Greetings, and welcome to the ABM Industries 4th Quarter and Fiscal Year 2018 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. 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 and Treasurer for ABM Industries. Thank you. You may begin.
Thank you all for joining us this morning. With us today are Scott Salmeres, 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 4th 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 cause our actual results to differ materially. These factors are described in the slide that accompanies our presentation as well as in our filings with the SEC. During the course of this call, certain non GAAP financial information will be presented.
A reconciliation of those numbers to GAAP financial measures is 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.
Thanks, Susie, and congratulations on your new role as Treasurer and Vice President of Investor Relations. Couldn't be happier for you. Good morning, everyone, and thank you for joining us today as we discuss our Q4 and full year earnings release, which we issued just yesterday afternoon. It's hard to believe fiscal 2018 has already come to an end. When we began the year, we had just closed on our GCA acquisition, opening a new chapter in ABM's future.
What followed was a monumental year for us on several fronts. In addition to adding more than 30,000 new team members from GCA, we also face one of the toughest labor markets in American history and the acute impact of Brexit on our UK retail business, all while keeping our clients happy and team members engaged. At no point during the year will we deterred from achieving our goals of accelerating organic growth through new sales, integrating GCA successfully, protecting margins and driving free cash flow generation. I'm so proud of the team's ability to navigate the challenging macroeconomic environment while delivering against our short term plans and progressing towards our long term goals. To summarize our performance for the year, we concluded 2018 with record revenues of more than $6,400,000,000 driven by 4% organic growth.
Our GAAP continuing EPS was 1 $0.45 per share or 1 $0.89 per share on an adjusted basis and our adjusted EBITDA margin was 5.1 percent for the year. We also generated a record level of free cash flow at more than $200,000,000 These results are consistent with what we outlined in the second half of the fiscal year and I'm pleased that overall the teams delivered on their commitments. Let me dive into some of the drivers of these results. And let me start by saying I was really pleased with our organic growth in fiscal 2018. All year, we've been discussing our determination to accelerate by adopting a sales culture and supporting this initiative by investing in sales resources and revamping how we train, manage and measure our teams.
Even in this tight labor market, we successfully attracted new salespeople to the company and in collaboration with our operations team, we achieved our stretch target of approximately $900,000,000 in new sales, demonstrating how our investments are bearing fruit. Our strategic key accounts continue to expand with us as well, particularly in Business and Industry and Technology and Manufacturing. Even in our more customer concentrated portfolios like aviation, we expanded in our core service lines and by entering new business lines. We recently announced a multi year contract with JetBlue for catering logistics, a service line that was nascent just earlier this year and is now targeted for growth with our other aviation clients. As we enter fiscal 2019, we're excited about our sales momentum and our pipeline.
We are dedicating our efforts to retaining our customer base through our account planning process and ensuring that we are making the right long term decisions for the business. It would probably be helpful to do a 1 year look back at GCA since that was so foundational to our 2018 results. The acquisition increased our scale and scope by adding more than $1,000,000,000 in revenue to our overall portfolio this year, in line with our expectations. During our 1st year of integration, we combined our sales and operations teams and aligned the business with our procurement and marketing standards while managing all back office support function. This integration was no small feat considering we operate on 2 separate ERP systems.
Furthermore, we over drove synergies during the year exceeding our original projections by ending 2018 with approximately $18,000,000 in realized savings. We remain on pace for run rate synergies at the higher end of our original $20,000,000 to $30,000,000 range. These synergies in addition to several cost mitigation strategies enabled us to maintain our margin outlook for 2018 even given the continued labor pressures. On that note, let's discuss what has become one of the most highly publicized topics this year. ABM is one of the nation's top employers with a labor force of more than 130,000 skilled and non skilled team members.
This puts us in the unique position of understanding and seeing the effects of the labor markets. Once the level of unemployment and underemployment in the U. S. Economy began to dip to historic lows, we were among the first companies to discuss its potential impact. Towards the end of the second quarter, we began to see a heightened decrease in both the availability and quality of the labor force.
