ABM Industries Inc (ABM) 2005 Q2 法說會逐字稿

Good morning. My name is Marianne, and I will be your conference facilitator. At this time I would like to welcome everyone to the ABM Industries Inc. second quarter earnings results conference call. (OPERATOR INSTRUCTIONS) Thank you. At this time I would like to turn the conference over to Mr. Henrik Slipsager, President and Chief Executive Officer of ABM Industries. Mr. Slipsager, you may begin your conference.

Thank you. Good morning. I am Henrik Slipsager, Pleasant and CEO of ABM. Joining me today are George Sundby, Executive VP and CFO; Terry Petty, Executive VP and Chief Operating Officer; and Linda Auwers, our Senior VP and General Counsel. On the call today I will provide an overview of our operational results for the second quarter and six months ended April 30th. George will discuss our financials in detail, and then I will conclude our prepared remarks with a summary of our operational achievements for the quarter, as well as provide an update on guidance for the remainder of fiscal 2005.

Before we begin I would like Linda to present the Safe Harbor statement. Linda?

Thank you Henrik. Before we begin I need to tell you that our presentation today contains predictions, estimates and other forward-looking statements. Our use of the words "estimate", "expect" and similar expressions is intended to identify these statements. These statements represent our current judgment on what the future holds. While we believe them to be reasonable, these statements are subject to risks and uncertainties that can't cause actual results to differ materially. Some of the important factors relating to our business are described and our Form 10-Q quarterly report, Forms 8-K and the Form 10-K that we filed earlier this year with the SEC.

Thank you Linda. We're pleased with our solid revenue growth and strong operating results for the second quarter of fiscal 2005. Contributing to this revenue and earnings growth were acquisitions in janitorial and security, new business in all operating segments and expansion of services with existing janitorial and engineering customers.

In the second quarter, sales and other income increased over 10% from the same period last year, and net income for the quarter increased by over 43% to $10.5 million, or $0.20 per diluted share, even after we recorded a previously announced pre-tax charge of $6.3 million related to amounts awarded to the plaintiff in a discrimination case. Our parking, security, engineering and lighting operations posted double-digit growth in operating profit. And all of our business segments, excluding lighting, experienced top line growth. In particular, our parking and security businesses achieved year-over-year growth of 34.4% and 37.9% respectively.

Gross margins during the quarter improved an impressive 50 basis points year-over-year due to more profitable acquisitions, new business, the continued elimination of unprofitable contracts and one fewer workday in the quarter, which benefited our janitorial operations.

During the first six months of this fiscal year we have completed the acquisition of the assets of the Sentinel Guard Systems, a provider of security officer services; (indiscernible) Services, a New York-based provider of professional on-site management commercial office planning and specialty cleaning; and Amguard, a provider of security and patrol services.

As we continue to focus our financial and management resources on the businesses that will contribute to our position as a leading national service provider, we announced last week a sale of CommAir Mechanical Services Carrier Corporation, a division of United Technologies. The consideration paid was $32 million. ABM will realize in our third fiscal quarter a pre-tax gain from the sale of approximately $21 million. CommAir generated pre-tax income of $1.4 million in fiscal year 2004 off revenues of 41.1 million. The sales price represents a multiple of nearly 23 times trailing pre-tax income.

We used the proceeds of this transaction to expand our existing lines of business by continuing our acquisition strategy and making the proper investment in our infrastructure to provide the necessary support for continued growth and long-term shareholder value. We ended the quarter with over $52 million in cash and cash equivalents, which do not include the proceeds from the CommAir sale, approximately $246 million of working capital and no debt. And our May 25th we replaced 250 million syndicated line of credit with a five-year $300 million facility.

Before I get into more a detailed discussion of our operating segments, I would like to turn the call over to George for a review of our second quarter and first six months of fiscal 2005 financial results. George?

Thank you Henrik, and good morning everyone. I'd like to review the consolidated results for our second quarter and six months period ended April 30th, as reported in yesterday's earnings release. Our quarterly report on Form 10-Q is scheduled to be filed later today with the Securities and Exchange Commission.

As Henrik indicated, we have successfully completed the sale of substantially all of our mechanical HVAC business. We received 32 million in cash at closing. Over the next 90 days there will be a true up for changes in working capital and resolution of other potential purchase price adjustments. The expected gain from this sale is approximately 21 million pre-tax, or $0.25 per diluted share after-tax, which will be included in our third quarter results.

