ABM Industries Inc (ABM) 2018 Q3 法說會逐字稿

Greetings, and welcome to the ABM Industries Third Quarter Fiscal 2018 Earnings Call.

(Operator Instructions) As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Ms. Susie Choi, Investor Relations for ABM Industries.

Thank you.

You may begin.

Thank you all for joining us this morning.

With us today are Scott Salmirs, our President and Chief Executive Officer; and Anthony Scaglione, Executive Vice President and Chief Financial Officer.

We issued our press release yesterday afternoon announcing our third quarter fiscal 2018 financial results.

A copy of this release and an accompanying slide presentation can be found on our corporate website.

Before we begin, I would like to remind you that our call and presentation today contain predictions, estimates and other forward-looking statements.

Our use of the words estimate, expect and similar expressions are intended to identify these statements.

These statements represent our current judgment of what the future holds.

While we believe them to be reasonable, these statements are subject to risks and uncertainties that could our cause actual results to differ materially.

These factors are described in a slide that accompanies our presentation.

During the course of this call, certain non-GAAP financial information will be presented.

A reconciliation of those numbers to GAAP financial measures is also available at the end of the presentation and on the company's website under the Investor tab.

I would now like to turn the call over to Scott.

Thank you, Susie.

Good morning, everyone.

Before I begin my quarterly remarks, I want to welcome our newest board member, Don Colleran.

We announced Don's appointment to our board yesterday.

As you may have seen in our press release, Don is a seasoned executive and currently Executive Vice President and Chief Sales Officer at FedEx.

He brings a wealth of experience and knowledge, particularly on sales and revenue generation, and we're thrilled to have him on our board.

So by now, I'm sure you've had a chance to review our earnings release, and this morning, Anthony and I will provide you some additional detail into our results.

We'll also give you an update on what we're seeing from a legal perspective and discuss our areas of focus as we work to end the year in line with our outlook and prepare for 2019 forward.

Our results for the third quarter were largely as expected.

We delivered strong organic growth of 4.5%, which continues to demonstrate our new sales culture.

We saw expansion with some of our top clients, particularly in the Business & Industry and Technology & Manufacturing segments, as marquee companies continue to choose ABM as they expand and grow.

Additionally, Technical Solutions had a record sales quarter in the U.S., which enabled 14% organic growth.

Top line growth remains a key priority for the entire company.

As our sales team and operation teams work towards ending the year with a healthy pipeline, we believe we can continue the new sales momentum based on the $460 million we delivered in the first half of the year and head towards our goal of $900 million in annualized new sales.

We are committed to recruiting, training and coaching great sales talent.

In fact, we currently have more than 90 sales [rookies] who are progressing through our new hire sales academy, and we look forward to their increased contribution over the next 12 to 18 months.

I commend all of our teams for continuing to embrace our new sales mandate of pursuing new clients and continuing to cross-sell and upsell services.

Our top sales people span all of our industry groups, and we are enthusiastic about the systemic changes we are seeing across the company.

Our GAAP EPS, on a continuing basis, was $0.51 or $0.57 on an adjusted basis.

These results were in line with our expectations and further demonstrates how resilient we are in a variety of different macroeconomic environments.

We were particularly encouraged by our ability to execute across all of our initiatives during the third quarter, considering the labor markets have not shown any sign of easing.

Let me take a moment to share what we are seeing on the broader labor front.

On last quarter's call, we discussed the acceleration of labor pressures as our economy experienced historically low levels of unemployment for both skilled and unskilled labor.

This led to a lower level of qualified applicants and higher turnover, which affected wage growth and an overall increase in the investment needed to attract and retain talent.

Given that direct labor costs comprise the majority for expense line, these factors have a meaningful impact on our operations.

Unfortunately, pricing is not immediately elastic when you have fixed price contracts, and as we've said before, it will take time before the full pricing environment has caught up to the current labor market.

We're in early stages of having strategic discussions with some of our clients to adjust these cost pressures.

While it's only been a few months, we've seen a mixed response so far.

In some cases, clients are open to positive, proactive conversation on price increases, even before the contractual period expires.

At the same time, we also have clients who are not open to revisiting pricing prior to contract expiration.

As we manage the next fiscal year, our organic growth will be predicated on retention, given the challenging operating environment and the need to increase price on some contracts due to labor-based profitability deterioration.

And let me be clear, our outlook on this front has not changed since we started seeing these pressures.

This is the natural dynamic within our business, and we're prepared to navigate our retention cycles just as we have in the past.

