamics in domestic air travel.

Speaker #3: Airports themselves are also in a period of heavy reinvestment. Projects such as the new Global Concourse at O'Hare, along with the FAA's multi-year program to modernize terminals and airport infrastructure, represent a sustained pipeline of opportunities for us.

Operator: Projects such as the new Global Concourse at O'Hare Airport, along with the FAA's multi-year program to modernize terminals and airport infrastructure, represent a sustained pipeline of opportunities for us. Against this backdrop, ABM's technology solution, ABM Connect for Airports, supported by our project delivery engine that enables us to quickly scale new jobs, is a clear differentiator. This combination of strong consumer travel trends, major infrastructure commitments, and our ability to mobilize rapidly gives us confidence that our aviation business will continue to outperform sector growth as new opportunities come online. In education, our business continues to benefit from the overall resilience of both higher education and K through 12 markets, sectors that have typically moved steadily even when the broader economy is less predictable.

Speaker #3: Against this backdrop, ABM's technology solution, ABM Connect for Airports, supported by our project delivery engine that enables us to quickly scale new jobs, is a clear differentiator.

Speaker #3: This combination of strong consumer travel trends, major infrastructure commitments, and our ability to mobilize rapidly gives us confidence that our aviation business will continue to outperform sector growth as new opportunities come online.

Speaker #3: In education, our business continues to benefit from the overall resilience of both higher education and K-12 markets, sectors that typically move steadily even when the broader economy is less predictable.

Speaker #3: The latest Gordian 2025 State of the Facilities report shows that institutions are focusing more on modernizing and maintaining existing campuses rather than adding new space.

Operator: The latest Gordian 2025 State of the Facilities report shows that institutions are focusing more on modernizing and maintaining existing campuses rather than adding new space. In short, the education market remains fundamentally solid, and our team has done a great job executing in this environment. For ABM, our focus on large school districts, colleges, and universities should ensure stable contributions supported by strong client retention and operational efficiency. Finally, in Technical Solutions, our electrification business, particularly microgrids, data centers, and power services, remains strong and now accounts for nearly 60% of segment revenue. Market fundamentals continue to strengthen. Wood McKinsey projects the U.S. microgrid market will more than double by 2030, reflecting the growing demand for energy resilience and decarbonization. Meanwhile, global data center capacity is expected to expand at double-digit annual pace to support AI-driven computing needs.

Speaker #3: In short, the education market remains fundamentally solid, and our team has done a great job executing in this environment. For ABM, our focus on large school districts, colleges, and universities should ensure stable contributions, supported by strong client retention and operational efficiency.

Speaker #3: Finally, in technical solutions, our electrification business—particularly microgrids, data centers, and power services—remains strong and now accounts for nearly 60% of segment revenue.

Speaker #3: Market fundamentals continue to strengthen. Would McKinsey project the U.S. microgrid market will more than double by 2030, reflecting the growing demand for energy resilience and decarbonization?

Speaker #3: Meanwhile, global data center capacity is expected to expand at a double-digit annual pace to support AI-driven computing needs. You can see why we're so excited about where ABM is headed.

Operator: You can see why we're so excited about where ABM is headed. The macro trends shaping our markets, whether the recovery in prime office, the surge in electrification investment, and the resilience of aviation and education, are the very areas where we are focused. These trends are evident in our revenue momentum, improving free cash flow, and durable client retention. We believe ABM is uniquely positioned to be a clear winner as these markets continue to evolve, and it becomes even more apparent that we are the best partner to help clients grow and transform their facilities. At the same time, our cash-generative model enables us to consistently return capital to shareholders through dividends and share repurchases, reinforcing our commitment to delivering long-term value alongside sustainable growth. The AI revolution will be a tailwind for ABM Industries rather than a threat to our core business.

Speaker #3: The macro trends shaping our markets—whether the recovery in prime office space, the surge in electrification investment, and the resilience of aviation and education—are the very areas where we are focused.

Speaker #3: These trends are evident in our revenue momentum, improving free cash flow, and durable client retention. We believe ABM is uniquely positioned to be a clear winner as these markets continue to evolve, and it becomes even more apparent that we are the best partner to help clients grow and transform their facilities.

Speaker #3: At the same time, our cash-generative model enables us to consistently return capital to shareholders through dividends and share repurchases, reinforcing our commitment to delivering long-term value alongside sustainable growth.

Speaker #3: And the AI revolution will be a tailwind for ABM, rather than a threat to our core business. Looking ahead, we expect our fourth-quarter earnings and margins to improve meaningfully from the third quarter, driven by the benefits of our cost and restructuring actions, as well as from strong performance in our ATS segment.

Operator: Looking ahead, we expect our fourth quarter earnings and margins to improve meaningfully from the third quarter, driven by the benefits of our cost and restructuring actions, as well as from strong performance in our Technical Solutions segment. We expect to be toward the low end of our prior adjusted EPS range of $3.65 to $3.80 for the fiscal full year. With that, I'll turn it over to David to walk through the financials.

Speaker #3: We expect to be toward the low end of our prior adjusted EPS range of $3.65 to $3.80 for the fiscal full year. With that, I'll turn it over to David to walk through the financials.

Speaker #4: Good morning, everyone. I'm honored to be here today and look forward to building a relationship with you all in the coming quarters. I'm also excited to work even closer with the ABM Operations and Functional Support teams.

David Orr: Good morning, everyone. I'm honored to be here today and look forward to building a relationship with you all in the coming quarters. I'm also excited to work even closer with the ABM operations and functional support teams. With that, let's get into the Q3 results, starting on slide six. Revenue grew 6.2% year over year to $2.2 billion, driven by 5% organic revenue growth and a 1.2% contribution from our recent acquisitions. Of note, our organic revenue growth was the highest it's been since the fourth quarter of 2022. Like last quarter, we saw organic revenue growth in all segments led by Aviation, Manufacturing & Distribution, and Technical Solutions. Business & Industry and Education were both up 3% in the quarter. It's clear that our advantaged offerings and service, in conjunction with our market focus and strategic pricing, are driving outsized growth.

Speaker #4: With that, let's get into the Q3 results, starting on slide six. Revenue grew 6.2% year over year to $2.2 billion, driven by a 5% organic revenue growth and a 1.2% contribution from our recent acquisitions.

Speaker #4: Of note, our organic revenue growth was the highest it has been since the fourth quarter of 2022. Like last quarter, we saw organic revenue growth in all segments, led by Aviation, M&D, and Technical Solutions.

Speaker #4: B&I and Education were both up 3% in the quarter. It's clear that our advantaged offerings and service, in conjunction with our market focus and strategic pricing, are driving outsized growth.

Speaker #4: Turning to slide seven, net income for the quarter increased to $41.8 million, or $60.07 per diluted share, compared to $4.7 million, or $0.07 per diluted share last year.

David Orr: Turning to slide seven, net income from the quarter increased to $41.8 million or $0.67 per diluted share, compared to $4.7 million or $0.07 per diluted share last year. This increase was driven by the absence of a $36 million adjustment to contingent consideration for our RavenVault microgrid business that was recorded last year, as well as a decrease in corporate costs, reflecting a smaller negative impact from prior year self-insurance adjustments. These items were partially offset by higher interest and taxes. Income was $51.7 million or $0.82 per diluted share, compared to $53.6 million or $0.84 per diluted share last year. The change largely reflects higher interest and tax expense, partially offset by lower corporate costs. Adjusted EBITDA was up 5% to $125.8 million, compared to $119.8 million last year, largely the result of lower corporate costs.