The sale to Carrier did not include CommAir's water treatment business with net assets of less than 300,000. This operation has been retained and is expected to be sold later in the year.

As a result of this transaction, the historical results of our mechanical division have been reclassified as income from discontinued operations. This is treatment similar given to elevator two years ago. This is shown in our income statement on a net of tax basis. Earnings per share, additionally, has been segregated into income from continuing and discontinued operations. The revenue and expense is shown in our income statement relate solely to the continuing segments of our business.

As we discussed on our last quarterly call on November 1, 2004, facility services was merged with engineering. Previously mechanical and facility services were included in our "other segment" until the end of fiscal 2004. With the reclassification of mechanical results to discontinued operations, we have also reclassified the prior year revenues and operating results at facility services to be included with engineering, thereby eliminating our other segment. Accordingly, our segment configuration now consists solely of janitorial, parking, engineering, security and lighting.

For the second quarter, as Henrik mentioned, income from continuing operations was 10.1 million, or $0.20 per diluted share, compared to 7.3 million, or $0.15 per diluted share, for the second quarter of 2004. Sales and other income from the continuing operations was 639.6 million, which is up 10.1% when compared with last year's second quarter. The increase includes 38.9 million from acquisitions and 19.8 million from internal growth.

As Henrik indicated, the janitorial operation recognized a 6.3 million pre-tax charge, or $0.08 per diluted share after-tax, related to the discrimination lawsuit, which we are continuing to appeal. Substantially offsetting this charge, the Company recognized a 2.7 million, or $0.05 per diluted share, income tax benefit from the settlement of prior year's state tax audits, and also realized a 1.2 million pre-tax gain, or $0.01 per diluted share after-tax, related to additional proceeds received in connection with the Company's World Trade Center insurance claim. The acquisitions we completed in the last five quarters, as Henrik mentioned, generated 1.3 million of higher pre-tax earnings than in the prior year's second quarter.

As previously discussed, the number of workdays shifts from quarter-to-quarter, causing positive and negative impacts on the profitability of our fixed-price janitorial contracts. For the second quarter, the janitorial operation benefited from one fewer workday in the second quarter, which decreased pre-tax labor costs by approximately $2.3 million. This offsets the one additional workday reflected in our first quarter results. For the remainder of fiscal year 2005, janitorial will have one additional workday, which will occur in the fourth quarter of 2005 as compared with 2004.

Net income, which includes the results of the discontinued operations, was 10.5 million, or $0.20 per diluted share, an increase of 43.2%. This year's second quarter results of our discontinued operations includes 243,000 of after-tax income earned on 11.1 million of revenue at mechanical, plus a $144,000 after-tax benefit from the settlement of some final customer litigation from our previously owned elevator operation.

The effective federal and state income tax rate from continuing operations for the second quarter was 15.5% compared to the 35.6% for the prior year. The lower rate was due to the 2.7 million pre-tax benefit from the resolution of the prior year tax matters. For the third and fourth quarter, I would anticipate a combined effective tax rate of approximately 38%.

Turning to the six month results for the period ended April 30, net income was up 34.8% to 18.4 million, or $0.36 per diluted share compared to the first half of fiscal 2004. Net income for the first six months of 2005 includes the aforementioned charges and gains in the second quarter of 2005.

Sales and other income from continuing operations was $1.278 billion, which is up 11.8% when compared to the prior year's period. The increase in sales includes 82.3 million from acquisitions and 52.8 million from internal growth.

Turning to the statement of cash flows, cash from continuing operations for the second quarter was a use of cash of 749,000, compared with cash generated from operations of 22.8 million for last year's second quarter. Six month cash flows from operation are 12.7 million compared to 34.8 million for the first half of 2004. The cash flow decrease was primarily due to quarterly growth in receivables, combined with timing of quarter end vendor payment, higher estimated income tax payments and a change in the timing of worker's compensation claims reimbursement to our third-party administrators. We fully expect to return to our normal cash flow generation in the third quarter.

As Henrik mentioned, we continue to have a very strong financial position with 53 million of cash at April 30, the receipt of 32 million in June with the sale of CommAir and no debt. The largest component of working capital continues to be accounts receivable, which increased to 333.8 million from 331.2 million at the end of last quarter due to higher sales. Accounts receivable that were over 90 days past due increased $1 million to 21.1 million, or 6.3% of our total outstanding compared to the 20.1 million, or 6.1%, at the end of the prior quarter. Days sales outstanding, however, decreased 1 day to 52 days. Our allowance for doubtful accounts decreased slightly from 8.3 million to 7.7 million during the quarter.