It was particularly acute for us in industries with stricter application processes such as education and aviation as well as certain geographic markets. At that time, we projected a total of 60 basis points of incremental labor and labor related pressures to our margins. Since then, we have not seen the labor environment improve, but we also haven't seen it worsen materially either. While challenges remain, we have been getting ahead of some of the pressures through proactive dialogues with clients and tighter expense management. I mentioned that our UK business saw challenges from the impact of Brexit.
The London retail economy has been particularly pressured and that is where we had our biggest concentration of technical solutions work. While we messaged these challenges throughout the year, we are clearly disappointed by our results. Despite this specific issue, our overall UK portfolio benefited from a full year of our transport for Londonering, which is one of the largest organic contracts in ABM history, as well as expanding services with key aviation clients. From an enterprise perspective, we continue to make progress in transforming our back office operations. It's hard to believe our Houston Bay shared services center began the fiscal year overcoming the challenges from Hurricane Harvey and are now fully functional and beginning to see the benefits of operational consistency.
This has led to quantifiable results with our cash flow, which is an important metric for our organization and a key indicator of our strong fundamentals. It has enabled us to deleverage faster than anticipated and in 2019, we expect to see a continuation of strong cash flow. 2019 will be one of the most important years on our path to fulfilling our 2020 Vision Transformation. We will be implementing a number of technology based modernization efforts that will make us more efficient operationally and enable our goal of ultimately being a more data driven company. In the first half of the year, we will have a new HRIS system that will give us the ability to manage our human resources and learning and development function more strategically as well as reduce the cost of employee acquisition over time.
Also manual administrative processes will be automated, which will reduce overhead as we progress. We've already begun the implementation of epay, our new cloud based time and attendance system for our field operations, which will improve scheduling and facilitate daily labor reviews, ultimately creating efficiencies for ABM as well as our clients. Finally, later this fiscal year, we will have a new unified financial system combining our 2 legacy ERP systems. The migration to a state of the art ERP system will equip our team with data and analytics to drive our business. Just based on the technology initiatives alone, 2019 will set the stage for financial benefits in 2020 beyond.
And progress is not only happening in our back office and with technology, but we are also improving all aspects of our organization all the way up to the Board room. Recently, we welcomed to our Board of Directors, Leanne Baker, the Chief Human Resources Officer for Global Food and Agricultural Company at Cargill Incorporated. Cargill is one of the largest companies in the country and employs more than 150,000 people. So clearly, you can see how Lian's experience and guidance will be invaluable to us as we move forward. 2019 will mark ABM's 110th year in business, which is a tremendous milestone.
We are the leader in the industries and markets in which we serve and have grown to become the country's 44th largest employer, which means we have the scale to support our remarkable clients. So as much as the current condition in the labor markets have become a short term headwind, the incredible breadth of our 130,000 person team will be our greatest long term tailwind and competitive advantage. We are a durable and resilient business with a highly diversified model that can manage in a variety of different economic cycles. Our 2020 vision transformation has touched every area of our company and we are stronger than we have ever been. The investments we are making will enable us to continue to differentiate our offering in the market and position ABM for the next 110 years.
Now let me turn it over to Anthony.
Thank you, Scott, and good morning, everyone. Before I review our results, please keep in mind the results presented in this release reflect our acquisition of GCA, which closed on September 1, 2017. Therefore, the financial results and associated year over year comparisons discussed today reflect 12 months and 2 months of GTA operations for fiscal 2018 and fiscal 2017, which include the related revenue and profit contributions as well as higher amortization, interest expense and share count. For fiscal 2017, the Q4 and full year results also reflect the transaction's acquisition costs. Additionally, our fiscal 2018 results for the quarter and year reflect the benefits of the U.
S. Tax Cuts and Jobs Act of 2017. Now on to our results for the 4th quarter. Total revenues for the quarter were $1,600,000,000 up 10.1% versus last year, driven by incremental GCA revenues of 88,000,000 dollars and 4.2 percent organic growth within the Business and Industry, Technical Solutions and Technology and Manufacturing segments. On a GAAP basis, our income from continuing operations was $8,900,000 or $0.13 per diluted share compared to a loss of $2,500,000 or $0.04 last year.
