ABM Indus expects 3-4% organic revenue growth in 2026 driven by new aviation contract and strategic WGN Star acquisition.

Are diversified across the business and provide confidence in our growth trajectory entering fiscal 2026. On top of the strong 2025 bookings, I'm pleased to announce 2026 is off to a great start for us with a major new contract in aviation. Specifically, we won a significant passenger services contract at a leading global gateway airport set to ramp up in the first quarter of calendar 2026. This win highlights our continued focus on the aviation sector, the strength of our team and the value of technology driven solutions. I'm confident in our team's ability to deliver an outstanding experience for our clients and their passengers. This is one of the largest single aviation awards in ABM Industries' history and it reflects the reputation our teams have built in delivering industry leading service and operational excellence. I'll also note that our pipeline across the enterprise remains strong and we are targeting another bookings record in 2026. 2025 was a year defined by progress in several strategic areas. We invested in AI capabilities that are already improving our internal processes including enhanced RFP automation, more intelligent HR support tools and early exploration of augmented AI to enhance client facing operations. These investments are expected to provide greater efficiency, scalability and differentiation and position ABM to unlock new revenue streams in the years ahead. We also made substantial progress in our ERP implementation. As you know, the transition created working capital friction earlier in the year, but the team worked relentlessly to stabilize and scale the system and we saw meaningful improvement in cash performance in the back half of the year. This sets us up well for continued progress in 2026 and normalization of our operations. I'd like to thank David Orr for taking a leadership position in this area and helping deliver a significantly better outcome than we had at the beginning of the year. Also exciting is today's announcement of our agreement to acquire WGN Star, a leading provider of managed technical workforce solutions and equipment support services for the semiconductor and high technology manufacturing sectors. This is a highly strategic transaction for ABM that is expected to close in the first calendar quarter of 2026. It significantly expands our technical capability set in fabrication environments, adds a skilled workforce of more than 1300 employees and strengthens our position in a sector that is experiencing multi year growth from US semiconductor onshoring. With only about 15% of the market currently outsourced, WGNSTAR gives us a meaningful foothold in a space with substantial Runway. Combined with our existing energy resiliency, mission critical and engineering strength, this acquisition positions ABM to be one of the largest integrated service providers to semiconductor facilities in North America. I also want to take a moment to highlight the continued efforts across ABM to improve margin and strengthen earnings power. The initial components of our restructuring program launched in Q4 are now largely complete. The program was designed to better align our core structure and operating model with our growth priorities. As mentioned last quarter, the annualized savings related to the initiatives already undertaken is $35 million, with over three quarters of the savings to be realized in fiscal 2026. These benefits, combined with disciplined cost management and improved labor efficiency, played an important role in our performance in the fourth quarter and will continue to do so in 2026. As we look across the business, I'm proud of how our teams navigated a complex and dynamic operating environment. Not only did we win important new business and strengthen key client relationships, we did so while modernizing our systems, advancing our use of AI, and integrating new tools and processes into the way we work. It speaks to the commitment and adaptability of our people and these efforts position ABM for long term success. Turning now to the year ahead, we are confident in ABM Industries' momentum heading into fiscal 2026. Demand across our key end markets remain healthy, especially within technical solutions, aviation and manufacturing and distribution. Combined with a record year of new sales bookings, the major aviation contract win, and a strong backlog, we expect another year of solid organic revenue growth. Our recent agreement to acquire WGNSTAR will strengthen our position in the fast growing semiconductor market and will complement our growth in this strategic space. In addition, our restructuring actions, disciplined cost management, and our 2025 share repurchases enhance the earning power of the enterprise. With these tailwinds, we expect fiscal 2026 organic revenue growth of 3 to 4% and adjusted EPS to be in the range of $3.85 to $4.15 before any potential positive or negative impact from prior year self insurance adjustments. With that, I'll turn it over to David to walk through the financial results in more detail.