Insurance reserves at April 30 were 199.2 million, which is up from the 187.9 million at the end of fiscal 2004. Self (ph) insurance claims paid in the first six months totaled $30.9 million, which is a slight increase of $700,000, or 2.3%, for the 30.2 million paid in the first half of 2004.

(indiscernible) the second quarter we reentered the treasury stock purchase program and purchased 211,000 shares at an average price of $19.64. Under the current authorization from the Board, which expires October 31, 2005, we have just under 1.8 million shares remaining.

One final item that I wish to bring to your attention, in our first quarter call we indicated that we would be adopting the new accounting standard, share-based payments, in the fourth quarter of this year. With the change in the adoption requirement, ABM has elected to defer the adoption of this new standard until the first quarter of 2006. Our Forms 10-Q will continue to disclose the pro forma impact of this new accounting standard.

With that, let me turn the call back to Henrik who will give his perspective on ABM's quarterly performance and update our outlook for 2005.

Thank you George. I will briefly review the operational results for the second quarter and update our guidance for fiscal 2005.

Janitorial -- our janitorial operations had a solid quarter, posting a revenue increase of $26.1 million, or 7.4%, compared to the same period in 2004. The initial (ph) and cone (ph) acquisitions contributed $21.1 million. Sales across most regions increased, particularly in the mid-Atlantic, Northeast, Northern California, Northwest and Midwest. The sales increase was primarily due to new business and expansion of services to existing customers.

Our operating profits for janitorial excluding the impact of the $6.3 million charge for amount awarded to the plaintiff in the discrimination lawsuit increased by $5 million, or 43.8% during the second quarter of 2005 compared to the same period in 2004. Due to profit improvements in the majority of the regions, including a pick up in tack (ph) work for the Northeast and a $2.2 million benefit from one fewer workday in the second quarter of 2005 and the same period last year (indiscernible) workdays were the same.

To highlight some of our growth in janitorial, we were awarded a multiyear, multimillion dollar contract with BCE Energy covering cleaning and maintenance services for 68 BCE customer centers and business locations. In addition, we received a contract renewal for janitorial services at the seventh busiest airport in the US, the Minneapolis St. Paul International Airport.

Parking -- sales increased $5.5 million, or 5.9%, while operating profit increased 0.6 million, or 34.4%, during the second quarter of 2005 compared to the second quarter of 2004. The strong increase in operating profits resulted from the new contracts, the termination of unprofitable contracts, higher margins on renegotiated contracts, as well as improvement at airport locations due to increased air traffic across the country.

More than 1 million customers park at AMPCO's locations daily, and nearly $1 billion in receipts is collected annually. As a leading economic indicator, we remain hopeful that recent pick up (indiscernible) in airline travel and office building parking will continue.

Security -- security sales increased $20.6 million, or 39.5%, during the second quarter 2005 compared to the same quarter of 2004, primarily due to SSA, Sentinel and Amguard acquisitions, which contributed $17.8 million of that sales increase. Despite a $400,000 charge for bad debt, operating profit increased 700,000, or 37.9%, primarily due to profit contribution from acquisitions and new business. ABM Security is one of the largest US owned and operated security enterprises and we will continue to market our national capabilities and work towards expanding our (indiscernible) customer bases.

Engineering -- the sales for engineering increased $6.4 million to 12.7% during the second quarter of 2005 compared to the second quarter of 2004 due to successful sales initiatives resulting in new business and the expansion of service to existing customers across the country, most significantly in Northern California. Operating profit increased $300,000, or 10%, during 2005 compared to 2004 due to higher sales.

This was the second quarter that engineering included the operation of ABM Facility Services. We believe that this is the right strategic direction and the combined entity should be more efficient and provide a stronger (indiscernible) platform.

In February we announced the ABM Facility Services and ABM Janitorial Services were awarded contracts with Ford Motor Company. The contracts cover facility maintenance solutions for Ford buildings in Dearborn, Michigan, which encompass several million square feet and include janitorial engineering services. ABM Facility Services will manage procurement of the (indiscernible) facility services and oversee subcontractor performance as well.