This quarter's results reflect a non cash impairment charge of $26,500,000 which resulted from our revised outlook of our technical solutions business in the UK, which I will discuss in more detail shortly. On an adjusted basis, income from continuing operations for the quarter increased 65% to 38,800,000 dollars or $0.58 per diluted share compared to last year. During the quarter, we generated adjusted EBITDA of approximately $90,000,000 at a margin rate of 5.5% compared to $70,800,000 at a rate of 4.7% last year. I will now turn to our segment results, which are described on Slide 12 of today's presentation. As we've noted all year, our 2018 operating segment results reflect the remapping of overhead expenses related to GCA, including allocations and additional amortization.
Therefore, year over year comparisons will not be meaningful until 2019. Our B and I segment grew 7.8 percent, achieving revenues of $737,000,000 driven by 14 $500,000 of incremental revenue related to GCA. Organically, B and I finished the year strong with organic revenue up 5.7%, which primarily reflects our TFL win in the UK. We have now anniversaried the TFL contract, and as a result, its incremental contribution to organic growth will decrease over the next few quarters. Management reimbursement revenue also increased by more than $6,000,000 Operating profit for the quarter was 43.6 $1,000,000 for a margin of 5.9 percent, reflecting approximately $2,000,000 of amortization related to GCA.
Excluding GCA related amortization, the operating margin for total B and I was 6.2% this quarter. For the full year, B and I delivered operating margins of 5.3% or 5.6% excluding amortization compared to our low 5% expectation. B and I stable performance all year has been the cornerstone of our business and demonstrates the strength of our diversified model. $265,000,000 During the quarter, we continue to expand into strategic service lines across major airlines, which offset certain contract losses we previously discussed. Operating profit for the quarter was 2,600,000 dollars During the quarter, start up costs associated with our catering logistics service line was beyond our original projections, which impacted the quarter by 90 basis points.
These costs have now normalized and our operating margin should begin to trend back in line with our original projections. Operating margins also reflect the acute impact that the current labor environment continues to have on the Aviation segment. For the full year, Aviation ended with an operating margin of 2.3% with a minimal impact from amortization compared to our high 2% expectation. Technology and Manufacturing revenues increased to $234,000,000 for the quarter, up 15% versus last year. This was driven by incremental GCA related revenue of $19,000,000 and organic growth of 5.9%.
We grew through a combination of new wins and expansions at our top high-tech clients. Operating profit was 17,500,000 dollars for a margin rate of 7.5%. Excluding $2,700,000 of GCA related amortization, operating margins were 8.7% for the quarter. For the full year, operating margins were 7.3% or 8.4% excluding amortization. Overall, we are pleased with the results we have seen in the T and M segment as they performed in line with our expectation of low 7% operating margins during this 1st year as a newly integrated group.
Revenue in Education was $214,000,000 reflecting approximately $50,000,000 of incremental GCA Operating profit for the quarter was $12,000,000 or 5.6 percent in margin. Excluding $6,800,000 of amortization, operating margin was 8.8% for the quarter. Similar to our Aviation segment, our Education team has been particularly challenged with the current labor markets. Operating margins for the full year were 5.2 percent or 8.3 percent excluding amortization. The Education segment delivered full year results that were in line with our operating margin expectation of high 4%.
In addition, Education benefited from a onetime inventory adjustment during the quarter as a result of our standard year end review procedures. Looking ahead, we are encouraged by the momentum of our education team and the sales pipeline we continue to develop, where we are seeing opportunities to cross sell other services within the portfolio. Healthcare revenue was $67,000,000 for the quarter, including $2,000,000 from GCA. Operating profit was $900,000 which includes $200,000 of GCA amortization. Finally, Technical Solutions reported revenues of 131,000,000 dollars a year over year increase of 15% for the quarter.
The Technical Solutions segment has been a tale of 2 cities all year. Our domestic business has been thriving with increases in BES revenue and core project work for the quarter year. 4th quarter results also reflect beneficial timing of certain projects that were executed later in the quarter. On the other hand, our UK business has been underperforming as a result of the uncertain economic conditions precipitated by Brexit and its impact to certain sectors of the economy. As we've shared on previous calls, we have been monitoring this business acutely.
