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ABM Extends LA Client Base, Shares Flat

Zacks Equity Research

Business services provider ABM Industries Incorporated (ABM) recently extended its client base in LA after it was selected as the official cleaning services partner of the Los Angeles Convention Center (:LACC). The terms of the deal, however, were not disclosed. The deal failed to impress investors as share prices remained relatively flat at $28.27 as on Mar 12.

Per the multi-year agreement, which commenced from Dec 2013, ABM offers day-to-day janitorial and maintenance services in addition to potential event housekeeping and janitorial support services to LACC. Spanning over 720,000 square feet of convention space and 147,000 square feet of meeting space with a 300-seat theatre, LACC is one of the largest convention centers in the U.S. The contract from AEG Facilities, which operates LACC, shows the kind confidence it has in ABM to entrust the company with such a huge responsibility.

The deal also strengthens ABM’s business relationship with AEG. ABM offers similar services to other high-profile AEG-affiliated venues in LA, including STAPLES Center, Nokia Theatre L.A. LIVE, The GRAMMY Museum and L.A. LIVE. In addition, the company serves notable AEG venues both in and outside the U.S. such as The O2 in London, U.K., the O2 World in Hamburg, Germany, StubHub Center in Carson, Calif., Sprint Center in Kansas City, Mo., BBVA Compass Stadium in Houston, Texas, Citizens Business Bank Arena in Ontario, Calif.; and Valley View Casino Center in San Diego, Calif.

ABM provides engineering, janitorial, parking, and security services to thousands of commercial, industrial, institutional, and retail facilities. ABM has developed a platform to deliver an end-to-end service model to its clients by realigning its operational structure to an on-site, mobile and on-demand market based structure.

This realignment is likely to improve its long-term growth prospects and provide higher margin opportunities by enabling it to better deliver end-to-end services to its clients across urban, suburban and rural areas. The company further expects to extend its global footprint as well as strengthen its position in existing markets through both inorganic and organic growth across industry verticals.

ABM currently holds a Zacks Rank #2 (Buy). Other stocks that also look promising include Rollins Inc. (ROL), Huron Consulting Group Inc. (HURN) and The Hain Celestial Group, Inc. (HAIN), each carrying a Zacks Rank #2 (Buy).

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