Research Analyst at UBS Group AG
Josh Chan is a Senior Vice President in the Asset Management group, leveraging his expertise in investment strategy and portfolio analysis. His responsibilities include overseeing key asset classes, though specific company coverage and quantitative performance metrics are not publicly documented. With a finance background and progressive experience in investment management, Chan has developed advanced analytical skills and industry insight over his career. While confirmed professional credentials such as FINRA registrations or securities licenses are not listed in public sources, his seniority and leadership role suggest significant industry qualifications.
Josh Chan inquired about the magnitude of margin headwinds from strategic pricing and the confidence level in Q4 margin improvement.
CFO David Orr attributed margin headwinds to the volume of rebids and timing of escalations. He expressed confidence in Q4 improvement due to ATS performance and restructuring.
Josh Chan of UBS sought to understand the ATS segment's margin headwinds, asking whether project delays or service mix was the bigger factor. He also inquired about the B&I segment's competitive positioning in prime office markets and its ability to gain market share in that desirable space.
President and CEO Scott Salmirs clarified that the ATS margin pressure was primarily due to project mix, with a higher proportion of lower-margin field execution work in the current quarter compared to higher-margin design and engineering work in the prior-year period. Regarding B&I, he asserted that ABM's ability to win in prime office is driven by its scale, deep client relationships, extensive resume in top-tier buildings, and technology investments, which collectively create a significant competitive advantage.
Josh Chan sought to reconcile the description of the market as 'stabilization' versus 'recovery' given paid employer growth, and asked about the potential for margin leverage once year-over-year revenue growth returns.
President Dave Travers clarified that while paid employer growth is positive, the overall labor market remains 'frozen' based on the low quits rate, hence the term 'stabilization.' CFO Tim Yarbrough explained that future margin leverage depends on the 2026 macro environment. He reiterated their strategy to invest into strength, with margins expected to follow revenue growth over time toward their long-term 30% goal.
Josh Chan inquired about Upwork's recent acquisitions, asking for details on their integration, operational function, and the resulting impact on GSV and revenue reporting. He also asked about the current macroeconomic environment's impact and the outlook embedded in the second-half guidance.
President and CEO Hayden Brown explained that the acquisitions of Bubtea and Ascend create a comprehensive, digitally native enterprise solution, expanding beyond independent contractors to serve the full range of contingent work. CFO Erica Gessert added that the deals would contribute minimally to 2H 2025 revenue but become more meaningful in late 2026. Regarding the macro, Brown stated the environment remains unpredictable, but the company is successfully offsetting pressures with its internal initiatives and is not assuming any near-term macro improvement.
Josh Chan of UBS Group AG requested more detail on the pickup in customer activity in June following a tariff-related pause and asked if this momentum could offset the tougher second-half comparisons.
President & CEO Jennifer Scanlon described a soft April and May followed by a pickup in June across segments as customers gained more clarity on tariffs and regulations. EVP & CFO Ryan Robinson added that it's difficult to determine if the June activity was a redistribution within the quarter or a new stepping-off point, leading them to affirm the existing full-year guidance amidst the uncertainty.
Josh Chan of UBS Group asked why the third quarter's organic growth rate ended up below the 6% rate that was reported for April, inquiring if business slowed in May and June.
CEO John Zillmer explained the slight moderation from April's growth rate was due to lower-than-expected activity in the arena business. CFO Jim Tarangelo added that shorter-than-anticipated playoff runs for NBA and NHL teams also contributed to the final quarterly result.
Josh Chan of UBS Group AG asked for more detail on the expansion of geographic reach and programming in the backup care segment. He also inquired about the potential for the 'aging up' of children in full-service centers to serve as a margin tailwind.
Chief Executive Officer Stephen Kramer explained that backup capacity is expanded through both owned assets (like Stephen's Gate camps and Jovi nanny agencies) and a diligently managed network of third-party partners. Chief Financial Officer Elizabeth Boland acknowledged that older age groups have more favorable economics and that filling preschool capacity as younger children age up provides positive operating leverage, which is a key focus for improving center profitability.
Josh Chan of UBS Group AG inquired about what drove the improved outlook portion of the guidance raise and asked about risks to realizing backlog margin beyond internal execution.
EVP & CFO David Jackola attributed the improved outlook to the strength and high quality of the record backlog generated in the quarter. President and CEO Russ Becker identified material cost escalation and weather as the primary external risks to margin realization, noting the company actively works to mitigate cost risks in its proposals and that labor availability is a known factor to be managed.