Given the expected continued challenges in this market as well as a customer deflection, we impaired goodwill and intangibles associated with this segment in the amount of $26,500,000 during the quarter. This non cash charge is excluded from our overall adjusted results but reflected in our segment results. Excluding this charge, operating profit for the quarter would have been 18,100,000 dollars or 13.8 percent in margin, leading to normalized operating margins of 9.2% for the full year, in line with our 9% margin target. Turning to cash and liquidity. Cash flow from operations was approximately $93,000,000 for Q4.
The combination of our new scale at GCA as well as the foundational improvements we've made through our Enterprise Shared Service Center helped drive sustainable working capital management improvement throughout the year. We also benefited from certain strategic actions we took during the year, such as the mid year termination of our swaps as well as one time tax and insurance collateral refunds. Even excluding these one time benefits, we generated more than $210,000,000 in free cash flow for the year, above our recent projection for $175,000,000 to $200,000,000 In 2019, we anticipate consistent performance and to further strengthen our healthy balance sheet. We ended the quarter with total debt, including standby letters of credit of 1,100,000,000 dollars and a bank adjusted leverage ratio of 3.2 times. I'm pleased with our accelerated pace of deleveraging.
During the quarter, we also paid a quarterly cash dividend of $0.175 per common share for a total distribution of $11,500,000 to stockholders. And I'm pleased to report that our Board has approved our annual dividend increase to $0.18 per share, marking our 211th consecutive quarterly cash dividend. As Scott said, 2019 will be our 110th birthday, and we are so proud to have raised our dividend for more than 50 consecutive years as part of our history. Now for a quick recap of our annual results. Overall revenues increased by 18% or $988,600,000 compared to last year.
The increase in revenues was attributable to $858,000,000 of incremental revenues predominantly from the GCA acquisition and organic growth of approximately 4%. Our GAAP income from continuing operations for fiscal 2018 was $95,900,000 dollars or $1.45 per diluted share. On an adjusted basis, income from continuing operations for the year was 125,300,000 dollars or $1.89 per diluted share. Adjusted EBITDA for the year grew to $326,400,000 and we ended the fiscal year with an adjusted EBITDA margin of 5.1% versus 4.3% last year. Now turning to our guidance outlook.
We are introducing a fiscal 2019 GAAP guidance outlook range of 1 point $6.5 to $1.80 and on an adjusted basis, dollars 1.90 to 2 point 2nd full year that we operate under our current business segments, following the acquisition of GCA. Therefore, quarterly results will be comparable on a year over year basis. However, given our extensive discussions regarding various initiatives as well as the overarching labor headwinds we've been facing, I wanted to provide additional details cadence of the year. Our revenue growth in fiscal 2019 will be predicated on both continuing our new sales and the expansion momentum we saw in fiscal 2018 as well as retaining accounts that are up for renewal. With retention, our focus is with the right customers and contracts with a path to quality long term business.
So overall in fiscal 2019, we expect our top line to be in the range of our historical results. And on a comparative basis, we expect to see some front end and back end normalization as large contracts like the TFL anniversary and our new sales begin to comp out. Turning to margin. We are forecasting adjusted EBITDA margin in the range of 5.1% to 5 0.3%, which reflects a full year headwind of labor, which we saw escalating at the end of the first half of fiscal twenty eighteen, offset by proactive price escalations, labor management processes we are and have been implementing as well as the full year impact of synergies associated with Keep in mind, any improvement would be partially offset by the continuation of investments we are making in our IT infrastructure to create and optimize our scalable platform. Given 2019 will be our 1st full fiscal year under the Tax Cuts and Jobs Act, I want to discuss some of the reasons why we expect our overall tax rate to increase 30% compared to fiscal 2018.
Our expected 2019 tax rate of 30% excludes discrete tax items such as the work opportunity tax credit and the tax impact of stock based compensation award, which we currently expect to be approximately $7,500,000 for 20 19. This compares to $11,000,000 in fiscal 2018. Additionally, while we would continue to benefit from a full year of lower overall federal tax rates, there are a number of items that did not impact us in fiscal 2018. These include limitations or deductions related to meals and entertainment and executive compensation plus some foreign tax provisions. The culmination of all these items will have an approximately 200 basis point increase in our effective tax rate year over year.