Before we get into the results, I want to take a moment to clarify how to think about prior year self insurance adjustments because they're an important factor in our fourth quarter and full year performance. As a reminder, starting in our SECond quarter earnings release and following discussions with the SEC, we updated the definition of all our non GAAP financial measures including adjusted net income, adjusted EPS, adjusted EBITDA, and adjusted EBITDA margin. Under the revised definition, we no longer exclude the positive or negative impact of prior year self insurance adjustments from our non GAAP results. Prior year self insurance adjustments represent the net changes to our reserves for general liability, workers compensation, automobile and health insurance claims that relate to incidents that occurred in prior years. These programs involve numerous claims across many years and some have very long tails, which makes them inherently difficult and in many cases impossible to predict or forecast with any precision. For this reason, our forward looking outlook does not include any potential positive or negative impact from these prior year adjustments. With that context, it's important to note that prior year self insurance adjustments had no impact on our Q2 results and an immaterial impact on Q3. They did however have a significant impact on our Q4 results and therefore on the full year as well. To help you interpret the numbers, we've included a table on page 4 of our earnings presentation that breaks out the specific impact. For example, in the fourth quarter the adjustment created a 26 cent headwind to adjusted EPS, so while our reported adjusted EPS was $0.88, to reflect and truly understand the underlying performance of the business, you would need to add back the 26 cent insurance related headwinds and as Scott noted, that core performance was above our expectations heading into the quarter. As I walk through the P and L this morning, I'll call out the impact of prior year self insurance adjustments where relevant so you have a clearer picture of our core operating performance. Let's start on slide 7. Revenue grew 5.4% year over year to 2.3 billion, a new quarterly record driven by 4.8% organic growth and a modest contribution from our recent acquisition in Ireland. Similar to last quarter, we saw organic revenue growth across all segments with the strongest contributions coming from technical solutions, manufacturing and distribution and aviation. Both BI and education delivered 2% growth in the quarter reflecting stable demand and solid execution. Overall, we're very pleased with the growth trajectory of the business and our end markets remain constructive as we head into fiscal 2026. Turning to Slide 8, net income from the quarter increased to 34.8 million or $0.56 per diluted share compared to a loss of 11.7 million or $0.19 per share last year. The year over year improvement primarily reflects 61.3 million benefit from the absence of the large contingent consideration adjustment related to the ravenvolt acquisition that was recorded in the prior year as well as higher segment operating earnings largely driven by strong ATS performance. These benefits were partially offset by a 15.8 million negative impact from prior year self insurance adjustments recognized in the current period and 9.5 million in previously communicated restructuring costs. Adjusted net income was 54.7 million or $0.88 per diluted share compared to 55.8 million or or $0.88 per diluted Share last year. The year over year change largely reflects the 15.8 million or $0.26 per share negative impact from prior year self insurance adjustments and higher interest expense, largely offset by higher segment earnings including the benefits of restructuring actions. Importantly, when adding back the prior year self insurance adjustment, our adjusted EPS would have been significantly higher than last year and reflects the strong underlying operating performance of the business. Adjusted EBITDA was 124.2 million and adjusted EBITDA margin was 5.6% compared to 125.6 million and 6% in the prior year. Taking into account the prior year self insurance adjustments had a 22.2 million pretax negative impact on EBITDA and a 100 basis points impact on adjusted margin provides a much clearer view of our core operational performance in the quarter. Now let's turn to segment performance beginning with Slide 9B and I. Revenue surpassed 1 billion for the quarter, up 2% from last year. This performance was driven by higher work orders, expansions with existing clients and continued strength in the uk, partially offset by certain client exits. Markets remain largely unchanged from last quarter and we expect modest steady growth in 2026. Operating profit was 80.6 million and margin was 7.7% as compared to 72 million and 7% respectively last year. The improvements were mainly due to restructuring benefits and the absence of 4 to 5 million of discrete costs incurred in the prior year. Aviation revenue grew 7% to $296.7 million supported by positive travel trends and several new wins ramping up which carried some frictional upfront costs as these programs came online. Operating profit was 16.8 million with a margin of 5.7%. These results primarily reflect the timing of escalations in mix, including some frictional costs in the quarter. As Scott mentioned, we're very excited about the large new passenger services contract we won after the quarter closed, which is expected to begin ramping in our fiscal SECond quarter. This win, combined with a robust pipeline of new opportunities, positions our aviation business well for healthy organic growth in 2026. Turning to Slide 10 M&D generated $417.4 million in revenue, an 8% increase year over year. This strong organic growth was driven by recent contract