Our priorities will be to grow our business with new sales that adopt the necessary pricing dynamics in today's environment and managing our retention prudently and responsibly.

This underscores the necessity for the investments we have made and will make in the future as part of our 2020 Vision strategy.

On past calls, we've mentioned several key areas of focus such as upgrading our information systems to drive consistency across our standard operating practices.

I want to highlight a few areas where we are making upgrades in the first and second half of next year, setting the stage for benefits over the long term.

First, we are upgrading our enterprise-wide labor management platform.

This will enhance our time and attendance process and give our field-level managers the ability to schedule our staff more efficiently.

We will start to roll out the new system during the first half of fiscal 2019.

This is so important as we are a labor company at our core, and given my comments around labor challenges, this system will provide better insight and controls around our labor processes.

We are also improving our human resources capabilities with a new union capital management HRIS system.

This new system will automate and transform many core HR areas such as workforce management, reporting and analytics and HR compliance management.

We're also making other investments to leverage our cloud-based data warehouse strategy.

The goal is to ensure that all of our systems will be seamlessly linked together, providing us with easy, fast access to data.

The key benefactor of this cloud-based strategy will be our legacy ABM and GCA enterprise resource planning systems.

As you know, we've been operating on 2 ERP systems through this year of integration.

We took a responsible approach to making investments in internal processes and systems given the upcoming convergence to one centralized platform.

We look forward to the efficiencies and improvements this unified platform will bring to our internal control framework.

In addition to these transformative implementations, the enterprise continues to focus on processes that will support our back-office operations.

We have made progress on a number of fronts in our new shared services environment, which has had a positive impact on our cash flow generation.

During the quarter, we generated $60 million of free cash flow, and we are now poised to deliver more than $175 million for the year.

Given our successful execution during the third quarter and our unchanging view for the near-term macroeconomic labor environment, we are reiterating our 2018 guidance outlook today.

Before I turn the call over to Anthony, I wanted to note that we recently celebrated our 1-year anniversary of acquiring GCA.

The past 12 months have been an amazing period of teamwork and change management.

I have seen our employees working together diligently to integrate our 2 distinct organizations, including navigating multiple systems and delivering on the high end of our synergy targets.

As we close out our first year as a new, stronger ABM, I want to thank our entire organization, all 130,000 employees, for their dedication and commitment.

Anthony?

Thanks, Scott.

I will now review the details behind our third quarter results.

As Scott just mentioned, we completed our acquisition of GCA Services Group on September 1 of last year.

As a result, this will be the last full quarter in which our GCA business will be reflected on an inorganic basis for all impacted segments.

Of course, our overall results for future periods will continue to reflect higher amortization, interest expense and share count dilution resulting from the transaction.

In addition, our Government Services sale occurred in May 2017, and this will be the last quarter in which any year-over-year comparison reflects this year's absence of that business.

Now onto the third quarter.

Total revenues for the quarter were $1.6 billion, up 23.2% versus last year, driven by GCA revenues of $260 million and organic growth within the Business & Industry, Technical Solutions and Technology & Manufacturing segments.

More specifically, our organic growth rate for the quarter was 4.5%, which includes $8 million of higher management reimbursement revenue, primarily in our B&I and Aviation segments.

On a GAAP basis, our income from continuing operations was $33.7 million or $0.51 per diluted share versus $32.9 million or $0.58 per diluted share.

Last year's GAAP income from continuing operations reflected variable adjustments for certain tax positions of approximately $15 million.

Our results also reflect the following items that are predominantly related to our acquisition of GCA: higher amortization of approximately $11 million, which is embedded within each impacted reportable segment; higher interest expense of $10.1 million; and an increase in weighted average shares outstanding on a diluted basis.

Excluding the impact of segment-related amortization, our overall operational results benefited from GCA-related revenue, predominantly within Education, Technology & Manufacturing and B&I segments.

On an adjusted basis, income from continuing operations for the quarter was $38 million or $0.57 per diluted share compared to $29.1 million or $0.51 per diluted share.

During the quarter, we had adjusted EBITDA of $88.4 million at a margin rate of 5.4% compared to $57.3 million at a rate of 4.3% last year.

Turning to our segment results, which are described on Slide 12 of today's presentation.

As we have noted all year, our 2018 operating segment results reflect the remapping of overhead expenses related to GCA, including allocation and additional amortization.

Therefore, year-over-year comparison will not be meaningful.

As a result, we have provided full year operating margin guidance to help you track our segment performance for this year.