We expect capital expenditures in fiscal 2019 to be between $50,000,000 to $60,000,000 and we expect depreciation of $50,000,000 to 55,000,000 dollars These ranges reflect our continuing investments in IT as well as growth CapEx. When considering our quarterly EPS cadence for fiscal 2019 on an adjusted basis, we expect the proportion of earnings between the first half and second half of the year to largely mimic what we saw in fiscal 2018. I also want to discuss some changes that will be implemented in fiscal 2019. As stated in our earnings release, we have adopted the new revenue recognition standards, also known as ASC 606. The guidance we are giving today does not reflect any accounting impact that may arise due to timing from ASC 606, which could be in the range of plus or minus 0 point 0 $5 The main drivers that could cause some variability include sales commission costs, which will now be deferred and recognized over the expected customer relationship ranging from 1 to 8 years.
Previously, commission costs were expensed as incurred. The profit margin on uninstalled materials associated with our Technical Solutions project related contracts are deferred until installation is substantially complete. Previously, margin on an installed material was recognized upon delivery under the percentage of completion method. Initial fees from sales of franchise license will now be deferred and recognized over the terms of the initial franchise agreement ranging from 1 to 3 years. Previously, initial fees from sales of franchise license were recognized upon the completion of the sale.
We will provide clarity on these items as results are reported and we navigate the fiscal year. Finally, in fiscal 2019, we intend to expand our disclosures by providing intersegment revenue as well as revenue by service lines. With that, operator, we are now ready for questions.
Thank you. Our first question comes from the line of Andrew Wittmann with Robert W. Baird.
I wanted to dig into, I guess, factors driving the top line here in fiscal 2019. I guess maybe starting with I mean, Scott, you just had a stretch goal of $900,000,000 you hit that. But it sounds like you guys talked about some moderation the organic growth rate year over year. I guess it sounds to me like maybe the missing hole there is retention rates. Can you talk maybe about some of the dynamics that you're looking at?
And you also are annualizing the big contract in TFL. But can you just talk about some of the dynamics that you're seeing in terms of top line in general, but maybe retention specifically, maybe is falling out of the discussions you're having on the price cost dynamics from labor?
Sure. That's great, Andy. And that's right on. We feel like we're going to be able to replicate or not overachieve what we did this year in new sales. So all is well on the top line for expanding with our customers and cross selling and bringing in new business.
I think for us, this is the year of having a keen focus on retention, right, because we have had some pricing pressures as we know because of the wage rates and the current labor market. But I think this is a time where we're going to dig in and make some strategic decisions about accounts that aren't performing to our expectation level. And as we look we don't think there'll be a dramatic difference in retention rates. We're talking about toggling a point or so. But I do think it's something that's going to have added pressure, especially as we have mid cycle conversations with clients where we're not performing.
Yes. I guess that makes sense. I mean, just in terms of the visibility you have into that point or so that you're identifying here, I mean, have those accounts that need to have those tougher conversations already been engaged and identified that gives you confidence in 2019 proceeds?
Yes. As we planned 2019, we looked at every account. We developed account plans. So we feel like we've identified the accounts where we're having more challenges. And we're going to be strategic about it too, right?
Because if it's a large scale client that we have the opportunity to continue to expand with and move through the cycle, it will be a very different decision set than a client maybe that has just one asset and is more price focused than really buying into our platform. And that's the way we're thinking about it. And to give you some idea of how we're thinking about it, when we planned our escalations for 2019, we've budgeted into our guidance about 25% increase year over year. So that's not necessarily a number you put in your model, but you should just understand directionally that we feel that we're going to have some good success, but it's just
Got it. Okay. The other thing I heard in the prepared remarks that I thought was kind of interesting was the number of IT systems that you're putting in HR, epay and then combining your financial systems. I think in 2018 you also had some systems implementations. I guess I have no doubt that they're baked into guidance, Anthony, but most of these systems are SaaS type of things that do get expense and pressure the P and L.