wins, particularly in the technology SECtor and continued client expansions across the segment. Based on the momentum we've seen in the back half of fiscal 2025, we believe these growth rates are sustainable as we move into 2026. Operating profit was 35.8 million with a margin of 8.6% compared to 40.4 million and 10.4% last year. As we discussed last quarter, the year over year margin chain is largely a result of strategic pricing on select new contracts that offer meaningful long term growth opportunities as well as ongoing investments in technical sales, talent and SECtor specific capabilities. Education revenue rose 2% to 233.7 million supported by escalations and stable retention rates. Our education team delivered an excellent quarter increasing operating profit 44% to 18.8 million and expanding margins by 230 basis points to 8%. This performance was driven by improved labor efficiencies and escalations as well as the benefits of our strategic mix shift towards colleges and universities where the scope of opportunities and economics continue to be particularly attractive. Technical Solutions had a phenomenal quarter with revenue increasing 16% to 298.7 million including 11% organic growth and 5% from acquisitions. Growth was once again driven by robust demands for microgrids where we completed a large number of projects in what is typically a seasonally strong fourth quarter. Our data center and power services businesses also performed well. Operating profit rose 32% to 37.1 million and margin was 12.4%, up 150 basis points from last year. This strong performance reflects excellent execution, higher volume and a favorable mix, all consistent with what we anticipated heading into the quarter. Now turning to Slide 11, we ended the year with total indebtedness of $1.6 billion including $23.5 million in standby letters of credit. Our total debt to pro forma adjusted DEBITDA ratio was 2.7 times available. Liquidity stood at $681.6 million, including $104.1 million in cash and cash equivalents. Fourth quarter cash from operations was $133.4 million and free cash flow was 112.7 million, a significant improvement compared to 30.3 million and 15.5 million respectively in the prior year. This strong performance was driven by continued progress with our ERP conversion and tight working capital management during the quarter. Now turning to capital allocation. During the fourth quarter we repurchased 1.6 million shares at an average price of $45.84 for a total cost of 73 million. For the full fiscal year we repurchased 2.6 million shares at an average Price of $47.35 totaling 121.3 million and reduced our outstanding share count by 4%. At year end we had 183 million of remaining availability under our share repurchase authorization. Looking ahead to next year, we remain committed to covering annual dilution at a minimum and will weigh additional repurchase activity against the opportunities in our M and A pipeline to drive long term value creation. Interest expense in the quarter was 24.3 million, up 2.4 million from last year, driven by larger average debt balances. Turning to our fiscal 2026 outlook on slide 12, we're excited about our 2026 plan and expect meaningful revenue growth, adjusted EBITDA and adjusted EPS all before any positive or negative impacts from prior year self insurance adjustment. Specifically, we expect full year organic revenue growth of 3 to 4%. Aviation, M& D and technical solutions are all expected to grow above that range, while BI and Education are expected to deliver low single digit growth. The WG Instar acquisition will contribute roughly one additional point of revenue growth, bringing total growth to 4% to 5% for the year. We're also introducing a new metric this year, segment operating Margin, which we believe better reflects the core operational health of the business as it removes the noise created by prior year self insurance adjustments. Segment operating margin is defined as segment operating profit divided by total revenue and we expect it to be between 7.8 and 8% for fiscal 2026. Interest expense is forecast to be 95 to 105 million and our normalized tax rate before any discrete items is expected to be 29 to 30%. With regard to cash, we expect free cash flow before the impact of transformation and integration costs, the Ravenvolt earn out and any incremental restructuring to be about 250 million in 2026. Putting this all together, we expect full year adjusted EPS in the range of $3.85 to $4.15 and as a reminder, our outlook does not include any future positive or negative prior year self insurance adjustments. Going forward, we'll continue to highlight any material impacts resulting from the inclusion of prior year self insurance adjustments in our non GAAP results. Moving to our fiscal 2026 adjusted EPS bridge on Slide 13, we start by adding back the full year 2025 prior year self insurance adjustment of $0.27 to get to our core adjusted EPS for the year. From there we layer in the net benefits of price, volume mix and restructuring savings interest expense before the WG Instar acquisition is anticipated to be a small tailwind in 2026. As we discussed earlier, we'll continue investing for the long term in 2026 including adding talent, expanding our AI capabilities, building out our technology stack after taking into account both the performance gains and these planned investments. We expect to grow our core EPS by more than 10% on 4 to 5% revenue growth from that number. We then back out the first year impact of wgnstar including associated acquisition related amortization and interest expense, which gets us to our adjusted EPS guidance range of $3.85 to $4.15 before any potential positive or negative impact from prior year self insurance adjustments. With that, I'll hand it back to Scott for closing remarks.

