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ABM Industries (ABM) Beats Q4 Earnings & Revenue Estimates

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ABM Industries Inc. (ABM - Free Report) reported strong fourth-quarter fiscal 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings (from continuing operations) of 58 cents per share surpassed the Zacks Consensus Estimate by a penny and increased 56.7% year over year. The bottom line benefited from lower tax rates (as a result of the Tax Cuts and Jobs Act) and higher revenue contribution. These were, however, partially offset by the impact of higher wage and overtime costs resulting from a tightening labor market.

Total revenues of $1.64 billion beat the consensus mark by $1.2 million and increased 10.1% year over year. The top line was driven by contributions from acquisition of GCA Services Group and organic growth.   

Revenues related to GCA acquisition came in at $90.4 million, which was reflected in the Education ($51.6 million), the Technology & Manufacturing ($20.1 million), and the Business & Industry segments ($14.4 million).

Organic growth was 4.2%, mainly driven by Business & Industry, Technical Solutions and Technology & Manufacturing segments, which was partially offset by negative organic performance in the Aviation and Healthcare segments

So far this year, shares of ABM Industries have declined 28.2% compared with 5.7% decline of the industry it belongs to.

 

Revenues by Segment

Business & Industry revenues (45% of total revenues) increased 7.8% year over year to $737.1 million. Technology & Manufacturing revenues (14%) climbed 15.4% year over year to $234.2 million. Education revenues (13%) of $214 million increased 30.8% from the prior-year quarter. Technical Solutions revenues (8%) increased 14.8% year over year to $131.4 million. Healthcare revenues (4%) increased 1% year over year to $66.6 million. Aviation revenues (16%) declined 0.7% year over year to $265.5 million.

ABM Industries Incorporated Revenue (TTM)

Adjusted EBITDA of $89.9 million increased 27% year over year due to the GCA acquisition. Adjusted EBITDA margin improved 73 basis points (bps) to 5.5%.

Adjusted income from continuing operations was $38.8 million, up 65.1% year over year. Adjusted operating income margin was 2.3%, up 80 bps from the prior-year quarter.

Operating expenses increased 9.6% from the year-ago quarter to $1.46 billion. Selling, general and administrative expenses decreased 19% from the year-ago quarter to $111.2 million.

ABM Industries Incorporated Price, Consensus and EPS Surprise

ABM Industries exited fiscal fourth-quarter fiscal 2018 with cash and cash equivalents of $39.1 million compared with $46 million at the end of the prior quarter. Long-term debt was $902 million compared with $998.4 million at the end of the prior quarter. Net cash provided by operating activities was $93.3 million in the reported quarter.

Dividend Payment

ABM Industries paid a quarterly cash dividend of 17.5 cents per share, leading to $11.5 million of total dividend payment in the reported quarter. Additionally, the company’s board of directors approved a 2.9% dividend hike, raising the quarterly cash dividend to 18 cents per share. The dividend will be paid onFeb 4, 2019 to shareholders of record as of Jan 3, 2019. This marks the 211th consecutive quarterly cash dividend declared by the company.

Fiscal 2019 Guidance

ABM Industries unveiled 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 $2.04 exceeds the midpoint of the guided range by 6.5 cents.

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.

Investors interested in the broader Zacks Business Services  sector are keenly awaiting earnings reports from key players like Booz Allen Hamilton (BAH - Free Report) , Republic Services (RSG - Free Report) and TransUnion (TRU - Free Report) .  While Booz Allen Hamilton will report third-quarter fiscal 2019 results on Feb 1, Republic Services and TransUnion will release their respective fourth-quarter 2018 results on Feb 7 and Feb 14.

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