Just so that we can get a sense of what this margin guidance you gave us here today really represents. Can you talk about what the cumulative headwind to margins is from all these systems implementations?
Sure, Andy. And you're exactly right. Our strategy over the last, call it, 1.5 years has been to move more of our infrastructure and software to the cloud. So over time, you should see a reduction in the CapEx associated with our IT systems and then the corresponding increase in our OpEx. And then we're expecting obviously efficiencies from these new systems on the labor side as well as from the back office perspective.
From a total cost year over year, anticipating the increase in IT spend to be approximately $10,000,000 on a year over year basis and that will be primarily reflected in our corporate segment.
And you know what Andy, if you think about 2020 vision and the cadence of the transformation, part 1 was to change our operating model and be more of a solution provider, right, bringing all of our services to bear for our clients. And then part 2 of it was working through our shared service center, right, our procurement, all the things that we've talked about. This is the stage now where we are investing in the platform to enable a lot of the best practices that we outlined through our 2020 vision program. So it's really exciting because in our minds the ABM of 2020 is going to be a more data driven analytic company as a result of all these investments And that's just going to help us drive our business and ultimately accelerate in the future. So this is kind of right in line with where we want to be.
Yes. No doubt this is that vision. I guess, Anthony, given that some of these are not implemented, I guess, there were some that you did say are in effect today, but some are coming in over the course of the year. If it's 10,000,000 dollars cost for this year, what's the annualized run rate because presumably there's some carryover that's going to get lapped into 2020 that we want to be aware of as well? Yes.
I think the way to look at it, Andy, is the cost increase year over year can be primarily the result of the SaaS model as well as the beginning depreciation of the CapEx associated with putting in place these systems. On a go forward basis, we're not anticipating incremental, so the run rate from an operating expense should be in line with what we forecast or what we're anticipating fiscal 2019 to be. The biggest difference is going to be the switch between depreciation and OpEx over time becoming much more an OpEx because most of our systems, although they're deploying throughout fiscal 2019 from a software as a license perspective, their expense they're fully expensed in 2019. So you're not going to see a lot of year over year going into 2020.
Got it. Okay. And then just I'm going to finish up here at least for this go around on tax rate. So just you went through a lot there pretty quickly, but you guys give this guidance of 30%, but obviously the number that's going to be on the income statement can be a little less because watch is the big one. And I think you said it's going to be down like to what $7,500,000 from was it $11,000,000 last year.
Is that right, Anthony?
Yes. So the way to look at it is really in 2 components. Our discretes are primarily going to be WASI and FAST 123R and then we have 179D, which are associated with our energy efficient project, which is the one that we frankly don't have very good visibility because it's project dependent. So when you look at YZ and 123R, we had roughly 11,000,000 dollars in fiscal 2018. We're anticipating $7,500,000 in fiscal 2019.
The WASI should be relatively consistent. The biggest driver is going to be the drop in 123R and that's really a function of the share price as well as the exercise option value when these options were options or stock based comps were put in place. Okay.
So then the $30,000,000 really turns into something closer to what $25,000,000 or $26,000,000 And then you would also get the benefit of the non deductible or the deductibility of stock compensation, which would lower the tax rate a little bit further and that would get you to your adjusted EPS range. I just want to make sure that for people listening to the call that this is all very clear that tax rate that they're actually going to see is not 30, it's going to be something closer to 25.
Yes. The way to look at it, the 30 is reflective of the full year of the U. S. Tax Cut Act, but it has incremental increases for provisions that didn't impact us in 2018. So from a year over year basis, purely from the tax rate, we would have an increase, which is not intuitive.
And I think I've been signaling that since Q3 of last year around making sure our investors understand that taxes just comparable are going to go up year over year. And then exactly to your point, what offset that will be the benefits from these discrete.
Okay. I think that's helpful. I'm going to leave it there for now. Maybe I'll buzz back in later. Thank you very much.
Thanks Andy.
Thank you. Our next question comes from the line of Marc Riddick with Sidoti. Please proceed with your question.
Hey, good morning.
Hey, Mark.