Lighting -- lighting sales reflect for the quarter that our operating profit increased by $100,000, or 22.1%. We remain encouraged by lighting's progress and look forward to improving results throughout the remainder of 2005.

In summary, we are very pleased with our operational performance in the second quarter, and we believe our proven track record of making accretive acquisitions, breadth of services, industry knowledge and our financial strength have ABM positioned to take advantage of continued economic growth and improvement in the national office market. Given the current economic climate, our operations are expected to continue to generally perform at or above our earlier forecast. We now know, however, that the timing costs associated with the initial certification of internal controls as required by Section 404 of Sarbanes-Oxley are higher than anticipated.

Reflecting continued operational strength and the previously mentioned third quarter gain related to the sale of CommAir, we're increasing our fiscal 2005 guidance for net income to $1.17 to $1.23 per diluted share. For the third quarter we are projecting diluted earnings per share of $0.50 to $0.55, which does include the gain from the sale of CommAir, but is exclusive of any future acquisitions. We look forward to updating you on our progress next quarter.

At this time I would like to open the call up for questions.

(OPERATOR INSTRUCTIONS) Jeff Kessler, Lehman Brothers.

Congratulations on a great quarter. A couple of -- two questions, and I think Scott may actually have a couple of questions as well. The guidance that you're giving for the year, does that include the gain on the sale?

Yes sir.

That gain is just -- I apologize, but the gain is how much again?

$0.25.

Secondly, you mentioned that in parking some of the gain in the operating profit was due to renegotiated contracts. I'm wondering if you could describe what is going on in the rest of your businesses, given what you see as a stronger economic climate and a stronger position that you may have with regard to your clients. Are you in a position to renegotiate contracts? Are there contracts coming up in which you can get better margins because of better tenant occupancy out of your clients?

That's a good question, Jeff, and it will require a long answer. Let me try to shorten one.

I would say overall we do have very few unprofitable contracts left. Parking was known for having a number of them. Some of them have been resolved through higher traffic in the airports. So we didn't change the contract terms, but the contracts -- the performance is better just due to activity levels.

When you talk about profitability in other places like related to higher tenant sales, I would just say that that again is an improvement on existing contracts normally where tenant sales are improving, but we maintaining the same type of contract with the client. And if tenant sales goes up dramatically, I would assume that some building owners would also call us and probably try to lower the price more than increase the price. So the higher tenant sales is a benefit, but is normally not part of a renegotiated contract in any of our services.

I was just wondering if what was going on in parking was analogous to what you could potentially see in some of your other businesses.

I think the only thing that we can see in the other businesses overall, and I think that you see that for most of our results, is a higher activity level. And I think parking started six or nine months ago, and we are starting to see it in the other services now, which was what we hoped for.

One final question, and that is could you update us on your legal situation? I'm talking about your lawsuit with your European insurance carrier and where that is at this point?

That's with Zürich, the World Trade Center. As you know, in, I think it was February, we had won our appeal. Zürich has filed a motion to hear the case in the bank (ph). I may not be saying that right, but before all nine justices. We're still waiting for the Appellate Court to rule on that Zürich filing.

Okay. Thank you very much. And again, good quarter.

David Leibowitz, Burnham.

Let me add my congratulations. A very brief question. Given the sale of again a non-service business, or a product business, what sort of pre-tax and after-tax margins do you believe the Company now with its total focus on services should be capable of generating looking out a year or two?

Very good question, David, and thank you for the nice words.

It sure depends on the mix of business in our growth mode. I would say that with the sale of CommAir, CommAir lately has not been, let's say, benefiting our overall percentage of profits. So it's not going to hurt us to sell CommAir. But I would say with a better economic climate and growth the way we've seen it the last three, four, five quarters, I think we should be able to at least sort or medium-term eventually get back to our 4% margins where we were four, five, six years back.

And has that -- is there any reason we shouldn't be at 5.5 to 7%?

There's a lot of good reasons why we should not be at 5.5 to 7%. One of them as competition. But there's no doubt that it is our hope that we can get above 4%, which I hope we can talk to you about in a conference call three or four quarters from now.

Excellent. Thank you very much.

Kevin Monroe, Thomas Weisel Partners.

Good morning. Based on your guidance, and if you back out the gain, it looks like your guidance for the year is actually down a couple of pennies versus what you gave last quarter. Can you explain the reason for that? Is that Sarbanes-Oxley or is there something else going on there?