Speaker #4: This increase was driven by the absence of a $36 million adjustment to contingent consideration for our RavenVolt microgrid business that was recorded last year, as well as a decrease in corporate costs, reflecting a smaller negative impact from prior year self-insurance adjustments.

Speaker #4: These items were partially offset by higher interest and taxes. Income was $51.7 million, or $0.82 per diluted share, compared to $53.6 million, or $0.84 per diluted share last year.

Speaker #4: The change largely reflects higher interest and tax expenses, partially offset by lower corporate costs. Adjusted EBITDA was up 5% to $125.8 million, compared to $119.8 million last year.

Speaker #4: Largely, the result of lower corporate costs. Adjusted EBITDA margin was flat at 5.9%, reflecting the strategic pricing and escalation decisions Scott discussed earlier. As Scott mentioned, we're taking several actions to improve margin, including a restructuring program that was launched in August.

David Orr: Adjusted EBITDA margin was flat at 5.9%, reflecting the strategic pricing and escalation decisions Scott discussed earlier. As Scott mentioned, we're taking several actions to improve margin, including a restructuring program that was launched in August. The program is designed to more closely align our cost structure and footprint with our growth priorities and is initially focused on organizational structure. The actions we've undertaken are expected to yield annualized savings of $35 million at a cost of approximately $10 million. We continue to review other elements of our cost structure for additional opportunities under this plan. Now, let's turn to segment performance, beginning with slide eight. Business & Industry revenue surpassed $1 billion for the quarter, up 3% from last year. This performance was driven by escalations, expansion with existing clients, and continued strength in our UK and sports and entertainment businesses. As Scott mentioned, certain areas in the U.S.

Speaker #4: The program is designed to more closely align our cost structure and footprint with our growth priorities. Initially focused on organizational structure, the actions we've undertaken are expected to yield annualized savings of $35 million, at a cost of approximately $10 million.

Speaker #4: We continue to review other elements of our cost structure for additional opportunities under this plan. Now, let's turn to segment performance, beginning with slide eight.

Speaker #4: B&I revenues surpassed $1 billion for the quarter, up 3% from last year. This performance was driven by escalations, expansion with existing clients, and continued strength in our UK and sports and entertainment businesses.

Speaker #4: As Scott mentioned, certain areas in the U.S. remain slow to recover, and we've made some strategic decisions with regard to pricing and the timing of escalations to ensure we position ourselves for sustainable growth.

David Orr: remain slow to recover, and we've made some strategic decisions with regard to pricing and the timing of escalations to ensure we position ourselves for sustainable growth. These decisions helped drive growth, although they impacted margin in the quarter. Operating profit was $73.8 million and margin was 7.1% as compared to $77.8 million and 7.7% respectively last year. Our teams are working actively on plans to drive margin higher through efficiencies and escalations. Aviation revenue grew 9% to $291.8 million, supported by positive travel trends and several new wins ramping up. Operating profit was $19.7 million, up 11%, with margins up 20 basis points to 6.8%. These results reflect volume growth and the benefits of escalations, partially offset by weather-related headwinds in the quarter. Turning to slide nine, M&D generated $408.9 million in revenue, an 8% increase year over year.

Speaker #4: These decisions help drive growth, although they impacted margin in the quarter. Operating profit was $73.8 million, and margin was 7.1%, as compared to $77.8 million and 7.7%, respectively, last year.

Speaker #4: Our teams are working actively on plans to drive margin higher through efficiencies and escalations. Aviation revenue grew 9% to $291.8 million, supported by positive travel trends and several new wins ramping up.

Speaker #4: Operating profit was $19.7 million, up 11%, with margins up 20 basis points to 6.8%. These results reflect volume growth and the benefits of escalations, partially offset by weather-related headwinds in the quarter.

Speaker #4: Turning to slide nine, M&D generated $488.9 million in revenue, an 8% increase year over year. This strong organic growth was fueled by new contract wins and client expansions.

David Orr: This strong organic growth was fueled by new contract wins and client expansions. In the third quarter, we were especially pleased to expand our presence in the technology sector, securing domestic business with leading U.S. and Asian semiconductor manufacturers, as well as a major capacitor manufacturer. We're making thoughtful pricing decisions to ensure we're well positioned to capture the significant growth in U.S.-based tech manufacturing, much of it driven by enhancements in AI. Operating profit was $36.4 million, with a margin of 8.9% compared to $40.9 million and 10.9% last year. As mentioned, the margin decline was largely due to strategic pricing on select new business opportunities, which offer significant long-term growth opportunities and also reflect investments in technical sales talent and sector-specific capabilities. Education revenue rose 3% to $235.1 million, supported by escalations and stable retention rates.

Speaker #4: In the third quarter, we were especially pleased to expand our presence in the technology sector, securing domestic business with leading U.S. and Asian semiconductor manufacturers, as well as a major capacitor manufacturer.

Speaker #4: We're making thoughtful pricing decisions to ensure we're well-positioned to capture the significant growth in U.S.-based tech manufacturing, much of it driven by enhancements in AI.

Speaker #4: Operating profit was $36.4 million, with a margin of 8.9%, compared to $40.9 million and 10.9% last year. As mentioned, the margin decline was largely due to strategic pricing on select new business opportunities, which offer significant long-term growth opportunities, and also reflects investments in technical sales talent and sector-specific capabilities.

Speaker #4: Education revenue rose 3% to $235.1 million, supported by escalations and stable retention rates. Our education team did a great job by growing operating profit 17% to $21.1 million and expanding margin 110 basis points to 9%.

David Orr: Our education team did a great job by growing operating profit 17% to $21.1 million and expanding margin 110 basis points to 9%, primarily driven by improved labor efficiencies and escalations. Technical Solutions grew 19% to $249.5 million, with 7% coming from organic growth and 12% from acquisitions. This strong growth was once again driven by robust demand for microgrid projects and data center services and power services, which now make up about 60% of segment revenue. Operating profit rose 9% to $19.4 million on higher volume, and margin was 7.8% compared to 8.5% last year. The margin performance primarily reflects business mix and higher amortization costs. Our microgrid business performed very well in the quarter. We expect margins to improve in the fourth quarter on healthier mix and higher volume.

Speaker #4: Primarily driven by improved labor efficiencies and escalations, technical solutions grew 19% to $249.5 million, with 7% coming from organic growth and 12% from acquisitions.

Speaker #4: This strong growth was once again driven by robust demand for microgrids, data center, and power services, which now make up about 60% of segment revenue.

Speaker #4: Operating profit rose 9% to $19.4 million on higher volume, and margin was 7.8% compared to 8.5% last year. The margin performance primarily reflects business mix and higher amortization costs.

Speaker #4: Our microgrid business performed very well in the quarter. We expect margins to improve in the fourth quarter on a healthier mix and higher volume. Now turning to slide ten.

David Orr: Now, turning to slide ten, we ended the third quarter with total indebtedness of $1.6 billion, including $29.7 million in standby letters of credit. Our total debt to pro forma adjusted EBITDA ratio was 2.8 times. Available liquidity stood at $691 million, including $69.3 million in cash and cash equivalents. Our teams across the business did an incredible job on cash in the quarter. They were laser-focused on collections and significantly reducing our day sales outstanding. I want to thank and acknowledge them for their efforts. Free cash flow was $150 million, an improvement of $135 million over Q2 and up $86 million over the prior year. We continue to make progress with our ERP conversion in the third quarter and anticipate further improvement in the fourth quarter. As such, we expect to be toward the low end of our normalized free cash flow range of $250 to $290 million.

