ABM Industries Incorporated (ABM) reported strong second quarter fiscal 2013 results with net income of $19.3 million or 35 cents per share compared with $11.7 million or 21 cents per share in the year-earlier quarter. The reported earnings beat the Zacks Consensus Estimate by a couple of cents.
Total revenue increased 11.0% year over year to $1.17 billion, primarily attributable to accretive acquisitions and organic growth from new sales and expansion of services with existing clients.
Janitorial: Revenues from the segment increased 2.7% year over year to $609.2 million in the quarter.
Facility Services: Revenues climbed 8.4% year over year to $147.4 million primarily due to organic growth.
Parking: Revenues from the segment declined 0.7% year over year to $151.6 million during the quarter.
Security: The segment reported revenues of $91.5 million compared with $88.9 million in the year-ago quarter, representing a 3.0% year-over-year increase.
Building & Energy Solutions: Revenues from this segment surged 8.4% year over year to $93.9 million mostly due to inorganic growth.
Adjusted EBITDA for the company climbed 28.4% in the reported quarter to $52.0 million, driven by incremental contribution from the recent acquisitions, new businesses, and one less working day than the year-ago period.
ABM Industries has a healthy pipeline of future businesses and is particularly going strong in government business. The company was selected as the official cleaning services partner of O2, a leading provider of mobile services and communication solutions to customers in the UK, Germany and Ireland. ABM Industries also formed a joint venture with Building Energy, an Italian power manufacturing company, to expand its solar and distributed energy capabilities in large-scale commercial and utility-scale solar power markets.
Cash and cash equivalents at quarter-end were $37.9 million. Net cash from operations was $49.3 million for the reported quarter compared with $43.5 million in the prior-year period. This enabled the company to reduce its outstanding debt under its credit facility by $39 million to $384 million.
Banking on the strong quarterly results, ABM Industries raised its guidance for fiscal 2013 and currently anticipates income from continuing operations to be in the range of $1.21 to $1.31 per share, up from earlier projections of $1.16 to $1.26 a share. Adjusted income is expected to be in the range of $1.40 to $1.50 per share, up from $1.35 to $1.45.
ABM Industries’ strategy entails growth through acquisitions. The company expects to extend its global footprint as well as strengthen its position in existing markets through successful integration of these companies and organic growth across the industry verticals.
ABM Industries presently has a Zacks Rank #2 (Buy). Other players in the industry that warrant a look includes AMN Healthcare Services Inc. (AHS), Booz Allen Hamilton Holding Corporation (BAH) and Clean Harbors, Inc. (CLH), each carrying a Zacks Rank #2 (Buy).
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