ABM Industries Misses on Q3 Earnings, Revenues Beat

ABM Industries Incorporated ABM came up with third-quarter fiscal 2015 adjusted earnings per share of 47 cents, which missed the Zacks Consensus Estimate by 2 cents. The adjusted earnings per share were flat on a year-over-year basis.

On GAAP basis, earnings per share were 3 cents per share, significantly down from 34 cents in the prior-year quarter. The decrease in earnings was primarily related to adjustments to insurance reserves.
 

Inside the Headlines

Total revenue increased 5.7% year over year to $1,348.8 million, with 5.7% organic growth and accretive acquisitions. The revenue figure also came above the Zacks Consensus Estimate of $1,336.0 million.

Total adjusted operating profit decreased 23.3% year over year to $35.8 million. Adjusted EBITDA stood at $53.3 million, down 14.6% from the year-ago quarter, primarily due to higher insurance expense.

Segmental Performance

Revenues for the Janitorial segment increased 4.7% year over year to $678.5 million. Segment operating profit decreased 19.7% to $33.4 million in the reported quarter.

Revenues from the Facility Services segment declined 2.5% year over year to $147.3 million and operating profit decreased 14.3% to $6.0 million.

Revenues from the Parking segment were up 3.5% year over year to $162.0 million, while operating profit decreased 13.3% to $7.8 million.

The Security segment revenues increased to $98.9 million from $95.4 million in the year-ago quarter. Operating profit was down 16.7% to $3.0 million.

Revenues from the Building & Energy Solutions segment were up 16.9% to $149.1 million. Operating profit was up 19.1% to $8.1 million.

Revenues from Other segment improved 16% year over year to $113.0 million while operating profit was flat at $4.5 million.

Business Restructuring Updates

ABM announced the formation of a new company names QMerit, which will take over its Unified Workforce software platform. Tracy K. Price, ABM executive vice president and president of ABM Facility Solutions Group, will be joining as the CEO of this new company.

Financial Position

Cash and cash equivalents at quarter end were $51.2 million. Net cash provided by operations was $62.4 million compared with $19.3 million in the prior-year period.

As of the quarter end, total debt outstanding was $305.1 million, with $378.8 million of  borrowing capacity under its $800.0 million line of credit.

During the quarter, the company paid a quarterly cash dividend of $9.1 million and repurchased 307,369 shares for $10.0 million.

Outlook

ABM has narrowed its fiscal 2015 adjusted EPS guidance to $1.75 – $1.80 from the prior range of $1.75 – $1.85 per share.

Going forward

ABM announced a comprehensive strategic and transformation initiative focused on driving sustainable profitability by effectively allocating resources to higher margin services and business verticals with a strong competitive edge. We expect this to fuel the company's growth momentum in the coming quarters.

ABM currently has a Zacks Rank #3 (Hold). Other stocks that look promising include ServiceMaster Global Holdings, Inc SERV carrying a Zacks Rank #1 (Strong Buy) along with Team, Inc TISI) and Accenture plc ACN, carrying a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ACCENTURE PLC ACN: Free Stock Analysis Report
 
ABM INDUSTRIES ABM: Free Stock Analysis Report
 
SERVICEMASTR GH SERV: Free Stock Analysis Report
 
TEAM INC TISI: Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research