Speaker #4: We ended the third quarter with total indebtedness of $1.6 billion, including $29.7 million in standby letters of credit. Our total debt-to-pro forma adjusted EBITDA ratio was 2.8 times, and available liquidity stood at $691 million, including $69.3 million in cash and cash equivalents.

Speaker #4: Our teams across the business did an incredible job on cash in the quarter as they were laser-focused on collections and significantly reducing our days sales outstanding.

Speaker #4: I want to thank and acknowledge them for their efforts. Free cash flow was $150 million, an improvement of $135 million over Q2, and up $86 million over the prior year.

Speaker #4: We continue to make progress with our ERP conversion in the third quarter and anticipate further improvement in the fourth quarter. As such, we expect to be toward the low end of our normalized free cash flow range of $250 million to $290 million.

Speaker #4: This range excludes $16 million of the RavenVolt earnout payment that was recorded as a use of operating cash, as well as full-year elevate and integration costs, which have totaled about $40 million through the first three quarters.

David Orr: This range excludes $16 million of the RavenVault earnout payment that was recorded as a use of operating cash, as well as full-year Elevate and integration costs, which have totaled about $40 million through the first three quarters. With regard to capital allocation, we repurchased 555,000 shares in the third quarter at an average price of $48.77 and a total cost of $27.1 million. We continued buying in the fourth quarter and repurchased 491,000 shares at an average price of $46.83 for a total cost of $23 million. Year to date, we've repurchased roughly 1.5 million shares for a total cost of $71.3 million. Additionally, our board recently approved a $150 million increase in our share authorization, bringing our current capacity to $233 million. Interest expense in the quarter was $25.3 million, up $4.1 million from last year, driven by larger average debt balances.

Speaker #4: With regard to capital allocation, we repurchased 555,000 shares in the third quarter at an average price of $48.77 per share, for a total cost of $27.1 million.

Speaker #4: We continued buying in the fourth quarter and repurchased 491,000 shares at an average price of $46.83. Our total cost was $23 million. Year to date, we've repurchased roughly 1.5 million shares for a total cost of $71.3 million.

Speaker #4: Additionally, our board recently approved a $150 million increase in our share authorization, bringing our current capacity to $233 million. Interest expense in the quarter was $25.3 million, up $4.1 million from last year.

Speaker #4: Driven by larger average debt balances, this result was higher than our expectations, as cash collections in the quarter were back-end loaded. Turning to our outlook on slide 11, given our higher interest expense and the impact of our strategic pricing and escalation decisions, we now expect full-year adjusted EPS and adjusted EBITDA margin to be toward the lower end of our prior guidance.

David Orr: This result was higher than our expectations as cash collections in the quarter were back-end loaded. Turning to our outlook on slide 11, given our higher interest expense and the impact of our strategic pricing and escalation decisions, we now expect full-year adjusted EPS and adjusted EBITDA margin to be toward the lower end of our prior guidance. As a reminder, the range for adjusted EPS was $3.65 to $3.80, and the range for adjusted EBITDA margin was 6.3% to 6.5%. We expect fourth quarter interest expense to be around $25 million, and we continue to expect a normalized tax rate before discrete items of 29% to 30%. As a reminder, our outlook does not include any future positive or negative prior year self-insurance adjustments. Going forward, we'll highlight any material impacts resulting from the inclusion of prior year self-insurance adjustments in our non-GAAP results.

Speaker #4: As a reminder, the range for adjusted EPS was $3.65 to $3.80, and the range for adjusted EBITDA margin was 6.3% to 6.5%. We expect fourth quarter interest expense to be around $25 million, and we continue to expect a normalized tax rate before discrete items of 29% to 30%.

Speaker #4: As a reminder, our outlook does not include any future positive or negative prior year self-insurance adjustments. Going forward, we'll highlight any material impacts resulting from the inclusion of prior year self-insurance adjustments in our non-GAAP results.

Speaker #4: With that, I'll hand it back to Scott for closing remarks.

David Orr: With that, I'll hand it back to Scott for closing remarks.

Speaker #2: Thanks, David. Before we wrap up, I want to thank the entire ABM team for their continued focus and execution in what remains a dynamic and evolving market.

Scott Salmirs: Thanks, David. Before we wrap up, I want to thank the entire ABM team for their continued focus and execution in what remains a dynamic and evolving market. This quarter, our teams did an outstanding job not only winning new business but also retaining and expanding client relationships, an accomplishment that, together with our strong free cash flow, demonstrates the resilience of our core business and the value we provide. I also want to acknowledge the adaptability of our teams as we modernize how we work. From implementing new systems to embracing artificial intelligence solutions and new ways of doing business, our people are learning and leaning into change with creativity and determination. These efforts are also enhancing how we serve clients, improving efficiency, and positioning ABM for long-term success.

Speaker #2: This quarter, our teams did an outstanding job not only winning new business but also retaining and expanding client relationships, an accomplishment that, together with our strong free cash flow, demonstrates the resilience of our core business and the value we provide.

Speaker #2: I also want to acknowledge the adaptability of our teams as we modernize how we work. From implementing new systems to embracing AI tools and new ways of doing business, our people are learning and leaning into change with creativity and determination.

Speaker #2: These efforts are also enhancing how we serve clients and improving efficiency, positioning ABM for long-term success. Thanks to all of you, we are confident in our ability to deliver sustainable value for our clients, our teammates, and our shareholders.

Scott Salmirs: Thanks to all of you, we are confident in our ability to deliver sustainable value for our clients, our teammates, and our shareholders. With that, let's open the line for questions.

Speaker #2: With that, let's open the line for questions.

Speaker #1: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press *1 on your telephone keypad, and a confirmation tone will indicate your line is in the question queue.

Operator: Thank you. We'll now be conducting a question and answer session. If you'd like to ask a question at this time, please press star one on your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. So that we may address questions from as many participants as possible, we ask that you please limit yourself to one question and one follow-up. One moment, please, for our first question. Our first question comes from the line of Tim Mulrooney with William Blair. Please proceed with your question.

Speaker #1: You may press *2 if you'd like to withdraw your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the * keys.

Speaker #1: So we may address questions from as many participants as possible, we ask that you please limit yourself to one question and one follow-up. One moment, please, for our first question.

Speaker #1: Our first question comes from the line of Tim Mulroney with William Blair. Please proceed with your question.

Speaker #5: Hi, good morning. This is Luke McFaddinall for Tim Mulroney. Thanks for taking our questions today. Maybe I want to start here just on the M&D business.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Hi, good morning. This is Luke McFadden for Tim Mulrooney. Thanks for taking our questions today. Maybe one to start here just on the M&D business. You know, growth in that business was quite a bit stronger than what we were modeling. I know you've had some headwinds in this segment over the last couple of quarters with respect to that larger customer rebalance. Is this growth acceleration primarily a function of, you know, kind of lapping some of those headwinds or really more tied to the underlying momentum you're seeing in the business at this point?

Speaker #5: You know, growth in that business was quite a bit stronger than what we were modeling. And I know you've had some headwinds in this segment over the last couple of quarters with respect to that larger customer rebalance.

Speaker #5: So, is this growth acceleration primarily a function of, you know, kind of lapping some of those headwinds, or really more tied to the underlying momentum you're seeing in the business at this point?