Josh Chan asked if Fiverr's advanced AI capabilities are attracting new types of customers and questioned how dependent the company's margin targets are on GMV improvement.
Micha Kaufman, Founder & CEO, confirmed that complex AI projects are indeed attracting higher-value customers, aligning with their upmarket strategy and boosting spend per buyer. Ofer Katz, President & CFO, asserted that the path to their 2027 adjusted EBITDA target of 25% is not dependent on a specific GMV growth scenario, stating the company has the flexibility and confidence to achieve it under various conditions.
Josh Chan of UBS Group asked for common themes behind the unexpected project ends impacting the Q3 outlook and whether the rest of the business was performing in line with seasonal expectations. He also inquired about the margin impact from the growing mix of nearshore and offshore business.
CEO Joe Liberatore explained that project ends were driven by clients strategically reallocating tech spending to areas with higher competitive advantage, not a single common issue. COO David Kelly confirmed that absent these specific ends, the technology business had been trending positively and the demand environment feels stable. Kelly also noted that the offshore business, while small, has been slightly accretive to margins. CFO Jeffrey Hackman added that the overall technology bill rate remains stable around $90, as higher-value consulting work offsets lower-rate offshore placements.
Josh Chan of UBS Group AG inquired about workforce capacity and recruiting strategies in a tight labor market, and the company's philosophy on project selection across different verticals given the strong pull from technology.
EVP & COO Trent McKenna detailed an "all of the above" approach to talent, including an internal staffing company and inter-company collaboration, to be the "employer of choice." CEO Brian Lane explained that while tech is hot, the company maintains a balanced portfolio across diverse, active markets, selecting projects with the best conditions and risk-adjusted returns.
Josh Chan of UBS inquired about the capacity and morale of the workforce amid high demand, the company's recruiting efforts, and the strategic approach to project selection across different verticals like technology.
EVP & COO Trent McKenna highlighted their strategy of being an 'employer of choice,' utilizing an internal staffing company and inter-company collaboration to manage labor effectively. CEO Brian Lane added that while technology is a key focus, they maintain a balanced portfolio, selecting projects with the best working conditions and risk-reward profiles. EVP & CFO William George emphasized their focus on being the best builders for the work available.
Josh Chan of UBS Group AG asked about the capacity and morale of the workforce amid high demand, the recruiting environment, and the company's strategy for project selection across different verticals, particularly with the growing focus on technology.
EVP & COO Trent McKenna highlighted that Comfort Systems strives to be the 'employer of choice,' utilizing an internal staffing company and inter-company collaboration to manage labor effectively. CEO Brian Lane explained that while technology is a key focus, the company maintains a balanced portfolio, selecting projects with the best working conditions and risk-reward profiles across various strong end markets.
Josh Chan of UBS Group asked about the company's workforce capacity and recruiting environment amid high demand. He also inquired about the strategic approach to project selection across different verticals, given the increasing focus on technology.
EVP & COO Trent McKenna explained that being an 'employer of choice,' using an internal staffing company, and collaborating between operating companies helps manage labor needs effectively. CEO Brian Lane noted that while tech is a priority, the company maintains a diverse portfolio, selecting projects with the best working conditions and risk-adjusted returns. EVP & CFO William George added the company's focus is on being the best at building what the market demands.
Josh Chan of UBS asked about the company's workforce, including their capacity to continue working at a high pace and the current recruiting environment. He also inquired about the company's approach to project selection across different verticals, given the increasing focus on technology.
EVP & COO Trent McKenna highlighted that being an 'employer of choice,' utilizing an internal staffing company, and fostering collaboration between operating companies are key to managing labor constraints and securing top talent. CEO Brian Lane addressed project selection, stating that while tech is 'red hot,' the company maintains a diverse portfolio and selects projects with the best working conditions and risk-adjusted returns, regardless of the sector.
Josh Chan from UBS asked about the specific geographies affected by weather in the quarter and if conditions had normalized. He also questioned if the sales records set in June reinforced confidence in the subscription base for the rest of the year.
President & CEO Jerry Gahlhoff identified the Southeast U.S. as a key area impacted by a cold, wet May, which delayed peak season by about three to four weeks. He confirmed that by the first week of June, business 'shot out of a cannon.' Both Gahlhoff and CFO Kenneth Krause expressed confidence from the strong June performance across all service lines but cautioned that one month does not make a trend.
