ABM Industries Incorporated (ABM) reported strong first-quarter fiscal 2013 results with a net income of $13.4 million or 24 cents per share compared with $10.6 million or 20 cents per share in the year-earlier quarter. The reported earnings beat the Zacks Consensus Estimate by a couple of cents.
Total revenue increased 10.1% year over year to $1.18 billion, and was marginally ahead of the Zacks Consensus Estimate of $1.17 billion. The healthy increase in revenues was primarily attributable to accretive acquisitions and organic growth from new sales and expansion of services with existing clients.
Janitorial: Revenues from the segment increased 1.9% year over year to $605.5 million in the quarter.
Facility Services: The segment revenues spiked 8.2% year over year to $156.4 million. The rise in the top-line figure was primarily due to organic growth, driven by incremental sales.
Parking: Revenues from the segment declined 1.4% year over year to $151.2 million during the quarter.
Security: The segment reported revenues of $96.7 million compared with $92.0 million in the year-ago quarter, up 5.1% year over year.
Building & Energy Solutions: Revenues from this segment dipped 1.3% year over year to $88.0 million as it was impacted by the comparative mix and timing of some awarded and completed U.S. Government contracts.
Adjusted EBITDA for the company climbed 7.5% in the reported quarter to $38.6 million, driven by incremental contribution from the recent acquisitions. ABM Industries has a healthy pipeline of future businesses and is particularly going strong in government business. The company recently received two linguist task orders from the Department of Defense under the Defense Language Interpreting and Translation Enterprise (:DLITE) contract. Subsequent to the quarter end, ABM Industries inked a $25 million energy retrofit contract with Wright State University to provide cost-effective and green long-term solutions to their facility service needs.
Cash and cash equivalents at quarter end were $36.5 million. The company utilized approximately $208 million in the reported quarter from available capacity under its credit facility to fund its recent acquisitions. At the same time, net cash used in operations was $11.5 million for the quarter.
For fiscal 2013, ABM Industries anticipates income from continuing operations in the range of $1.16 to $1.26 per share, with adjusted income of $1.35 to $1.45 per share.
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.
However, the company needs to be wary of tough competition from other players in the market such as Team, Inc. (TISI), Argan, Inc. (AGX), and Rollins Inc. (ROL). ABM Industries presently has a Zacks Rank #3 (Hold).
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