Speaker #3: Yeah, I think, look, we're really enthusiastic about our manufacturing and distribution segment, especially the end markets we're focusing on with semiconductor and pharma. So I think it's a combination of lapping, generally, when you look year-over-year.

Scott Salmirs: Yeah, I think, look, we're really enthusiastic about our Manufacturing & Distribution segment, especially the end markets we're focusing on with semiconductor and pharma. I think it's a combination of lapping generally when you look year over year. For us, it's just about attacking strong end markets and investments we've made in salespeople. In this industry group, it's so focused on having expertise in those areas like semiconductor, what have you. You can't just have a generalist go to those kinds of organizations and sell or be an operational person if you don't have that expertise. We've made a lot of investments there, and they're really starting to pay off. That's why you're seeing this accelerated growth. We're big believers in this growth profile for years to come. I think this is more about our focus and our expertise.

Speaker #3: But for us, it's just about attacking strong end markets and investments we've made in salespeople in this industry group. It's so focused on having expertise in those areas, like semiconductors, what have you.

Speaker #3: You can't just have a generalist go to those kinds of organizations and sell, or be an operational person if you don't have that expertise.

Speaker #3: So we've made a lot of investments there, and they're really starting to pay off. And that's why you're seeing this accelerated growth. We're big believers in this growth profile for years to come.

Speaker #3: So, I think this is more about our focus and our expertise too.

Speaker #4: Understood. Makes sense. And you know, thinking about free cash flow here, in the fourth quarter, we just wanted to make sure we're doing our math right.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Understood. Makes sense. You know, thinking about free cash flow here in the fourth quarter, we just wanted to make sure we're doing our math right. Inclusive of the full-year Elevation and integration costs, we're getting to about $170 million in implied free cash flow for the fourth quarter. Is that the right ballpark, or are we doing something wrong there? I think let me give some color on that. As you recall, our original normalized cash flow guide for the year was $250 to $290 million. That includes roughly $70 million or excludes roughly $70 million of one-time items related to Elevate initiatives and the portion of the RavenVault earnout payment that is treated as operating cash flow. If you kind of back that down, free cash flow of $180 to $220 million, we're at $42 million free cash flow year to date.

Speaker #4: So, inclusive of the full year elevation and integration costs, we're getting to about $170 million in implied free cash flow for the fourth quarter?

Speaker #4: Is that the right ballpark, or are we doing something wrong there?

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): That would imply we need to do about $140 million in the fourth quarter to achieve the range. For perspective, we did $150 million in Q3. That's what gives us the confidence on the Q4 number in the range.

Scott Salmirs: Yeah, what I would add to that is our organization is so acutely focused on cash collections at its core. I'm just so proud of the team and what we've done. We told you guys that we were going to come back and get to this level, and we're just really happy with what we've done and have every bit of confidence we're going to keep on this momentum.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Understood. Thanks so much for the color today. I'll pass it along.

Scott Salmirs: Thanks.

Operator: Today's questions are from the line of Jas Bibb with Truist Securities. Please receive your questions.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Hey, good morning, guys. I wanted to follow up on the margin headwinds. I guess to clarify, would you categorize the margin pressures as incremental growth investments, or is there anything else driving this? Because the Business & Industry and Manufacturing & Distribution growth has actually been really good, so it doesn't seem really like an operating leverage challenge, I guess.

Scott Salmirs: Yeah, so it's been a combination of both, right? When I think about BNI, I think about it more about protecting our footprint, protecting our client base, because where we had the pressures were in two or three geographic areas that I mentioned in the prepared remarks. Whereas M&D was more about opportunistically expanding on going after new business and maybe lowering our threshold. Maybe I'll give you guys a couple of examples, see if this makes sense. In the Northeast, we had a large multi-building commercial office client that was under pressure. They came to us, and they talked to us about the fact that they're looking to trim operating costs across all of their areas and said they may even have to rebid. We got in the middle of it because of our relationship and said, look, you don't have to rebid.

Scott Salmirs: Let's figure out how we can accomplish what you want to accomplish. We'll look at scope reduction. We could look at timing of escalations. It was actually incredible because we came away with this with a margin profile that was still acceptable to us, not as ideal as it was before that negotiation, but still acceptable for us. We got a long-term extension. From our view, we really ingrained ourselves with that client because now they think of us as a strategic partner, not just a vendor. We had another example on the West Coast where we had a large client in a pressured area of downtown LA, and we had one year to go on the contract. This is one where we proactively went to them because we didn't want them to bid it out or even start thinking about it.

Yeah, so it it's it's been a combination of both, right? When I when I think about BNI I think about it more about protecting our footprint, protecting our client base because where we had the pressures were in 2 or 3 Geographic areas that I I mentioned in the prepared remarks, um, so whereas M&D was more about opportunity opportunistically expanding, um, on going after new business and maybe lowering our threshold and maybe I'll give you guys a couple of examples to see if this makes sense. Um, so in the, in the Northeast, we have a large multi-building commercial office, client, that was under pressure and they came to us and they talked to us about the fact that they're looking to trim operating costs across all of their areas. And so they may even have to rebid and we got in the middle of it because of our relationship and said, look, you don't have to

Scott Salmirs: We worked through, again, the same kind of iterations with them. Can we adjust scope? Can we take a person out of the lobby during the day? Can we think about the window cleaning cycles? We really got into it with them, and we ended up forging a longer-term contract and the same thing, walking away with a client that now thinks of us as a strategic partner. In both those cases, we protected our footprint. These were both marquee clients and long-term clients. For us, we look at this as a really positive result. You guys know that have been following us for years, we always rework the margin back up. I think even if it's a little painful right now, we'll talk about this a year from now, and we're going to be really excited about where we are from a margin perspective.

But let's figure out how we can accomplish what you want to accomplish. Uh we'll look at scope reduction. We could look at timing of escalations and I was actually incredible because we came away with this with a margin profile. That was still acceptable to us, not as ideal as it was before the that negotiation, but still acceptable for us. And we got a long-term extension. And, and from our view, we we really ingrained ourselves with that client because now they think of us as a strategic partner, not just a vendor. And then we had another example in the west coast where we had a large client in a pressured area of, uh, downtown LA. And that we had 1 year ago on the contract and what this is 1, where we proactively went to them because we didn't want them to bid it out or even start thinking about it and we worked through again, the same kind of iterations with

With them, can we adjust scope? Can we take a person out of the lobby during the day? Can we think about the window cleaning Cycles? Like, we really got into it with them and we ended up forging a longer term contract and the same thing walking away with a a client that now thinks of us as a strategic partner and in both those cases, we protected our footprint and these will both Marquee clients and long-term clients. So that we it, you know, for us, we look at

Scott Salmirs: The other example I want to give you is Manufacturing & Distribution. We are going after certain submarkets like semiconductor and pharma. We had a new opportunity with a client that was tangential to semiconductor. It wasn't exactly semiconductor, but it was part of the semiconductor supply chain. We wanted this client. We wanted to get into this vertical. You know what? When we bid this contract, we went approximately 100 basis points below what we would normally do as kind of our minimum for bidding new business because we wanted this strategically. We did that. We secured the new business, and we're already seeing some growth from that client, from that bid. These are decisions that, again, they impact us in the short term. We also know that you don't solve these problems in a quarter. We'll have some effect as we go forward.

