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ABM Industries (ABM) Q1 Earnings Beat, Revenues Rise Y/Y

Zacks Equity Research

ABM Industries Inc. ABM first-quarter fiscal 2019 adjusted earnings (from continuing operations) of 31 cents per share beat the Zacks Consensus Estimate by 4 cents and increased 19.2% year over year. The bottom line benefited from higher margin revenue contribution and the impact of the adoption of Accounting Standards Codification ("ASC") 606.

Total revenues of $1.61 billion increased 1.2% year over year on the back of 2% organic revenue growth (excluding the adoption of ASC 606 and ASC 853).

Organic revenue growth was driven by growth within Business & Industry, Technical Solutions and Technology & Manufacturing segments, which was partially offset by decline in revenues within the Education and Healthcare segments. Revenues related to the GCA acquisition have been included in organic growth.

Over the past six months, shares of ABM Industries have gained 7.6% against 8.8% decline of the industry it belongs to.

 

Revenues by Segment

Business & Industry revenues (48% of total revenues) increased 2.4% year over year to $774.5 million. Technology & Manufacturing revenues (15%) climbed 1.7% year over year to $236.1 million. Technical Solutions revenues (7%) increased 3.7% year over year to $107.9 million.

Aviation revenues (16%) declined 2.9% year over year to $252.4 million. Healthcare revenues (4%) decreased 1.6% year over year to $66.7 million. Education revenues (13%) of $204.7 million decreased 1.1% from the prior-year quarter.

Operating Results

Adjusted EBITDA of $68.8 million increased 5.7% year over year. Adjusted EBITDA margin improved 18 basis points (bps) to 4.3%.

Adjusted income from continuing operations was $20.8 million, up 19.7% year over year. Adjusted operating income margin was 1.3%, up 20 bps from the prior-year quarter.

Operating expenses increased 1.2% from the year-ago quarter to $1.45 billion. Selling, general and administrative expenses increased 3.4% from the year-ago quarter to $112.7 million.

ABM Industries Incorporated Price, Consensus and EPS Surprise

 

ABM Industries Incorporated Price, Consensus and EPS Surprise | ABM Industries Incorporated Quote

Balance Sheet & Cash Flow

ABM Industries exited fiscal first-quarter fiscal 2019 with cash and cash equivalents of $30.6 million compared with $39.1 million at the end of the prior quarter. Long-term debt was $945.8 million compared with $902 million at the end of the prior quarter. Net cash used in operating activities was $39.3 million in the reported quarter.

Dividend Payment

ABM Industries paid a quarterly cash dividend of 18 cents per share, leading to $11.9 million of total dividend payment in the reported quarter. Additionally, the company’s board of directors announced a cash dividend of 18 cents per share, payable on Mar 6, 2019 to shareholders of record as of Apr 4. This marks the 212th consecutive quarterly cash dividend declared by the company.

Fiscal 2019 Guidance

ABM Industries reaffirmed its fiscal 2019 guidance for adjusted income from continuing operations in the range of $1.90-$2.05 per share. The Zacks Consensus Estimate of $1.97 lies within the company guided range.

Zacks Rank & Upcoming Releases

ABM Industries currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the broader Zacks Business Services sector are Omnicom OMC, Robert Half RHI and Automatic Data Processing ADP. While Robert Half sports a Zacks Rank #1, Omnicom and Automatic Data Processing carry a Zacks Rank #2 (Buy).

Long-term expected EPS (three to five years) growth rate for Omnicom, Robert Half and Automatic Data Processing is 6.9%, 8.4% and 12.8%, respectively.

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