Thank you.

Thanks David. Before we open the line for questions, I want to take a moment to reflect on the year and acknowledge the tremendous work of our team. Fiscal 2025 was a year of real accomplishment for ABM. We delivered record revenue and record new sales bookings even as we navigated an uncertain macro environment and worked through a significant ERP system upgrade that touched every part of our business. These achievements speak to the resilience, adaptability and professionalism of our people. I'm incredibly proud of how our team showed up this year, meeting challenges head on, being focused on our clients and executing with discipline. Whether it was delivering complex technical solutions projects, ramping major new contracts, or advancing and adapting to our AI and technology capabilities across our operations, our team rose to the occasion. Their efforts position ABM very well for the future. Looking ahead, I'm excited about what 2026 holds for ABM. We have large new clients ramping early in the year. The WGNSTAR acquisition will be contributing to our growth and our pipeline across the portfolio remains strong. These elements give us confidence in our ability to drive another year of solid organic revenue and continued earnings expansion. And as we think about the longer term, we will continue to evolve ABM into a higher growth organization. That means enhancing our portfolio, pushing further up the value stream with our clients, expanding our technical and data enabled capabilities, and being disciplined allocators of capital. We will do this with the same focus on clients, people and operational excellence that has guided us this year. To everyone at abm, thank you for your hard work and commitment. It's made all the difference. Happy Holidays to everyone and with that, we'll open up the line for questions.

Thank you. We'll now be conducting a question and answer session. We ask that you please limit yourself to one question and one follow up to allow as many as possible to ask questions. If you'd like to ask a question at this time, you may press Star one on your telephone keypad and a confirmation tone indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the Queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Thank you. And our first question is from the line of Josh Chan with ubs. Please review through your questions.

Hi, good morning, Scott. David, Paul, thanks for taking my questions. I guess I'm going to ask about the margin trajectory of the business. I think you introduced the segment operating margin metric. I was just wondering, I guess, what are the drivers between what seems like a relatively flat margin outlook for 26, despite some restructuring savings being realized. Thank you.

Hey, Josh, good morning. Thanks for the question. Yeah, we did introduce a new metric next year with the segment operating profit margin. And we just feel like that's a really clean metric for us and it reflects, call it the operating health of the business as it removes some of the noise created by the prior year self insurance adjustments. So we do have some benefit from the restructuring built into those margins. Some of that restructuring, as we spoke about in Q3, was baked into the field and operating profit numbers. And then we have some mix rolling into those numbers in 2026 as well that we're working through, some of which from some of the pricing decisions we talked about in the Q3 call. So it's just a blend of those two things ultimately. But we're excited to introduce this metric and as I said, it just gives us a real clear picture and it mirrors actually how we measure and manage the business internally.

Okay, great. Thank you for that. And then maybe a question on the deal. Could you explain the strategic attraction of the deal and why you pursued it? And then also from a financial perspective, the switch from being dilutive in 26 to accretive in 27. Could you just kind of talk a little bit about whether that's due to reduced amortization or pure business growth and margin expansion. Thanks for the color.