Scott Salmirs: The thing that I'd want to mention here is we're not sitting on our hands when this stuff happens, right? You heard in the prepared remarks, right? We're looking at discretionary costs. We're going back and relooking at labor efficiencies across our entire platform to make up for this. To David's credit, initiated a firm-wide restructuring program where we took $35 million of cost out of the company, and that's largely underway. We'll be finished in the next month or so where we'll have the full run rate by fiscal start of 2026. I'm really proud of the organization for coming together and doing that. Hopefully that gives you a little bit more color on how these pricing decisions have impacted us, the examples of it, and what we're doing as an organization in a very agile way to counteract those.

Supply chain, and we wanted this client. We wanted to get into this vertical. Um, and you know what? When we bid this contract, we went approximately 100 basis points below what we would normally do as kind of our minimum for bidding new business. Because we wanted this strategically, we did that, we secured the new business, and we're already seeing some growth from that client from that bid. So, like, uh, these are decisions that, you know, again, they impact us in the short term, and we also know that, you know, you don't solve these problems in a quarter. So, we'll have some effect as we go forward. But, you know, I guess the thing that I'd want to mention here is...

we're not sitting on our hands when this stuff happens, right? And you heard in in the prepared remarks, right? We're looking at discretionary costs, we're going back and relooking at Labor efficiencies across our entire platform to make up for this. And you know today that's credit initiated a, a firm wide restructuring program where we took 35 million dollars of cost out of the company and that's largely underway, we'll be finished in the next month or so where we'll have the full run rate by fiscal start of 2026 and really proud of the organization for coming together and

So, um, you know, I just hope that gives you a little bit more color on kind of how these pricing decisions have impacted us, the examples of it, and kind of what we're doing as an organization in a very agile way to counteract those.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): No, that's helpful. You mentioned the cash flow outlook. You can maybe give us some more detail on your progress on collections, any concerns about delinquencies, and maybe a good frame for us where you're at on billing cycles for new revenue versus what could be considered normal. No problem. No material concerns on delinquencies. I think, as Scott said, there was just a tremendous focus in the quarter on collections overall. In fact, our DSOs were down 7% sequentially Q2 to Q3. We were really proud of that because that was the target we were hoping to achieve. As I said, in Q4, we looked to carry that momentum in. There is a laser focus throughout the organization, and that goes down from the operators to our back office support functions and everywhere in between. Really proud of where we landed the quarter on cash flow.

No, that's helpful. And then you mentioned the cash flow outlook. Can you maybe give us some more detail on your progress on collections, like any concerns about delinquencies? And maybe provide a good frame for us regarding where you're at on billing cycles for new revenue versus what could be considered normal.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Feel good about it going into Q4.

Operator: Thanks for taking the questions, guys. The next questions are from the line of Andy Wittmann with Baird. Please receive your question.

Yeah, no problem. Uh, no material concerns on delinquencies. I think as Scott said there was just a tremendous Focus, um, in the in the in the quarter on collections overall, in fact, our dsos were down 7% sequentially Q2 to Q3. Um, and so we're really proud of that because that was the target. We were achieving, we were hoping to achieve. And then, as I said in Q4, we looked to carry that momentum in. I mean, there's a there's a focus throughout the organization and that goes down from The Operators to our back office support functions and everywhere in between. So really proud of where we landed the coral and cash flow. Feel good about it going into Q4.

Thanks for taking the questions, guys.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Yeah, great. Thanks for taking my questions. I just wanted to kind of dig into the guidance in the quarter and all the implications here a little bit deeper. I guess specifically, it's a big quarter-over-quarter EPS ramp. There can be historically some positive seasonality that helps Q4 over Q3, but it looks particularly acute this year to achieve the low end of the guidance. That's really what I want to get into. When I look at it here, your implied fourth quarter to get to the low end is $1.09 to get there. Consensus is $1.07. That actually kind of feels like no change, but it feels like there's clearly a change here in terms of the margin rate that your annuity businesses have exited the quarter with on Q3 versus Scott's comments here so far.

The next question is from the line of Andy Whitman with beard. Please receive your question.

Yeah, great, thanks for taking my questions. I guess I just wanted to kind of dig into, um,

The guidance and the quarter, and all the implications here, a little bit deeper. And I guess specifically, it's a big quarter of a quarter, EPS ramp, and there's...

Can be historically, some positive seasonality that helps for you over 3 Q, but it looks particularly acute this year to achieve the low end of the guidance. So that's really what I want to get into because, you know, when I look at it here, your implied fourth quarter to get to the low end.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Maybe the question is, which are the segments sequentially that are going to drive such a sharp acceleration in your operating income dollars and why? Thanks, Andy, for the question. Let me dimension that this way. We do, first of all, expect a material sequential improvement in both the EPS line and the margin line. I'll actually dimension it on the margin side. We're looking at roughly 100 basis points of improvement in margin. The way I would think about that is we have some moderate improvement in Business & Industry and Manufacturing & Distribution on the strength of restructuring and the strength of the timing of escalations that are going to come through in the fourth quarter. The really big difference in the fourth quarter is our expected performance in Technical Solutions.

Is a is a dollar 9 to get there. A consensus is is a dollar 7 so that that actually is kind of feels like no change but there's this it feels like there's clearly a change here in terms of the margin rates that your annuity businesses have exited the quarter with on 3 Q versus um uh Scott's comments here so far. So I I guess maybe the question is

Which are the segments, um, sequentially that are going to drive such a sharp acceleration in your, um, operating income dollars and why?

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): If you think about historically what this business has done in Q4s past, it's a seasonally very strong quarter. In fact, over the last two years, operating profit margins have been 11% and 13% respectively in Q4 for Technical Solutions. We anticipate that to repeat itself in Q4 this year. That's a massive part of the margin and EPS improvement. Outside of the restructure impact for Business & Industry and Manufacturing & Distribution, as Scott mentioned, the restructure was broader than that. It was across the firm. We anticipate a benefit from that as well. We feel like we're lined up to show a very strong sequential Q4. Got it. Yeah. It's just interesting if you look at the interest expense specifically. I mean, that's a pretty big change in your guidance for interest expense.

And we anticipate that to repeat itself in Q4 this year. So that that's a, that's a massive part of the, the margin and EPS Improvement. And then, outside of the restructure impact, for B9 M&D, as Scott mentioned, the restructure was broader than that, it was across the across the firm. And so we anticipate, um, a benefit from that as well. So we, we feel like we're lined up to show a very strong sequential Q4.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): You know, just that change in interest expense here, the half year, explains that really the delta between the high end of your EPS and the low end now that you're talking about is actually almost completely explicable by the change in your interest expense outlook. I guess that's just a comment more than a question, but still, I think notable. Scott, I guess maybe to you here, just the, you know, last quarter kind of felt like things were kind of firing on most, if not all, cylinders. It just, it feels like, you know, I didn't hear a lot of commentary about, you know, some pockets of weakness, tough markets in the West Coast and the Midwest. This quarter, kind of a bigger change. I guess just like, can you just take us through the timeline as to what changed through the quarter?

Got it. Yeah and it's just interesting if you look at the the interest expense specifically. Um I mean that's a that's pretty big change. In your guidance for interest expense, you know just that change in interest expense here for the half year explains. The the really the Delta between the high end of your EPs and the and the low end. Now that you're talking about is actually almost completely explicable by the the change, in your interest expense Outlook. So just I guess that's just a comment more than a question but um, still I think notable, you know, Scott I guess.