Starting with B&I.

B&I achieved revenue of $735 million, growing 12.7% versus last year, driven by $45 million of additional revenue related to GCA and solid organic growth both domestically and internationally.

B&I's organic growth this year has benefited from our U.K.-based [TSL] win.

Additionally, organic growth was also driven by [expansions] with key clients and an increase in management reimbursement revenue.

Operating profit for the quarter was $38.9 million for a margin rate of 5.3%, reflecting approximately $2 million of amortization related to GCA.

Excluding GCA-related amortization, the operating margin for B&I was 5.5% this quarter.

Overall, B&I has proven resilient, and we are pleased with how well the team has executed this year.

We continue to believe B&I will produce operating margins in the low 5% range for the full year as we previously guided.

Aviation reported revenues of $256.8 million with an operating profit of $9.7 million and a margin of 3.8% for the quarter.

Results were generally in line with our expectations as the slight decline in revenue versus last year is primarily attributable to the loss of certain airline contracts.

Also as you'll recall, last year, we had the revenue and margin associated with a single contract, which we have since terminated.

While the quarter was flat from a top line perspective, we are encouraged by several recent catering logistic cross-sells that we have won, solidifying our entry into that market and proving our ability to compete as a provider of specialized services in the industries we serve.

This year's operating margins increased by more than 170 basis points year-over-year as last year's margin reflects the terminated contract, which I just referenced.

GCA had a relatively small impact on this segment.

For the remainder of the year, our renewal strategy remains in focus, and we believe it would be prudent to remain conservative in light of the current labor market.

Last quarter, we discussed the acute impact this labor cycle can have on specific segments such as Aviation and Education.

Given these considerations, for the full year, we now expect Aviation operating margins in the high 2% range compared to our previous outlook for 3%.

Moving to Technology & Manufacturing.

Technology & Manufacturing revenues increased to $231 million for the quarter, up 43% versus last year.

This was due to strong expected organic growth during the quarter, in addition to $60 million of GCA-related revenue.

Organically, we expanded with our high-tech clients and from tag revenue through both the GCA and Legacy ABM portfolio.

Operating profit was $16.9 million and our margin was 7.3%, reflecting new wins at better margins and prudent expense management.

Including amortization, we still expect operating margin in the low 7% range for the full year.

Revenue in Education was $211 million, reflecting [$144] million in GCA business.

During the K-12 summer buying season, we won key contracts with the Huntley Community School District in Illinois, one of the state's fastest-growing K-12 districts as well as the Portland Public Schools System in Michigan.

However, the Education segment continues to experience a greater degree of pressure related to labor, which, among other things, impacted some renewals and buying decisions.

While we were slightly disappointed in our total number of K-12 awards, we remain encouraged by our pipeline in the higher education market, which is year-round.

We are also targeting first-time outsourcing opportunities across the segment as well as improving the retention moving forward.

Operating profit for the quarter was $12 million for a margin of 5.7%.

Excluding the impact of amortization, operating margins were 8.8% as this segment is impacted most from GCA.

On a total basis, we believe we will end the year in the high 4% operating margin range compared to our prior guidance of low 5%.

Healthcare revenue was $69 million for the quarter, including $7 million from GCA.

Operating profit was $2.5 million and operating margin was 3.7%.

Excluding GCA amortization, operating margins were 3.9% for the quarter.

We continue to expect to end the year with operating margins in the low 4% range.

Finally, Technical Solutions.

They reported revenues of $122 million, a year-over-year increase of 14% for the quarter.

As expected, based on the pace of bookings and the pipeline we discussed in the first half of this year, Technical Solutions had one of their strongest quarter ever as project and revenue churn normalized.

For the quarter, margins were 9.8% compared to 8.8% last year, primarily due to greater operating leverage driven by higher revenues.

Overall strength in our domestic business more than offset underperformance in the U.K. Operating margins for the year are now expected to be approximately 9%, above the high 8% range we previously announced.

Looking forward, all of our industry groups will be focused on our contract renewal cycles and retention, while continuing to grow our already robust sales pipeline.

Turning to cash and liquidity.

Cash flow from operations was roughly $74 million for Q3.

We are seeing sustained improvements in our management of working capital.

Due to this better management and timing of certain capital investments, we expect to end the year with free cash flow between $175 million to $200 million, excluding the proceeds from last quarter's swap termination.

We remain focused on improving our front and back-office processes as free cash flow remains a key metric for our organization.