On behalf of Josh Chan from UBS, Karen Sangani inquired about cost inflation trends for 2025 compared to 2024, specifically for labor, materials, and equipment. She also asked about the company's priorities for its different customer acquisition channels in 2025 and their expected impact on volume.
CFO Ken Krause stated that inflation is 'very much under control,' with the exception of 'outsized inflation' in fleet costs due to higher lease renewals. CEO Jerry Gahlhoff addressed channel priorities, confirming that all three major channels—residential, commercial, and termite/ancillary—are performing well and will continue to be a focus for growth in 2025, noting strong consumer demand for high-value remediation services.
An analyst on behalf of Josh Chan asked about the timing of the Q3 hiring and whether the company tracks ROI on advertising spend, and how those metrics have changed recently.
President and CEO Jerry Gahlhoff explained that technician hiring often occurs in Q3 due to route splits, while sales hiring is more balanced year-round to ensure effective scaling. EVP and CFO Kenneth Krause noted Q3 investments were front-loaded in July and August. Gahlhoff confirmed they closely track return on ad spend (ROAS) to dynamically manage customer acquisition costs, while maintaining discipline to keep ad spend as a stable percentage of revenue.
Josh Chan from UBS Group AG inquired about the expected trajectory of key cost buckets (materials, labor, fleet) into fiscal 2026, including potential tariff impacts, and also asked for an update on the M&A pipeline.
President & CEO Todd Schneider expressed confidence in navigating cost challenges, noting that the guide contemplates tariff impacts and that Cintas has advantages like a diversified supply chain and a focus on efficiency. EVP & COO James Rozakis detailed initiatives like garment sharing and SmartTruck. On M&A, Schneider described the pipeline as active but unpredictable. EVP & CFO Scott Garula reaffirmed the company's balanced capital allocation strategy remains unchanged.
Josh Chan of UBS Group AG inquired about the expected trajectory of key cost buckets like materials, labor, and fleet into fiscal 2026, including the potential impact from tariffs, and also asked about the M&A pipeline.
President & CEO Todd Schneider expressed confidence in navigating cost pressures, noting the guidance contemplates tariff impacts and that Cintas has advantages like a diversified supply chain and a culture of efficiency. EVP & COO James Rozakis detailed initiatives like SmartTruck and plant automation. On M&A, Mr. Schneider called it important but hard to predict, while EVP & CFO Scott Garula reaffirmed the company's balanced capital allocation strategy.
Josh Chan of UBS Group asked management to reconcile their more optimistic tone with the lack of macro clarity and inquired about the magnitude of the first-half negative free cash flow and its potential recovery.
Chairman & CEO Jonas Prising explained the improved tone is based on client feedback indicating stabilizing confidence as they get used to market 'noise'. EVP & CFO Jack McGinnis addressed free cash flow, noting that large Q2 outflows are a recent trend and that first-half negativity was impacted by MSP program timing. He expects a return to strong free cash flow in the second half, similar to the prior year.
Josh Chan of UBS inquired about the breadth of the decline in customer wearer levels and asked for the specific impact of lower direct sales on Core Laundry's growth in the quarter.
President & CEO Steven Sintros responded that the softness in wearer levels was "a little bit broader" rather than being concentrated in a specific sector. He also quantified the direct sales impact, stating that year-over-year sales were a few million dollars lower, which reduced the Core Laundry growth rate by just under half a percentage point. He noted that some of this is expected to be recovered in the fourth quarter.
Josh Chan of UBS asked if management views the Executive Search business as having 'really accelerated' and whether the Q1 guidance assumes continued double-digit growth for that segment.
CEO Gary Burnison avoided focusing on a single quarter but confirmed that Executive Search has gained significant traction over the past 7-8 quarters despite a challenging economy. CFO Robert Rozek clarified that while they don't guide by segment, the Q1 forecast does anticipate 'some level of continued growth' for Executive Search on a year-over-year basis.
Josh Chan of Daniel Energy Partners asked about the timing and rationale for the Datagration acquisition and for more detail on its PetroVisor and EcoVisor platforms. He followed up by asking how these new platforms will integrate with Weatherford's existing Foresight and Signet solutions to enhance real-time analysis.
Executive Girish Saligram explained that the Datagration acquisition was timely because customers are struggling to integrate disparate data systems. He described Datagration as a 'universal plug adapter for the digital world' that allows Weatherford to offer powerful, real-time optimization platforms. The integration will enable the delivery of specific AI/ML models and solutions to customers through a flexible subscription model, helping them drive operational efficiency.