I would like to explain that because, as you know, we have that lawsuit, the $6.3 million case that we lost was not in our guidance last time. That's $0.08 right there.

But you also had $0.06 in onetime items and gains this quarter.

I'm coming back to that. So we had six times (ph) gains coming back to us this quarter. The guidance that we are providing is somewhat flat on operating -- on net income for the rest of the year, maybe slightly down below the down side of the estimate, and it's all related to SOx, which the costs have exceeded our expectations by a pretty high margin.

This is George. Also, with the sale of CommAir, we lose CommAir for the last half of the year during the hot months. And that's when generally that operation did quite well. (multiple speakers) our prior guidance would have those as operating results in there, and we're just earning interest income on the proceeds right now.

George, can you give a little more detail on why the cash from Ops was negative this quarter, specifically around, I guess, the worker's comp issue? I know this is an issue you guys had a couple of months ago. Are things getting better there now that you've got a new administrator? Or what's --?

Our total payments, which is what are going out to claimants, as I said, has only gone up about 2.3% for the six month period. But in moving the claims from one TPA to another TPA, under the contract we're reimbursing the TPA only on a quarterly basis and our new TPA requires more frequent reimbursements. So during this transition of all those claim files we're in essence reimbursing out TPA quicker. But as far as the dollars actually going out to claimants, we're very pleased with the increase. It's been only about 2%.

One last question. It looks like your internal growth -- and I might be doing the math wrong, but it looks like it was like 3.5% or so in the quarter, and that looks like it's slowing down a bit. Is there any particular segment that is -- you're seeing a little slowdown and internal growth, and what might be the cause of that? It sounds like the macro fundamentals driving your business should be all getting a bit better.

I think the macro is getting better and we have growth. One thing that does affect growth a little negative, and we're talking (ph) really about small margins, is the one less day. One last day means a higher profitability in the janitorial group due to the fixed-price contracts, but in all the other services there's one less day to sell business. And that does affect it a little bit. I think you'll find that our internal growth is basically the same, running at the 4 to 6% level.

Okay. Thank you.

David Gold, Sidoti.

Henrik, on janitorial you commented on new business and expanding services. I was curious if the expansion of services, are those incremental sales to tenants, the more profitable typically? Or are those more expanding sales to the entire building?

You'll have to repeat that.

When you talked about part of the growth in janitorial stemming from the expansion of additional services that you're selling, is that -- should we think about that as incremental sales to tenants? (indiscernible) you sell some of the higher margin services in some parts of the country to tenants versus -- or is it more sort of building-wide you go into the building and you're selling additional services to them? Or is it not that simple?

Yes, it is basically that simple. We sign in general in good times more services to the tenants in isolated areas. You'll find that the specifications in janitorial contracts vary from state to state and part of the country. So New York has very limited specs for the main building, which means we have increased demand for tenant services. If you go to the West Coast, you'll see specs being much more all-inclusive. So you won't see any major impact outside New York City, but New York City will see some impact.

Can you comment on what you're seeing in New York City?

Positive impact.

Okay. Got you. And then on the acquisition side of things, presumably you quite a bit of cash now that -- well, I guess you have had -- but some more money to use. Still focused in janitorial and security, is that still where you would like to add most?

Yes, janitorial and security. We're looking at parking as well. And also if anything in engineering comes up, we will look at that. The number of opportunities in engineering is very limited due to it's a service that's growing more from in-house contract and from contracts with a contractor. Parking is a different animal, as you might know, since we're for sale right now. The whole market dynamics are changing also because you have some financial buyers in there who are not as cheap as I am when it comes to buying companies. And that leaves us the janitorial and security probably being the two greatest opportunities we have, janitorial getting maybe a little more difficult because of our size now. And the opportunities of buying companies is getting a little more limited by the day. But security, on the other hand, we have tons of opportunities, both short-term and long-term.

Just sort of lastly on that, are there -- barring the mechanical piece you spoke about, are there other pieces of the business that you might think to carve out and sell?

Good question. 23 to 40 time pre-tax earnings I will consider anything.

Sell the whole thing. Got you. Just one last one for you, George. On the Sarb-Ox costs, can you give us an idea of what your -- and I know that may be hard to quantify as well, but what you're now expecting that to run you this year, and then how much of that is (indiscernible) bookable -- in other words, repeatable -- next year, if you expect much of it?