We ended the quarter with total debt including standby letters of credit of $1.2 billion and a bank-adjusted leverage ratio of 3.6x.

I am pleased at the pace of our deleveraging to date.

During the quarter, we paid a quarterly cash dividend of $0.175 per common share for a total distribution of $11.5 million to shareholders.

And our board has approved our 210th consecutive quarterly cash dividend.

Turning to the macro environment.

Given the continued uncertainties surrounding today's labor environment and the potential impact any change could have on our results, we believe our existing guidance outlook range remains appropriate due to the actions we have taken today.

The outlook continues to contemplate the full year annualized 60 basis points headwind we are facing due to the current operating environment.

While the mitigation efforts we've put in place allow us to achieve our full year guidance, we see no sign of significant labor pressure abatement or worsening for that matter, and we believe it's too early to predict the longer-term impact.

However, we are actively managing our labor and customer renewal cycles and feel confident that our outlook will not materially worsen from our full year margin run rate.

In addition, we remain steadfastly committed to our strategic investments in systems to further drive operating and back-office efficiencies.

As Scott discussed, investments that are fundamental to these initiatives include the first half and second half launches of our cloud-based human capital management and time and attendance system as well as our new ERP system that will converge our legacy GCA and ABM infrastructures.

In closing, we are formally reiterating our GAAP and non-GAAP guidance outlook for the year.

We continue to expect GAAP income from continuing operations to be in the range of $1.73 to $1.83 per diluted share.

And on an adjusted basis, $1.85 to $1.95 per share.

This guidance assumes a tax rate between 28% to 30% for fiscal 2018.

This rate excludes discrete tax items such as the 2018 Work Opportunity Tax Credits and the tax impact of stock-based compensation awards, which collectively will be a little more than $10 million in discrete tax items for the full year as we disclosed last quarter.

We are currently finalizing our fiscal 2019 tax expectations, including the full impact of the Tax Cuts and Jobs Act.

At this time, while we continue to benefit from a lower overall federal tax rate, there are a number of items which did not impact us in fiscal 2018 that will come into effect in the new calendar year.

Mainly, limitations or deductions related to meals and entertainment and executive compensation plus some foreign provisions.

In addition, we also expect the benefit related to FAS 123R to decrease in fiscal 2019.

As always, we will provide you with a detailed discussion of our fiscal 2019 outlook in December, but I hope this additional context will help inform some of your expectations for next year.

With that, operator, we are now ready for questions.

(Operator Instructions) Our first question comes from the line of Michael Gallo with CL King.

I just want to delve in a little bit on the -- obviously, labor has been and continues to be a headwind.

So you've had a little more time now with some of the mitigation and other efforts around technology.

I was wondering if you've been able to kind of dimensionalize what kind of offset -- whether you think in time you can mostly offset, partially offset, completely offset.

Obviously, pricing is always a mixed discussion.

But I guess, in terms of kind of controlling what you can control, just without -- just assuming for a second that you don't have pricing.

How much you can kind of offset internally?

And then I was wondering if there might be some opportunity given your size and scale to use the bundling strategy perhaps as a way to get price -- without getting price but by perhaps offering greater scope of service.

Yes.

That's a good question.

And I think all things being equal in the labor market, and I think that's a big caveat, right?

Because generally speaking, we don't know which way labor is going.

Is it going to stay the same or the pressure is going to increase or will they abate a little bit?

But assuming all things being equal, I think we've done pretty well so far in terms of mitigating.

We talked about a 60 basis point push annualized and that we were able to overcome 40 basis points of it.

So we're pleased at where we are.

And as we go into next year with that as kind of the baseline, We'll look at some of the tools that we are putting forth on the IT side, specifically the new HRIS system to help us in terms of workforce management.

And then a new time and attendance system that's going to be cloud-based, that's going to have tools for scheduling, alerts for our managers in terms of overtime.

So there's a lot of good stuff coming our way to help us mitigate.

And I think the real question, Michael, is whether or not those tools will just allow you to stay even, right?

Or they will help you accelerate.

And that remains to be seen, but we're pleased about where we were heading ahead of time with our investments to help us mitigate that.

And then cross-selling is always a big thing for us, right?

Because the more you can bundle services, it really does 2 things.

It helps you get stickier with the clients so it should push out your retention and your ability to retain, but also you have a chance to increase your margins, right?

Because typically it's the same of overhead from an SG&A standpoint when you are adding services and you have one account manager.