That's great. So the strategic imperative with this acquisition is just really compelling. I mean, I guess we don't have to talk a lot about the semiconductor space. Right? You know, like it's, it's one of the hottest and fastest growing segments in the economy right now. And we have a big Portfolio already, over $300 million in business in that space. And for us, it's incredibly exciting. And the best way to think about this is, and maybe this will help. When you think about this acquisition and what they do, what I want you kind of to visualize is you picture a bullseye, right? And if you look at the outer ring of a bullseye. Think of that as a semiconductor facility and the inner ring as the fabrication center where they're actually doing all the fab. We operate from the outside of the ring to the inside of the ring. Before you get to the fabrication facility, that's what ABM's corps has been doing. Cleaning, doing technical service, doing support service for staff. But we've never been able to get inside the fabrication facility because to get inside there, it's typically sensitive materials, it's restricted, you need certifications and that's what WGNStar brings to the table. And when you think about the fact that they have over 30 clients in the semiconductor space and we have over 50 and you put those together, I think it's just going to be fabulous because now we can go to our clients and say we can now broach the fabrication center with our skills. So it's just going to open up a whole universe for us. So the strategic possibilities are just fabulous. And I'll let David answer the dilution question.

Yeah, Josh, thanks for the other question. So from a dilution perspective, as we noted, we'd expect some nominal dilution in the first year and that's really largely because of the factoring in the amortization and interest cost of the deal. But I think the good news is based on the growth trajectory, we expect a real path to accretion in year two. And ultimately if you step back and look at this thing on a forward looking basis, we see a multiple between 12 and 13 times. So we're extremely excited about the acquisition. It's got a great margin profile, a great growth profile. That growth profile helps us propel in the 26 and 27 and we see a lot of actual cross selling synergies opportunities as Scott just mentioned, with the shared accounts that we have. So really exciting opportunity for us.

Yeah. And we feel like there's a lot of parallels between this and what we did with RavenVolt where we picked a specific segment of an industry, in this case micro grids with RavenVolt and said we see this as a point of acceleration. And you know, Just for context, Ravenvolt did over $400 million in revenue this year. And think about that from where it started with the acquisition. So we feel like, you know, WGNSTAR has same principles as RavenVolt and it's just as exciting for us.

Great. Thank you both for the color and the time.

Thanks.

Our next question is from the line of Jasper Bibb with Chuas Securities. Please proceed with your questions.

Hey, good morning everyone. Wanted to ask about your experience with pricing concessions and some of the more challenged US office markets you talked about last quarter. Just hoping you could clarify if you've seen any more customer concessions in the B&I business or has that slowed down. Thanks.

Yeah, so I think, you know, it's stabilized and we did say last quarter that we thought it was more episodic. We're always having pricing discussions. We continue to have pricing discussions in the fourth quarter, but they weren't as kind of dramatic and didn't add up to what it did in Q3. So we see that stabilizing right now and, you know, feel really good about it. And you know, I guess if you would think about what we talked about with M and D last quarter, we said, you know, we mentioned those pricing discussions were about capturing market, specifically in the semiconductor space. We knew about WGNStar, we knew it was coming. Obviously we couldn't share that at that time. So part of those pricing discussions was anticipation for the WGNStar deal. So hopefully that gives you a little bit more clarity. But you know, again, we see total normalization now.

Yeah, that's helpful.

And then I guess just hoping you could provide a bit more detail on the remaining pieces of the ERP roadmap that are coming in 26 and how that factors and how you're thinking about our free cash flow outlook for the year.

Yeah, thanks Jasper, this is David. So we're really happy that we've got the vast majority of the transactions throughout the enterprise on the new ERP system. And obviously we worked through that this year and we think we finished the year on a good note there. We have a few groups left to go. And the good news is, I think from a risk and complexity scale level, those groups are much less complex ultimately to get onto the system. And with the advancements of AI and how we deploy AI, we're learning every day more and more about how more efficiently we can migrate those groups onto the system. But having nearly 90% of the transactions on board right now is a great place for us to be, you know, relative to cash flow. We're obviously really pleased with where we ended the year on cash flow. You know, pretty big difference between the first half of the year and the back half of the year. In fact, our DSOs at the end of this year were down 11% from their peak in Q2. And that's, by the way, a reflection of the team's effort. I mean, it was a tremendous amount of focus from the entire team at ABM to get there and then looking forward to next year. I do think we're entering the year from a position of strength on cash flow. Our target next year of around 250 million normalized cash flow even includes an incremental $30 million of anticipated capital spend on buses for an airport contract that we won in 2025. So given that on an adjusted basis, we feel really strong about the cash flow number in 2016.