Um, maybe to you here, just the

You know, last quarter of kind of felt like things were were kind of firing on on most if not all cylinders and it just it feels like, you know. I didn't I didn't hear a lot of commentary about, you know, some pockets of weakness, tough markets in the west coast in the midwest. Um, this this quarter kind of a bigger change, I guess. Just like,

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): I would have thought that there had been some indication about kind of some of these pricing negotiations that you're going into. Maybe just take us through kind of how this all evolved and came to be so that we just understand kind of what happened here.

Scott Salmirs: Yeah. Thanks, Andy. Interestingly, it's really simplistic. It's just, and I'm saying this kind of tongue in cheek, but I don't, it was just bad timing. It's like we had a bunch of clients concurrently come to us and talk about the fact that they're pressured. They're looking at their budgets for 2026 because this is the time, this is the zone when owners are putting together their budgets because most of them largely are on the calendar year. You're sitting here, for them in June, July, August, and firming up what their P&Ls are going to look like. They just came to us and said, look, again, we're looking across the whole spectrum. No one was targeting cleaning, but they were targeting every expense, their utilities costs, right? Waste removal, everything. They just came to us like, what can you do?

Can you just take us to the timeline as to what changed the quarter? And I would have thought that there had been some indication about kind of some of these pricing negotiations that you're going into. Maybe just take us through kind of how this all evolved and came to be so that we just understand um, kind of what happened here.

Yeah. Um, thanks, Andy. You know, it, you know. Um,

Scott Salmirs: We don't want to test the market, and we never want them testing the market, right? There's a very different outcome for us on a margin when it's a bid versus a renegotiation. We were happy, all things considered, to go into a renegotiation. It was a timing. A lot happened concurrently, and it just happened in the weaker markets, geographic markets that have not recovered as quickly. I'll tell you some of them, and you'll be shaking your head. Portland, Seattle, downtown LA, parts of Minneapolis, DC has been under pressure. There have been these, it's different than maybe New York or Center City, Chicago, which are stronger. It happened in those markets. It happened at the same time. To give you some comfort, Andy, I could tell you, at least in the short term, we're already a month into Q4. We are not seeing this happen again.

Interestingly it's um, it's really simplistic. It's just uh, you know, and I'm saying, this kind of tongue and cheek but I don't, you know, it was just bad timing, you know. It's like we we had a bunch of clients concurrently come to us and talk about the fact that they're pressured. They're looking at their budgets for 2026 because this is the time, this is the Zone when owners are putting together their budgets, because most of them largely are on the calendar year. So you're sitting here, you know, for them in June, July August, confirming up, you know what their p&ls are going to look like, and they just came to us and said, look, you know, we'll again, we'll look at the whole Spectrum. No, No. 1 was like targeting cleaning but they were targeting every expense their their utilities cost, right? Waste removal everything and they just came to us, like, what can you do? You know, we don't want to test the market and we never want them testing the market, right? Um, there's a

Scott Salmirs: Frankly, I've been around here 20 years. I've not seen, again, having in unison so many clients at such a short period of time. We fought through it. We reacted really quickly. We feel like we're in good shape, and we feel like we're not going to be having this conversation with you guys again about something that just felt so episodic.

Very different outcome from us, for, for us, on a margin when it's a bid versus a renegotiation. So we were happy. You know, all things considered to go into a renegotiation. So it was it was a timing a lot happened. Concurrently and it just happened in the weaker markets, Geographic markets, that have not recovered as quickly. And, you know, look, I I I'll tell you some of them and you'll be shaken in your head, you know, you know Portland, Seattle downtown LA parts of Minneapolis DC has been under pressure, so there's been these different than maybe New York or Center City Chicago, which are stronger. So it it happened in those markets. It happened at the same time, but to give you some comfort Andy. I could tell you, uh, at least in the short term, you know. We're, we're already a month into Q4. We are not seeing this happen again, and frankly, you know, I've been around here, 20 years, I've not seen again.

Operator: That's really helpful perspective. Thank you for that, Scott. Have a good day.

Having you know, in unison. So many clients at at such a, a short period of time. So, but again, we fought through it, we we reacted really quickly. So um, we feel like we're in good shape and we feel like we're not going to be having this conversation with you guys again about. Um something that just felt so episodic.

Scott Salmirs: Thanks, Andy.

That's a really helpful perspective. Thank you for that, Scott. Have a good day.

Thanks Andy.

Operator: Our next question is from the line of Faiza Alway with Deutsche Bank. Please proceed with your questions.

Faiza Alway: Yes, hi. Thank you. Good morning. Scott, I wanted to follow up on the same topic. You talked about you don't want to test the market. I'm curious if you can talk more about the competitive environment. Are you seeing new entrants out there? I would have thought just given where we are in terms of the labor environment, there may be some potentially competitive advantages that you might have. Just talk a little bit more about that thought process.

Our next question is from the line of FISA. I'll wait with December Bank. Please just see with your questions.

Scott Salmirs: Sure, Faiza. Here's what I think about. There are not new entrants from a competitor's standpoint. In any given market that we have, we're always going to have three or four really good competitors. It's just the fact of what we do, right? When we talk about not wanting something to go to market, for us, it's just a very different conversation when you're sitting down with a client and working with them in a collaborative way to come to a result that they want versus going out to bid and potentially having someone put in an irresponsible bid because they don't know the client as well as we do and know some of the demands the client would have. You'll always find, and I don't think this is necessarily even ring-fenced to ABM Industries.

Process.

Scott Salmirs: I think you would look at any kind of commercial services vendor in our universe, and it's kind of ubiquitous that they would say, like, why would you want something to go out to market if you can have a negotiation? I think this is a result of clients that are under pressure right now because there have been slower to recover markets. Again, just to be clear, Faiza, there is nothing in our mind that's structural that's going on here. This is a normal event for us throughout the year. We see clients come to us all the time on a regular basis in every industry group. Particular clients become under pressure because it could be their own business model. It could be something that's happening particularly to their business.

Sure, sure fisa. Um, so look here, here's the way I think about that. It there's not new entrance from a competitor's standpoint look and and in any given Market that we have, we're always going to have 3 or 4, really good competitors. It's just, it's just a fact of what we do, right? So, um, when when we talk about not wanting something to go to market, you know for us it's it's just a very different conversation when you're sitting down with a client and working with them in a collaborative way to come to a result that they want versus versus going out to bid and potentially having someone put in an irresponsible bid because they don't know the client as well as we do and know some of the demands that the client would have. So, um, you you'll always find and I I don't think this is necessarily even ring fence to ABM. I think you, you would look at any kind of Commercial Services vendor in our unit.

University and it it's kind of ubiquitous that they would say. Like, why would you want something to go out to Market if you can have a negotiation. So, um, I think this is a result of clients that are under pressure right now because there's been slower to recover markets and again, I don't there's, you know, just to be clarifies that there is nothing an online that's structural that's going on here, you know, we this is this is a normal.

Scott Salmirs: This isn't the first time that we've had to sit down with a client and try to work through a result to have them save money. It literally happens every week for us. This was a situation where there were a number of big clients that were prestigious that we did not want these kinds of strategic, big brand name clients getting into the hands of any of our competitors.