So I think when you bundle all that together, we feel like we are in pretty good shape, but the big wildcard for, not just ABM, but for everybody is where will labor markets go in 2019.

And just as a follow-up to that, Scott.

I mean, obviously, a lot of these services are done in-house.

Everybody is dealing with the same local market labor pressures.

So I was wondering if you've had any discussions from perhaps people that didn't outsource traditionally who might be looking at this inflationary labor market and might now be more interested in outsourcing than they were in the past?

That's the longer-term hope.

We are actually organizing some of our sales force in certain verticals around targeting first-time outsourcing.

We think it's particularly ripe in the education sector because so much of that is in-sourced right now.

Whereas less than that in B&I.

B&I is a much more mature market, predominantly outsourced already.

So I think we're trying to be very strategic about where we place our sales assets.

And also how we structure our commission programs so people are incented to go after an outsourcing, which is a longer-term play than going after a competitive bid.

(Operator Instructions) Our next question comes from the line of Andy Wittmann with Robert W. Baird.

Just wanted to kind of dissect the quarter a little bit to understand some of the moving pieces, actually.

I guess you guys are pretty clear on the call that you're -- the outlook that you laid out last quarter for the labor market headwinds are really almost essentially the same today as they were 3 months ago.

At that time, you talked about how, on an annualized basis, you're seeing -- you're expecting about 40 basis points net headwind to margins.

It looks like that's still in place.

I guess my question is, as I look at kind of a new segment margin guidance that you gave here, you took it down a smidge in Aviation and Education.

Those are a couple of the markets that you highlighted last quarter as well with some labor market headwinds.

You took it up in Technical Solutions.

Given that, that's the case and that the Aviation and the Education are more in the annuity and the Technical Solutions is more of a project-based business, does that imply that there was some degree of labor inflation that you saw this quarter?

It was maybe a little bit different from what you had seen last quarter, or is this just a clear view after operating on these new segments for a longer period of time?

So in the quarter, we saw incremental labor against our original forecast, specifically in those 2 segments that you just highlighted.

But again, we put in place mitigating actions, so we landed as expected, but slightly off on the labor line.

Okay.

So what -- can you give us some bookends as to maybe how the labor on the annuity type business may be varied versus your initial expectations there?

We saw about 15 basis points more in the quarter than what we would have expected.

Okay, okay.

And then just digging into GCA a little bit.

It looks like you guys are maintaining the comment that you're operating at the high end of the synergies.

Can you just, Anthony, just refresh us about what the run rate of the synergies that have been actioned already was at the end of the quarter?

And then just give us some context about how much of a tailwind that's going to be to your profitability next year?

Sure.

So we're still guiding to the full year, in-year realized synergies of roughly $16 million at the midpoint.

And that will guide towards a run rate heading into 2019 at the higher end of the $25 million to $30 million range.

Got it.

So the synergies are pretty much completed by the end of Q4.

There's a little bit that's going to be in fiscal '19, but for the most part, those actions have already been -- taken place.

Okay, just continuing to go down the GCA tunnel here a little bit.

There were some comments in your prepared remarks about the education end market.

You went through kind of fast with it.

It sounded like you mentioned there were some retention issues given that the labor pressures have been a little bit higher there.

Basically, it sounded like you couldn't come to terms because the customer was thinking that they didn't have to pay for the higher labor.

Can you just talk a little bit maybe, Scott, more about what you're seeing in that end market in particular?

It sounded like there was a bit of a retention issue there and you sounded a little bit disappointed.

So I think a little bit more meat on that bone would be helpful for us.

Sure.

Yes.

So I think from an education side, I would look at this in 2 ways.

I would look at the kind of top line sales and then also from the labor perspective.

And I think the sales, it wasn't what we hoped it would be, it was a little bit essentially flat.

And I think I have to take -- I have to be measured in my reaction to that only because it was a year of integration, right?

This was the year we were going our operational teams in line.

We were getting our sales team shaped up.

We just appointed a Head of Marketing as a permanent position.

So there was a lot of moving parts but so -- but I still would have liked to have seen us do a little bit better on the top line there.

And then on the bottom line, it was the labor markets, right?

It's -- this is tough.

We've always talked about how education for us is kind of stratified on the bottom half of the United States, which tends to be the nonunion lower wage market.

So you get more turnover, more wage pressure.

So -- but I will tell you, we're pretty optimistic about next year.

We have a project that we have in place now where we're specifically targeting education facilities that are in-sourced right now, where we think we have an opportunity over the next 12 to 24 months to try to flip that, and we're very aggressively going after contracts that we think are going to be coming out to bid in the next 12 months.