Thanks for taking the questions.

Our next question is from the line of Andy Whitman with Baird. Please proceed with your questions.

Yeah, great, thanks. David, could you elaborate more on the 250 million normalized free cash flow? Can you call out what the items that are unusual one time items that we should be considering in the year? Obviously some of the restructuring is going to have probably some cash costs, although it sounds like you got through a lot of that. Maybe if you could just bridge us to what, what the. The actual number will be at the items. Just so we have an understanding of some of those ins and outs. Thank you.

You got it. No problem. Yeah. So if you start at 250, Andy, we'll probably have about $20 million in transformation costs, another $10 million in integration acquisition costs, and you know, plus or minus $5 million in restructuring costs. And then the last piece of it is we do anticipate an additional payout for the Rayvolt contingent consideration. And right now that's about $30 million. So if you rack all of those up and back it out of 250, you get down to a free cash flow number of around 185 million.

Super helpful. Thank you for those clarifications. Just speaking of earnouts and payouts, is the WGNSTAR cash payout that's expected in your fiscal second quarter it or does this one also have some contingencies earnouts, what have you associated with that? And if you can, if there are any, just what can you tell us about those, recognizing that that deal has not yet closed?

Yeah, we anticipate the deal to close early in our second quarter of fiscal 26, Andy. And so we'll anticipate funding it at that time. And we've designed some structures on the management side to make sure that the team's motivated. And we'll go into more detail as we progress through the second quarter.

Got it. Let's see here. Maybe one other one. Can you maybe David, just for understanding here, what was the segment operating profit margin in fiscal 2025 I just want to make sure that I understand kind of where you are on the metrics so I can understand the guidance.

Yeah, thanks, andy. It was 7.9%. So roughly right in the middle of the range of what we're calling out for fiscal 26.

Got it. And then just maybe final question for me, obviously again, you said that the restructuring program has been substantially activated here already. Can you talk about how much is left to go and how the rest of it phases in during the course of fiscal 2026 and where the benefits should accrue there? I guess there's some accrual to 27 here.

Yeah. So as we spoke about in Q3, we realized about 20% of the 35 million benefits in Q4 of 2025, and the balance of that we still anticipate recognizing in 2026. And that restructuring is largely done essentially. And so beyond that, we continue to look at other areas like real estate footprint, you know, optimizing our spend on subcontract any early AI enabled savings. Those will be incremental as they come to anything we announced on the prior restructuring.

Got it. Okay. I think that's it. Just those clarifications. Thank you so much. Have a good day and happy holidays to you.

Same to you, Randy.

Our next question is from the line of Tim Mulrooney with William Blair. Please receive your questions.

Yeah, Good morning, everybody. You know, Scott, your guidance framework of organic revenue growth of 3 to 4% next year. What's the assumption embedded in in that guidance for the B and I segment? It's your biggest segment, the business, it's been accelerating in recent quarters, but you didn't highlight it as a growth driver in your outlook section for fiscal 2026. So I'm curious where your head is at and you know, how you're thinking about the business for next year.

Yeah. So look, I think so when I think about the B and I segment, which is largely commercial real estate, you know, I feel like from our perspective, the commercial real estate crisis is behind us now. We feel like the, you know, work, you know, from home versus work in the office is kind of stabilized at this point. So we think we're back to kind of steady state in bni and typically that's been growing at a GDP rate and that's where we think it's going to land this year. And that's what's baked into our guidance basically normal course now, which by the way, is a big relief. Right. For I think for all of us to Feel like we've kind of lapped all the drama of the last few years in commercial real estate.