We're in the first year of implementation, and it's really hard to quantify the cost of certification. We're incurring outside costs from both our external accountants, as well as we have retained another of the big four firms to help us with the implementation. I think the bigger cost overall is just to the overall organization and the amount of time that is dedicated to it.

Okay. Well, if we looked at the nickel on the high side that the guidance has changed, would it be right to think about that as a couple of pennies are from CommAir and then the other $0.03 would be Sarb-Ox?

I think overall the Sarbanes costs are going to run higher than that for us.

Okay. Fine. Thanks.

(OPERATOR INSTRUCTIONS) Jeff Kessler, Lehman Brothers.

Henrik, I was with one of your competitors in one of your businesses yesterday who questioned your strategy of really concentrating on building up security and janitorial at the same time. Even though it may be working financially, their question was whether it's actually, we will call it synergistic operationally, given that the janitorial business and the security people may not be able to -- may not always be working at the same time, and it may be kind of hard to try to put together an integrated service package ultimately, if that's what you're aiming for, to a building or property management company.

I would like to know who you talked to, but let's start by answering the question.

The only thing I can tell you is it's not your janitorial competition.

I think I got that. Nonetheless, let me try to respond to the question as well as I can.

The growth and the reason that we're looking at security is two or threefold. One is we look at the security market as having internal growth over the next coming years due to the changed environment we're living in today versus the environment we lived in ten years ago.

Two is we as a company thus have a lot of know-how when it relates to businesses that are based upon the recently low-wage individuals, high turnover. And if you look at janitorial and security overall, the type of individuals in labor we're looking for is not that different. So we have knowledge about those types of jobs.

As you know, really, I have been very cautious in my optimism with respect to cross selling, and I'm still very cautious. So I think if the person you talked to who remains nameless is stating that there is very little cross reference and cross selling between those two services, he is absolutely right. But at the same time, we do see that clients in one service do recognize that we have business in other services, and thereby can sell it. But this thing about joint property manager or joint manager in those two services will probably not happen so often for sure.

Finally, there is a thought process out there that with the Company that you work for has been a US-based and US-based only company since 19-whatever it is, 1906 or something like that. And things are slowly changing at ABM. I'm wondering as your customers -- as we've seen with companies like CB Richard Ellis and other property management companies I cover, as their clients began to demand that they start providing them with worldwide services, are you getting the same types of demand from your largest companies, particularly in janitorial? And are you willing to start moving abroad? And are there opportunities for you to service them abroad, assuming that you don't have to do all types of green-fielding and start-ups in Europe and other places where your largest clients may want you to start working?

Wonderful question. Let me start from scratch.

You're right, this Company (indiscernible) 1906, and I think you can see on our balance sheet we are probably not the most aggressive company you've ever met. But you're right; there are pressures both from customers, investor and others about looking outside the US. And one thing the Board is pushing now is that we are exploring some of these opportunities that are outside, and that will be part of -- either that will be part of my long-term strategy, to go outside, or the long-term strategy will be to stay in the US. Right now we're exploring it, and things could change.

Can you just give some idea of which areas around the world are easier for you to start up or work in and which areas are harder, just so that we might get some idea of if you're going to start expanding with your largest clients where you're going to expand more easily?

The easiest place for me to go is Denmark, but the market size is probably $22, so let's keep away from that market.

I think if you look at where it will be natural for us to look if we are looking would be in areas such as the UK, where the cultural differences between what we do here and what they do there is not that different. And it's a very mature business, especially on the janitorial side, as it is here. Expansion-wise, personally I'm very much intrigued by the Far East just due to the growth level we have out there, especially in high rises in China, etc. So there are different ways of looking at it.

Up to this point we've been using our global alliance. We still have contacts throughout the world in the global alliance. We're using some of the know-how we get from the global alliance to at least present a strategy to the Board later on this year. And that might include, as I said, expansion outside. But time will show.

Well, you've got the cash to do it, and obviously investors would like to see you use that cash at some point in time.

I appreciate it. We have the choice here to do the New York Lotto or go outside the US (multiple speakers)

At this time there are no further questions. Mr. Slipsager, are there any closing remarks?

Thank you very much for listing. Looking forward to talking to you after the third quarter.

Thank you. This concludes today's ABM Industries Inc. second quarter earnings results conference call. You may now disconnect.