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ABM Industries (ABM) Beats on Q2 Earnings, Narrows EPS View

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ABM Industries Inc. (ABM - Free Report) second-quarter fiscal 2019 adjusted earnings (from continuing operations) of 47 cents per share beat the Zacks Consensus Estimate by 6 cents and were flat year over year. The bottom line benefited from higher margin revenue contribution from the Technical Solutions, Business & Industry and Technology & Manufacturing segments and the impact of the adoption of Accounting Standards Codification ("ASC") 606. This was, however, partially offset by higher tax rate.

Total revenues of $1.59 billion missed the consensus estimate by $10 million but increased 0.9% year over year on the back of 1.7% organic revenue growth (excluding the adoption of ASC 606 and ASC 853).

Organic revenues were driven by growth within Technical Solutions and Aviation segments, which was partially offset by decline in revenues at Business & Industry, Healthcare and Technology & Manufacturing segments.

So far this year, shares of ABM Industries have gained 23.9% compared with the industry’s rise of 17.3%.

 

 

Revenues by Segment

Business & Industry revenues (47% of total revenues) decreased 0.2% year over year to $753.4 million. Technology & Manufacturing revenues (14%) declined 1.5% year over year to $224.3 million. Education revenues (13%) of $205.6 million decreased 0.6% from the prior-year quarter. Healthcare revenues (4%) decreased 5.1% year over year to $66.3 million.

Technical Solutions revenues (8%) increased 17.6% year over year to $127.6 million.  Aviation revenues (16%) increased 0.3% year over year to $250 million.

Operating Results

Adjusted EBITDA of $84.7 million increased 2% year over year. Adjusted EBITDA margin of 5.3% was flat year over year. Adjusted income from continuing operations was $31.5 million, up 1.1% year over year. Operating expenses increased 0.6% from the year-ago quarter to $1.41 billion. Selling, general and administrative expenses increased 0.6% from the year-ago quarter to $108.4 million.

ABM Industries Incorporated Price, Consensus and EPS Surprise

 

ABM Industries Incorporated Price, Consensus and EPS Surprise

ABM Industries Incorporated price-consensus-eps-surprise-chart | ABM Industries Incorporated Quote

Balance Sheet & Cash Flow

ABM Industries exited second-quarter fiscal 2019 with cash and cash equivalents of $53.7 million compared with $30.6 million at the end of the prior quarter. Long-term debt was $905.5 million compared with $945.8 million at the end of the prior quarter. Net cash provided by operating activities was $95.8 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 Aug 5, 2019 to shareholders of record as of Jul 5. This marks the 213th consecutive quarterly cash dividend declared by the company.

Fiscal 2019 Guidance

ABM Industries narrowed its fiscal 2019 guidance. The company now expects adjusted income from continuing operations in the range of $1.95-$2.05 per share compared with the previously guided range of $1.90-$2.05.

Zacks Rank & Stocks to Consider

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.

A few better-ranked stocks in the broader Zacks Business Services sector are Navigant Consulting , FLEETCOR Technologies (FLT - Free Report) and NV5 Global (NVEE - Free Report) . While Navigant Consulting sports a Zacks Rank #1, FLEETCOR and NV5 Global carry a Zacks Rank #2 (Buy).

Long-term expected EPS (three to five years) growth rate for Navigant Consulting, FLEETCOR and NV5 Global is 13.5%, 15.4% and 20%, respectively.

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