Yeah, for sure. Yeah. Now that's good to hear. Steady state, normal course stabilization. Those are the words that, yeah, I think everyone wants to hear as we're turning quarter into 20, 26. So that's great. Thank you, Scott. David, I have a completely different, you know, shifting gears completely here to the self insurance adjustment. And by the way, the bridges of the slides at the end were really helpful. So thanks for building those out. But I saw that 26 cent impact from your prior year self insurance adjustments and wondering if you could just unpack that a little bit more because you know, I understand, I understand there's a lot of accounting estimates that go into this and you do the best that you can here, but we're trying to understand if this, this was a discrete event or if there's potential for a longer tail here in future quarters.

Yeah, no problem. Thanks for the question. So the context I would provide here is, you know, this pool overall is a $500 million pool for us and as mentioned, it includes workers' compensation, general liability, and auto-related claims. And I think obviously with the healthcare environment like it is, we know there can be volatility in this space on these claims. But I think when we take a step back and look at it from our perspective, a 4% adjustment on a 500 million dollar pool for a workforce of over 100,000 employees is really well within industry standards. And you know, really the key is nothing's really changed. We had roughly a 4% adjustment last year as well and some years we even had a favorable adjustment. So it's just that after our discussions with the sec, we're now reporting this above the line. But I think that's the key in looking at it is, you know, this is something we deal with. We just have a reporting change and now it's reported differently. So it's really nothing more than that. I would say.

Yeah. And if anything, yeah, I was just going to say like when you think about this pool and again, industry standard, we have such a strong safety culture here. It's just been embedded. Everyone gets a safety message every morning and I think that's why we've been able to control this so well and keep it within a tight range which again, you know, as David mentioned, you know, what's going on with healthcare costs, it's with all the costs associated around these kinds of claims to keep it within 4% we're really proud of that.

I do. And I appreciate that sometimes we see these larger impacts and it's just an update to a reserve because there's an ongoing court case or something like that. So I just wanted to clarify, but it sounds like if I could summarize, this is well within the range that you see in a typical year. And we will need to adjust to these swings now that they can't be excluded from GAAP EPS, correct?

Right? I think that's right. And I think that's another reason for us to give clarity in providing segment operating profit margin. Again, as I mentioned, that really just takes the noise out of that adjustment.

Completely understood. Thank you very much and happy holidays.

Same to you.

Thank you.

Thank you. Our final question today will come from the line of Faisal Alway with Deutsche Bank. Please proceed with your question.

Yes, hi. Thank you. I wanted to ask more about the WGN Star acquisition. I think Scott, you mentioned that there's a very small level of business that is outsourced in that sector right now. I guess I'm curious why that is. And are you anticipating that there's going to be, I assume here anticipating that there's going to be more of a shift towards outsourcing and so give us some color around why that is. And I guess related to that, talk a bit about the underlying competitive environment. Is there a potential additional roll up opportunity? How should we think about future MA in this space? Yeah. So I think for us, the way we look at it from our perspective, the reason so much of the work is in source is because it's highly technical. And for some of these semiconductor companies to bridge the gap of outsourcing, it it's a very, very high bar. But with WGNStar, so many of their clients are 20 plus year relationships because they are so good at operating within these facilities and gaining the trust of their clients that what they've seen is in the clients they've captured more and more of the work that was insourced starts coming to WGNStar. So it really has to do with the high level of proficiency that an employee has to have and having that trust in your provider. Right. So we feel really great about that and that's going to give us high confidence that we're going to get some really nice revenue synergies over time by introducing this capability now to our existing semiconductor clients. And frankly we think there's crossover to pharma clients that operate in these kinds of facilities. So tremendous potential for us. So I think that that's really in our mind the key reason and when we look at the competitor set, you know, not a tremendous amount of big competitors, it's a lot of small competitors. We could have roll up potential for us, but it could also be that we could just expand organically with this skill set and just hiring and training on our own. So we have a lot of opportunity here and I think that's why we're so excited about this.

