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Why Is ABM Industries (ABM) Down 11.6% Since Last Earnings Report?
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A month has gone by since the last earnings report for ABM Industries (ABM - Free Report) . Shares have lost about 11.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ABM Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
ABM Industries Q2 Earnings Beat Estimates, Revenues Miss
ABM Industries reported mixed second-quarter fiscal 2021 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Adjusted earnings from continuing operations came in at 82 cents per share, beating the consensus mark by 9.3% and improving 36.7% year over year. The bottom line benefited from higher margin improvement in Work Orders and EnhancedClean services as clients continue to incorporate disinfection into their operations. Persistent management of direct labor to align with the operating environment is also an added positive. Additionally, the Technical Solutions segment gained from improved business mix and execution of higher margin projects. These were, however, partially offset by higher corporate expenses (owing to planned investments in information technology) and higher share based compensation expenses.
Total revenues of $1.49 billion missed the consensus estimate by 0.3% but improved 0.1% from the year-ago quarter. Despite ongoing COVID-19-related client disruptions, the year-over-year growth was due to huge demand for disinfection-related work orders and EnhancedClean services in the Business & Industry, Technology & Manufacturing, Education, and Technical Solutions segments. These were, however, partially offset by continued softness in the Aviation segment.
Segment-wise Revenues
Business & Industry revenues increased 1.4% year over year to $796.2 million. Technology & Manufacturing revenues improved 5.4% year over year to $246.3 million. Education revenues of $214.2 million increased 7% from the prior-year quarter. Technical Solutions revenues increased 2.6% year over year to $125.5 million.
Aviation revenues decreased 19.7% year over year to $148.3 million.
Operating Results
Adjusted EBITDA came in at $106.6 million, up 17.1% from the prior-year quarter. Adjusted EBITDA margin rose to 7.1% from 6.1% in the year-ago quarter.
Operating expenses decreased 2.4% from the year-ago quarter to $1.27 billion. Selling, general and administrative expenses increased 35.6% from the year-ago quarter to $161.9 million.
Balance Sheet & Cash Flow
ABM Industries exited second-quarter fiscal 2021 with cash and cash equivalents of $435.7 million compared with $378.3 million at the end of the prior quarter. Long-term debt was $524.2 million compared with $573.8 million at the end of the prior quarter.
Net cash generated from operating activities totaled $125.9 million in the reported quarter. Free-cash flow came in at $117.6 million.
Dividend Payout
ABM Industries paid out a quarterly cash dividend of 19 cents per share, leading to $12.7 million of total dividend payout in the reported quarter. Additionally, the company’s board of directors announced a quarterly cash dividend of 19 cents, payable on Aug 2, 2021, to its shareholders of record as of Jul 1, 2021. This marked the 221th consecutive quarterly cash dividend declared by the company.
Fiscal 2021 Guidance
For fiscal 2021, ABM Industries raised its guidance for adjusted income from continuing operations to the range of $3.30 to $3.50 per share from the prior guidance of $3.00 - $3.25.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, ABM Industries has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ABM Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is ABM Industries (ABM) Down 11.6% Since Last Earnings Report?
A month has gone by since the last earnings report for ABM Industries (ABM - Free Report) . Shares have lost about 11.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is ABM Industries due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
ABM Industries Q2 Earnings Beat Estimates, Revenues Miss
ABM Industries reported mixed second-quarter fiscal 2021 results, wherein earnings beat the Zacks Consensus Estimate while revenues missed the same.
Adjusted earnings from continuing operations came in at 82 cents per share, beating the consensus mark by 9.3% and improving 36.7% year over year. The bottom line benefited from higher margin improvement in Work Orders and EnhancedClean services as clients continue to incorporate disinfection into their operations. Persistent management of direct labor to align with the operating environment is also an added positive. Additionally, the Technical Solutions segment gained from improved business mix and execution of higher margin projects. These were, however, partially offset by higher corporate expenses (owing to planned investments in information technology) and higher share based compensation expenses.
Total revenues of $1.49 billion missed the consensus estimate by 0.3% but improved 0.1% from the year-ago quarter. Despite ongoing COVID-19-related client disruptions, the year-over-year growth was due to huge demand for disinfection-related work orders and EnhancedClean services in the Business & Industry, Technology & Manufacturing, Education, and Technical Solutions segments. These were, however, partially offset by continued softness in the Aviation segment.
Segment-wise Revenues
Business & Industry revenues increased 1.4% year over year to $796.2 million. Technology & Manufacturing revenues improved 5.4% year over year to $246.3 million. Education revenues of $214.2 million increased 7% from the prior-year quarter. Technical Solutions revenues increased 2.6% year over year to $125.5 million.
Aviation revenues decreased 19.7% year over year to $148.3 million.
Operating Results
Adjusted EBITDA came in at $106.6 million, up 17.1% from the prior-year quarter. Adjusted EBITDA margin rose to 7.1% from 6.1% in the year-ago quarter.
Operating expenses decreased 2.4% from the year-ago quarter to $1.27 billion. Selling, general and administrative expenses increased 35.6% from the year-ago quarter to $161.9 million.
Balance Sheet & Cash Flow
ABM Industries exited second-quarter fiscal 2021 with cash and cash equivalents of $435.7 million compared with $378.3 million at the end of the prior quarter. Long-term debt was $524.2 million compared with $573.8 million at the end of the prior quarter.
Net cash generated from operating activities totaled $125.9 million in the reported quarter. Free-cash flow came in at $117.6 million.
Dividend Payout
ABM Industries paid out a quarterly cash dividend of 19 cents per share, leading to $12.7 million of total dividend payout in the reported quarter. Additionally, the company’s board of directors announced a quarterly cash dividend of 19 cents, payable on Aug 2, 2021, to its shareholders of record as of Jul 1, 2021. This marked the 221th consecutive quarterly cash dividend declared by the company.
Fiscal 2021 Guidance
For fiscal 2021, ABM Industries raised its guidance for adjusted income from continuing operations to the range of $3.30 to $3.50 per share from the prior guidance of $3.00 - $3.25.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, ABM Industries has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, ABM Industries has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.