So our Education team, now that they're solidified and they're operating as one unit and soon be on one ERP system, midyear next year.

I think there's a lot of white space there for us over the long term.

Okay.

Okay, great.

I guess maybe one more for now from me.

We've seen in other service companies different end-market health between domestic U.S. markets and some level of degradation in the U.K. Everybody points to Brexit, so it's hard to attribute it to something or another.

But just given that you do have some exposure to the U.K., I wanted to kind of get your take on what you're seeing there and how that could affect your business on a go-forward basis?

Sure.

I mean, it's so interesting, right?

Because Carillion collapsed in January of this year, I think it was January 15.

And I think a lot of us were pretty optimistic that it would create a bigger market space and bigger opportunity, and it really didn't materialize and we've seen that from a lot of our competitors across the space as well.

Margins have compressed and it's been even tighter.

And I think a lot of that has to do with the U.K. economy itself, whether it's Brexit or not remains to be seen, but the U.K. market has -- is certainly tightened up, and it is 100% counterintuitive compared to what's going on.

But it's a reality of what we're facing.

We're refocusing some of our services to go to places where we think could be higher growth.

We've been traditionally focused on the retail segment over there as a larger portion of the market and we're going to be moving more towards commercial and maybe manufacturing and really trying to leverage some of our U.S. clients because they are still having big presence in the U.K. despite everything you read about Brexit.

So we're optimistic about the U.K., but certainly, this year did not pan out as we had hoped.

(Operator Instructions) Our next question comes from the line of Marc Riddick with Sidoti.

I was wondering if you can give an update on where we are with the Tag Pricer and some of the [in-plays] that you've received there and kind of the benefits that we're seeing so far?

Yes.

So Tag Pricer, we talked about this for the last few months as one of our bright spots from a technology standpoint.

And the fact that the field was so excited that we were rolling out some technology that they felt was useful.

We're real happy with where we are.

In our B&I segment, which is our biggest segment, we're over 75% adoption on tags that are eligible, not all tags are right for the Tag Pricer, but 75% adoption.

And I think in this early stage, Marc, it's less about for us, did it increase your tags, did it increase your bottom line?

I think we'll start understanding that over the coming months and realistically years as our AI component starts figuring out, particularly in building you could start moving your margin in a different place in a particular segment.

Law firms pay more than investment banks so, over time, we'll start understanding kind of the top line and bottom line implications.

For me, given all the challenges in the current market.

I'm excited over the fact that it used to take 2.5 days to generate a tag whereas now it could just take a few hours between inputting it and getting it into our work order system, which we're making some enhancement in 2019 to even shrink that time period.

So I'm particularly excited that our teams are embracing the technology.

They are using it and it's allowing them to spend more time managing their staff, with clients, collecting cash, all the things that we want them doing rather than processing paperwork.

So I think it's a two-part story.

Right now, use it, adopt it, become more efficient; day 2, what has this done to increase sales and increase our bottom line?

And just as a reminder, so ballpark around when do you start to begin to anniversary when it rolled out because I guess then you would start to at least begin to start gathering year-over-year comparisons and what have you, right?

Yes, we first started rolling this out in Q1 of last year.

And really the anniversary from a ramp-up standpoint, it's really the second half of fiscal '18.

So that will be the first point that we have adequate data to make those correlations, Marc.

Okay.

And then one last thing.

I mean, you talked about the efforts on the human resources side that you'll be layering in from a technological standpoint.

I was wondering, does that -- is there much in the way of overlap for that data -- that information you will be able to begin to collect with something like Tag Pricer or were those -- would those be kind of viewed separately?

It's interesting, while it's separate, we are putting together a new IT strategy, which is a data warehousing strategy, where we're basically going to have one repository for all information.

So over time, we'll be pulling from one area.

It just remains to be seen which data points we'll be able to pull and turn into data analytics.

Ladies and gentlemen, there are no further questions at this time.

I'll turn the floor back to management for any closing comments.

Excellent.

Well, thank everybody and welcome everybody to the fall, now that summer is over.

And we're excited about where we're heading.

We're excited about kind of our new sales culture and how we're navigating the labor market.

So we think there's just a lot of good, positive things happening at ABM, and we're excited to come back to you at year-end and update you on how we closed out the year and how we're going to guide to 2019.

So thanks, everybody.

Thank you.

This concludes today's teleconference.

You may disconnect your lines at this time.

Thank you for your participation.