Great. And then just wondering if you can be a bit more specific around the dilution in 2026 and the accretion in 2027 maybe give us a sense of what the margins are EBITDA margins are in the business or the segment operating margin, if you, if you want to put it that way. And then I guess what you're assuming for interest, expense and amortization for 26 and then how should we think about what goes into the synergies as we think about that accretion in 27?

Yeah. Thanks Faith. Sure thing. So on the EBITDA margin side, the margins of WGN Star are in the mid-teens. So it's a very healthy margin business. And for amortization interest on an annualized basis, we assumed roughly $13 million of amortization and about $12 million of interest. So, for fiscal 2026 you take about three quarters of that. Assuming we close the transaction the first part of the second quarter and then on a go forward basis, as I mentioned earlier, we anticipate growth rate to certainly continue in the double digit range and even beyond that. As Scott just called out, the opportunity to drive cross selling synergies and revenue synergies in this business is really significant given the shared portfolio in the shared vertical space. So that's really where we see a lot of the accretion heading into fiscal 27.

Great. That's all very helpful. Maybe if I can just ask a question on technical solutions. Give us your how should we think about the lay of the land there. I know that business can be pretty lumpy, so if there's any additional perspective you can provide around the go forward and the underlying environment and pipeline, that would be really helpful.

Yeah, the pipeline in backlog specifically is as healthy as it's ever been in technical solutions, fisa and what's exciting about that business is it's growing at a rate that we expect it to grow and back towards the high single digits. And then the other thing I would say is it is largely a project business. So it does, it does tend to be a little Lumpy from a forecast perspective. And there is some seasonality to it as well. There's a lot of work goes in over the summer, for example, when schools are out. Some of the micro grid work tends to ramp up just based on award schedules towards the fourth quarter. And you saw that in our results that we just reported now. So overall though, really, really excited headed into 26 on the tech solutions business.

Great. Thank you so much.

Thank you.

Thank you. We've actually had one late question from the line of Mark Riddick with Sidonian company. Please just use your question.

Hey, good morning. Thanks for squeezing me in there. I just wanted to sort of touch maybe a little bit on the potential acquisition pipeline following this purchase. Maybe what we're looking at as far as leverage levels post transaction. I'm assuming it looks like we might be approaching around 2 or so. So maybe talk about your comfort level and leverage range and maybe what the acquisition pipeline looks like currently. And then I have a follow up on the acquisition.

Yeah, so it's something that, you know, we're always actively looking at opportunities, especially some that will accelerate these specific markets that we're going after like semiconductor, a data center, a pharma. So we continue to look at that, but we're also very balanced. Right. This will get us to about a three times leverage when we close this acquisition. And that's kind of the range that we want to be in. So we'll be really balanced about how we look at acquisitions for the rest of the year. Again, have a pipeline that's building, but for us, you know, we don't do a tremendous amount of acquisitions because it has to be a compelling strategic imperative for us with a IRR that is compelling as well. So we're going to be really balanced in 26 when we look at acquisitions.

And then the press release had the details as far as trailing revenue and the like. Is there any particular seasonality we should be thinking about for the acquisition or whether or any sort of particular skew either from a seasonality standpoint or a geographic standpoint. Thanks.

No real seasonality because they're operating obviously indoors in the fabs. So we get around the seasonality. So it's pretty even from a revenue base. And we love the diversity of their clients. They really operate in nine basic regions of the country where semiconductor facilities are located. So they have good diversity geographically as well within the US and you know, 85% of their business is in the US and the other 15% is in Ireland. So we get a little diversity there as well.

Okay.

Excellent.

Thank you very much.

Thank you. Thank you. At this time, we've reached the end of our question and answer session. I'll hand the call back to Scott for closing remarks.

Well, thanks, everyone, for participating today. And, I mean, I could tell you we are so thrilled at ABM to deliver these kinds of results in Q4. Some of the results actually even exceeded our own internal expectations. So the team just came through, and we are so energized about 20, 26 and how we're moving forward, and just hope everybody has a really good holiday. And we're really excited to come back in Q1 and tell you about how we're performing. But thanks, everybody.

Thank you. Ladies and gentlemen, thank you for your participation. This does conclude today's teleconference. You may now disconnect your lines and have a wonderful day.