I wanted to touch a little bit on the CapEx guide and wondered if you could parse out for us what how much of that would be considered sort of the growth CapEx, if you will, and what would be maintenance CapEx for 2019 and how we should think about how that might evolve beyond 2019?
Sure. So CapEx in general should be roughly about 1% of our sales. That's the way we look at it internally. And then the split of that is going to be $45,000,000 to $50,000,000 of that is going to be kind of the maintenance CapEx and that will be for equipment. Historically, that would be for our systems implementations as well as our software when we would host it.
As you look forward, I would bake in 1% as being the right run rate. It's hard for me to say that number should materially different from what we've historically seen given the growth in the business and some of the CapEx associated with that growth.
Okay, great. And then I wanted to shift over to a little bit of if we could sort of get some thoughts and updates around the pricing discipline and go to market strategy benefits and how what differences that you're seeing by segment a little bit? Because I mean, certainly there's quite a bit going on and then of course you're going to be laying on the technology changes. But I did want to get a sense of maybe the receptivity that you're seeing and the differentiation by from one segment to another that might be helpful.
So look, I think the pricing impact on the business is universal. It's not in any particular industry group. This is a situation that's facing each of our segments and really facing each of our clients as well. And I think that's what has gotten us in a good place because you have these quarterly conversations with clients. So it's not the first time they're hearing about it and they're facing the same challenges.
So that's why we think there's going to be more receptivity this year on escalations as we go forward and why we felt comfortable budgeting higher. And as I said earlier, there's no question that there's risk with that and we'll be more discerning. But it's nice to have something impact you that this is one way of misery loss company because you have a narrative that everyone can share and that's why we're getting again the reception that we're getting.
Okay, great. And then one of the things I was thinking about as far as the as you go through the year with the technology and enhancements throughout the year, I was wondering if you could touch a little bit on where you feel you are on the analytics side, I suppose. And if you can feel as though you have that capability in house to take advantage of what you'll be deriving during the course of the year from your technology improvements or whether we should see an update in some of the analytic needs within the company?
So it's early on, right? We're in the point now where we're just starting to deploy all this technology. So I think from a pure analytics and data from these systems, it's really going to be a 2020 story because that's when we'll start to be able to talk about year over year changes. However, we still have the infrastructure like for example, one of the things that we're very focused on is managing daily labor, right? So it's a manual process right now and it's getting done.
So when we enable the technology, it's going to just make us more efficient and it's going to free us up to do some of the other things that we probably like to be doing. But the reality is we're still focusing on all the key things we have to do in this labor environment. It's the technology that's going to enable us. So it's an evolving story. These systems are all starting to come online throughout the year.
But in terms of having true data analytics, that's not going to be more manually derived. That's really something that we're going to feel comfortable in 2020.
Okay. That makes sense. And then one last thing for me. I was wondering if you could give maybe some thoughts as to some of the things that you've learned initially as to the strategic service line enhancements within Aviation? And then maybe some of the things that you've learned from there, is that something that you could see taking into the other segments as far as expanding service line opportunities?
Thanks. Yes. The main thing we learned is that clients appreciate when we come to them with solutions, right. We've historically been a single service company and we are just starting on this path, right. But by now as our teams are getting adept at talking about cross selling like this year was our best cross selling year ever.
We did close to $100,000,000 in cross selling services. And we see that happening in unique places. In our education line, we're expanding with health care. So a lot of the universities will also have hospitals as well. So it's something that we can talk to with clients now and but this is still it's a long term process to get our people skilled at cross selling.
But to think that we did close to $100,000,000 this year, we were pretty encouraged by that, but we still feel like we have a lot more runway. So being a solution provider is going to prove out as part of our long term thesis. And you enable that with technology and account plans and standard operating practices and we just think we have a winning combination in the future.
Okay, great. I'll leave it there. Thank you very much.
Thanks Mark.
Thank you. At this time, I'll turn the floor back to management for any final comments. I
just want to thank everybody for following us and participating throughout the year and just wish everybody a happy and healthy holiday season and a prosperous 2019. We look forward to updating you at the end of Q1. Thanks everybody.
Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.