Faiza Alway: Okay, understood. Makes sense. Just to put a finer point on what you're saying with respect to BNI versus M&D, because it sounds like those are the two segments where you're undertaking this strategic pricing. BNI feels a little bit more defensive versus M&D. It sounds like there's a lot of new business opportunities. I just want to make sure that I'm thinking about it the right way. If that's right on M&D, should we expect growth to accelerate from here as you get some of this new business, perhaps at a slightly lower margin? I'm just trying to think through the margin implications for next year.

Event for us, throughout the year. We see clients come to us all the time on a regular basis and every Industry Group particular clients become Under Pressure because it could be their own business model. It could be something that's happening particularly to their business. So this isn't, this isn't the first time that we've had to sit down with the client and try to work through a result to have them save money. It literally happens, you know, every week for us. It's just, this was a situation where there were a number of big clients. You know, that were prestigious that we did not want these kinds of strategic big brand name clients getting into the hands of any of our competitors

Okay, understood. Makes sense. Um, and then just to...

Scott Salmirs: Yeah, I think the way to think about it is think about those segments, right? BNI is primarily commercial office. As you know, for the last few years, it's been under pressure. It was absolutely, you know, more defensive from that way because it was the clients responding, whereas M&D was more opportunistic. We wanted to get into a particular market. I think what I would ask you to do is also put this in context to the fact of, you know, what I noted in my prepared remarks. Our bookings are up 15%. We brought in $1.5 billion in new business through the first three quarters of the year. Our momentum in terms of winning new business and bringing them on and the tailwinds into 2026 are really healthy.

Respect to B and I versus M&D because it sounds like those are the 2 segments where you're undertaking. You know, the Strategic pricing like BNI feels a little bit more defensive versus M&D. It sounds like there's a lot of new business opportunities. Um, so, you know, just want to make sure that I'm thinking about it the right way. And, and if, if that's right on, mnd, um, like should we expect growth to accelerate from here, as you get some of this new business? Perhaps at a slightly lower margin? I'm just trying to think through like the margin implications for next year.

Yeah, so like I think the way to think about it is think about those segments, right? BNI is, is primarily commercial office, and, and as you know, for for the last few years, it's been under pressure. So it was absolutely um, you know, more defensive from that way because it was the client's responding. Whereas M&D was more opportunistic. We wanted to get into a particular Market. Um, so but then, I think what, what I would ask you to do is also,

Faiza Alway: All right, thank you so much.

Put this in context to the fact of, you know what, I noted in my prepared remarks, our bookings are up 15%, we we brought in 1.5 billion dollars in new business, through the first 3 quarters of the year. So like, you know, our momentum, in terms of winning new business, and bringing them on, and the Tailwind into 2026 are really healthy.

Scott Salmirs: Thanks, Faiza.

All right, thank you so much.

Thanks fisa.

Operator: Our next question is from the line of Josh Chan with JLL. Please proceed with your questions.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Hi, good morning, David and Paul. I appreciate the color about the strategic pricing and escalation actions, but could you talk to the magnitude of the margin headwinds? In any given quarter, only a very small portion of your business, I would expect to be rebid or renegotiated at any time, right? To see those more episodic events have that big of a margin impact, could you talk to kind of how that caused the magnitude of the margin headwind?

Have a nice question for the line of Josh Chan with UBS. This is you with your questions.

Hi, good morning Scott David and Paul um I I appreciate the color about the Strategic pricing and escalation actions um I guess but could you talk to the manager of the margin headwinds because I guess in any given quarter or only a very small portion of your business? I would expect to be rebid or renegotiated at any time.

Scott Salmirs: Yeah, I'll let David take that one.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Yeah, thanks, Josh. Yeah, as Scott pointed out a few minutes ago, rebids are a part of our normal course of business, but just the volume and aggregation of this quarter was something we have not historically seen. You combine that with the decisions we made to protect and preserve the long-term growth footprint. As we mentioned, there were some timing items on the escalation side that we do believe over the next quarter or two will begin to recover. I think that in and of itself for Business & Industry especially provides most of the bridge on the margin headwinds.

Operator: Okay, that makes a lot of sense. In terms of the catch-up into Q4, certainly it does seem like Q4 is becoming a lot healthier. I realize the escalation timing could contribute to that, but I guess what's your confidence level that that alone can drive the projected level of sequential margin improvement?

With the decisions we made to protect and preserve the long-term growth footprint. And as we mentioned, there were some timing items on the escalation side that, you know, we do believe over the next quarter or two we'll begin to recover. So I think that in and of itself for BNI especially provides most of the bridge on the margin headwinds.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Yeah, I wouldn't say it's that alone. It's a combination of other things. If you're talking enterprise-wide, as I mentioned, just really anticipate a strong quarter from ATS. I wouldn't discount the benefits of the restructuring activities as well, because as Scott said, those activities are underway. They've largely been completed. We anticipate roughly 20% of those benefits to come through in Q4 this year with the balance to come through in fiscal 2026.

Okay, that that makes a lot of sense. And then in terms of the the catch up into Q4, certainly it, it does seem like you forwards the coming a lot healthier. I I realize the the escalation timing could contribute to that but I guess, what's your confidence level? That the that alone can drive the projected level of of sequential margin Improvement.

Operator: Okay, great. Thanks for the color and good luck in Q4.

Yeah, and it's, I wouldn't say it's that alone. It's a combination of other things. So again, if you're talking to Enterprise-wise, I mentioned just really anticipating a strong quarter from ATS, and I wouldn't discount the benefits of the restructuring activities as well. Because Scott said those activities are underway, they've largely been completed, and we anticipate roughly 20% of those benefits to come through in Q4 this year, with the balance to come through in fiscal 26.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Thank you.

Thanks for the color and good luck in Q4.

Scott Salmirs: Thanks.

Thank you, thanks.

Operator: The next question is from the line of Marc Riddick with Sadoti. Please receive your question.

The next question is from the line of Margaret with Sedoti. Let's just see if there are questions.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Hey, good morning, everyone. David, certainly looking forward to working with you going forward. Thank you for all the color that you guys have already provided. I guess I just want to take a different tact on this. I was curious, Scott, maybe you could talk a little bit. You gave some examples on how these opportunities presented themselves during the quarter. Maybe you could talk a little bit about the visibility and maybe some of the contract lengths, things like that, the benefits of that retention and how we should think about that vis-a-vis historical visibility levels.

Scott Salmirs: Sure. I mean, look, I think it's a ramp-up, right? You make these decisions. When we restructure these contracts and we're working with owners on how to get to really what their goals are for pricing, we think about it strategically too within where we're providing relief because we'll want to restructure it in a way that we can work the margins back up. It's too much sausage-making for this call, but the truth of the matter is our salespeople and our operators know how to provide savings and restructure the contracts and the contract language in ways that over the next two to five years, you see the margins come way back and sometimes even stronger than they were at the start. You're taking a little bit of a hit at the start to preserve the long-term relationship.

Good morning everyone. And, uh, David certainly looking forward to working with you going forward. Thank you for all the uh the color that you guys have already provided, I guess it. And and I just sort of want to take a different um tacked on this sort of I was sort of curious Scott maybe you could talk a little bit you gave some some examples on sort of how how these, uh, opportunities present themselves during the during the quarter. Maybe you could talk a little bit about the visibility and maybe some of the, the contract, links things like that, that maybe sort of, you know, the benefits of of, of that retention. And and, um, how we should think about that Visa V, you know, historical, uh, visibility levels.

