Company: ABM
Filing Date: 2025-03-28
Form Type: CORRESP
Source: 0000771497-25-000008
Chunk: 1

Company: ABM INDUSTRIES INC /DE/
Filing Date: 2025-03-28
Form: CORRESP
Chunk 1
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 as well as monitoring of claims developments.

We record our reserves for workers’ compensation, general liability, automobile liability, and property damage insurance claims based upon all available information to develop our best

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estimate of insurance claims reserves for our current fiscal and prior fiscal years, as information is obtained, which includes known trends and events and third-party independent actuarial determined estimates of required reserves.

For periods in which a third-party actuarial valuation is not performed, we conduct reviews to evaluate patterns and trends related to changes made to claims reserves and claims payment activity for the period.

ABM’s Non-GAAP Self-Insurance Adjustment

As disclosed in our Press Release dated December 18, 2024 furnished as an exhibit to our Current Report on Form 8-K, page 14, the Company adjusts net income (loss) to eliminate changes to its self-insurance reserves to the extent that those reserve changes relate to claims that occurred prior to the beginning of the then-current fiscal year (a “Prior Year Adjustment”). Accordingly, net income (loss) is only adjusted by a Prior Year Adjustment and our current operating results continue to include our best estimate of our self-insurance programs’ incurred expense for that fiscal year.

Even though our non-GAAP Prior Year Adjustment excludes amounts from the most directly comparable GAAP measure, we have concluded that this non-GAAP adjustment does not represent an individually tailored accounting policy that causes the presentation of the Company’s non-GAAP measure to be misleading based on the following:

• The adjustment does not shift the measure from an accrual basis of accounting to a cash or modified basis of accounting.

• The adjustment has no impact on recognized revenue.

• The adjustment does not include transactions that are also reportable in another company’s financial statements.

• The adjustment does not change the pattern of recognition of the Company’s insurance expense for the current year, but does reflect part, but not all, of an accounting concept:

◦ For the year ended October 31, 2024, the Company adjusted income from continuing operations by $20.3 million to reflect unfavorable developments in its estimate of ultimate losses related to insurance reserves that occurred prior to November 1, 2024. It should be noted that such adjustment represented 3.2% of our total gross insurance claim reserves at October 31, 2024