ABM Industries Reports Mixed Q2 Results, CEO Optimistic About Future Margins

Zinger Key Points
  • ABM Industries reported Q2 sales of $2.02 billion, a 1.7% YoY increase, beating the consensus estimate of $2 billion.
  • Despite sales growth, ABM's operating profit declined by 12.3% YoY to $81.3 million, with operating expenses rising 2.8% YoY.

ABM Industries Inc. ABM shares are trading higher after the company reported second-quarter 2024 earnings and provided guidance.

ABM reported second-quarter sales growth of 1.7% year-over-year to $2.02 billion, beating the consensus of $2 billion.

Operating profit declined 12.3% year-over-year (YoY) to $81.3 million, and the contracted by 64 bps to 4%.

Operating expenses increased 2.8% YoY to $1.76 billion, and Selling, general and administrative expenses rose 2.1% to $159.9 million.

Adjusted EPS was 87 cents, down from 90 cents, beating the consensus of 79 cents.

Adjusted EBITDA fell 8.5% to $125.3 million with an adjusted EBITDA margin of 6.2%, a 70 basis point decline YoY.

Related: Top Wall Street Forecasters Revamp ABM Expectations Ahead Of Earnings

Operating cash flow for the quarter totaled $177 million, up from $26 million a year ago. As of April 30, ABM held cash and equivalents of $60.7 million.

During the quarter, the company repurchased 555,461 shares of common stock at an average share price of $42.84, totaling $23.8 million. The total current authorization now stands at ~$186 million.

Dividend: ABM declared a cash dividend of $0.225 per common share, payable on August 5, 2024, to shareholders of record on July 5, 2024.

"ABM's service breadth, people, and customer focus, as well as the investments we have made in technology, have enabled us to perform well in challenging market conditions. Going forward, we expect to further leverage our investments and strong free cash flow to self-fund growth and pursue margin expansion opportunities, while at the same time consistently returning capital and building long-term stockholder value," commented Scott Salmirs, President & Chief Executive Officer.

2024 Outlook: ABM raises the adjusted EPS expectation to $3.40-$3.50 (prior $3.30 to $3.45) versus the $3.40 consensus.

The company expects an adjusted EBITDA margin of 6.2%-6.5% and an interest expense of $82 million-$86 million.

Price Action: ABM shares are trading higher by 2.60% at $49.00 premarket at the last check Thursday.

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