Sure. I mean look I think you know it's a ramp up, right? You you make these decisions and um when we when we restructure these contracts and we're working with owners on on having get to their

Really what their goals are for pricing. Um, we kind of, we think about it, strategically too, within where we're providing relief, because we want to restructure it in a way that we can work the margins back up. And it's, it's too much sausage making for for this call. But the truth of the matter is our, our sales people and our operators, know how to provide savings and restructure the contracts and the contract language.

Scott Salmirs: What's amazing about that is when you have a contract with a significant client, with a significant brand, and you're looking at an expiration date on that contract, and this could be a $25 million, $50 million, $75 million contract, and you're looking at an expiration date of a year from now, and you're like, oh my goodness, what an amazing opportunity to give a little bit of margin back and end up with now a four or five-year extension. For us, it's a home run because we know we're going to get back to that same margin place, but now we have a five-year journey ahead of us and locking up a marquee client.

In ways that over the next 2 to 5 years, you see, the margins come way back and sometimes even stronger than they were at the start. So, you know what, you're you're taking a little bit of a hit at the start, to preserve the long-term relationship. But what's amazing about that is when you have a contract with a significant client with a significant brand and you're looking at an expiration date on that contract, and this could be a 25.575 million contract and you're looking at an expiration date of a year from now and you're like, oh my goodness, like what an amazing opportunity to give a little bit of give a little bit of margin back and end up with now 4 or 5 year extension. You know for us it's it's it's a home run because we know we're going to get back to that same margin place. But now we have a 5 year, journey ahead of us and locking up a marquee client.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Excellent. That's kind of where I was going there. Do you sense that there are other similar opportunities that you might be able to take in the near term, or do you get the sense that that might be driven more so around the differentiation of regional performances that you were hinting at earlier?

Scott Salmirs: Yeah, no, you know, I think I may have mentioned this before, but we do this all the time. I have every expectation that in the month of September, there's going to be four or five exact similar, the examples I gave, four or five times that's going to happen in the month of September, different than 30 of them happening in the month of September. Those are anecdotal. Those aren't real numbers of what happened. I think, you know what, Mark, that's probably the differential. You'll always see this stuff happening. It's just, again, to have it happen in unison concurrently in one shot, that was the one that created the impact. We're always looking for these kinds of opportunities to continue to secure longer-term contracts with our marquee clients.

Excellent. And that's kind of where I was going there. So, I mean, did you sense that there are other similar opportunities that that you, you might be able to take in the near term or do you get the sense that that might be driven more? So around the, the differentiation of regional performance is that you're hinting at earlier? Yeah, no. I I, you know, I, I thought, I think I may have mentioned this before, but like we do this all the time. So like, you know, um, I have every every

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Great. I appreciate the explanation on going over that. The one thing I also wanted to touch on, you mentioned in your prepared remarks, AI benefits and the like. Can you talk maybe about the timing of when you might see that and sort of how that might take shape and how that sort of plays into the ERP? Thanks.

Term contracts with our marquee clients.

Scott Salmirs: Sure. Listen, AI is probably the most exciting thing that's happening here, but it's still a nascent technology, right? We're looking at areas across the company where we see savings in terms of our overhead, right? We're also seeing places where we can accelerate from a revenue standpoint and a profitability standpoint that are client-facing in the field with labor, what have you. It's the beginning, right? It's the beginning of a journey, not just for ABM Industries. I think we're in good company because I could tell you all the other CEOs that I talk to, everyone's playing around with these initiatives. My sense of it is in 2026 through 2028, you're going to start seeing real meaningful impact. It's not going to be binary where it's just going to be flip a switch. You're just going to see a ramp-up. Super excited about that.

And so I appreciate the explanation, on, on, on going over that the 1 thing, I also wanted to touch on you mentioned that you prepared remarks AI uh, benefits and the like can you talk maybe about maybe the the, the timing of when you might see that and sort of um uh how how that might take shape and how that sort of plays into the Erp. Uh, thanks.

Scott Salmirs: I think what we're really excited about and what we've been reflecting on a great deal is ABM Industries' business model. We've been talking to investors that have been talking about where they're placing their bets. It seems like the investor community is starting to get nervous about certain companies that they think could be completely really disaggregated because of AI and their business model and what could happen to their core. You think about ABM Industries' core, right? I don't know how you feel, Marc, but I don't think AI is going to be turning a wrench anytime soon, right? Or doing all core services. We think there's going to be a lot of focus on companies like ABM Industries in the future when you look at the disruption that's going to happen to companies in a negative way from AI.

Sure. Um, listen, uh, it AI is probably the most exciting thing that's happening here but it's still a nent technology, right? You know, we, we, we're looking at areas across the company where we see Savings in terms of our overhead, right? But we're also seeing places where we can accelerate from a revenue standpoint and a profitability standpoint. You know, that our client facing in the field with labor, or what have you, um, but it's it, it's the beginning, right? It's the beginning of a journey for for not just for ABM. I think we're in good company because, you know, oh, I could tell you all the other CEOs, that, I talked to everyone's playing around with these initiatives, but my sense of it is in 26 through 28, you're going to start seeing real meaningful, real meaningful impact and it's not going to be it's not going to be binary where it's just going to be flip of switches. You're just going to see a ramp up so super excited about that, but I think

Scott Salmirs: We look at this and say we are just super enthusiastic about the core services that we provide as a foundation and the fact that they are insulated for years in terms of AI and then layering on the benefits that we could get in back office and through labor efficiency. It gets us pretty charged up here that we have an AI-resilient business model when it comes to disruption.

You know what, we're really excited about and what we've been reflecting on a great deal is abms business model and you know we've been talking to investors that have been talking about where they're where they're placing their bets and and it seems like the investor Community is starting to get nervous about certain companies that they think could be completely, um, really disaggregated because of of AI and their business model and what can happen to that core and you think about abms core, right? Um, you know, I don't know how you feel Mark, but I don't think AI is going to be turning a wrench anytime soon, right? Um, or doing all core services. So we think there's going to be a lot of focus on companies like ABM in the future. When you look at the disruption, that's going to happen to companies in a negative way from Ai. And we look at this and say like we are just

super enthusiastic about kind of the the core services that we provide as a foundation and the fact that they are insulated um, for years in terms of AI and then layering on the benefits that we could get and back office and through Labor efficiency. And um, it gets us pretty charged up here that we have, um, an AI resilient business model when it comes to disruption.

Analyst (multiple: Luke McFadden, Jas Bibb, Andy Wittmann, Faiza Alway, Josh Chan, Marc Riddick): Great. Thank you.

Scott Salmirs: Thanks, Mark.

Great. Thank you.

Operator: Thank you. This will conclude our question and answer session. I'll hand the call back to Scott Salmirs for final comments.

Thanks Mark.

Scott Salmirs: Thank you, everyone. Appreciate you following. You can see there's a lot of enthusiasm here for what we're doing and where we're heading. We're going to continue on. We're looking forward to talking to you in Q4. At that time, we'll give you our annual guidance for 2026. In the interim, have a good holiday season, and we'll talk to you soon. Thanks, everybody.

Thank you. This will conclude our question and answer session. I'll hand the call back to Scott Salmirs for final comments.

Well, thanks everyone. Appreciate you. You following and uh you can see there's a lot of enthusiasm here for what we're doing and where we're heading. And um, we're going to continue on. We're looking forward to talking to you in Q4. And at that time, we'll give you our our annual guidance for 26. And, um, in the interim have a good holiday season and we'll talk to you soon.

Operator: This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.

Thanks everybody.

This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation. Have a wonderful day.