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Adjusted earnings from continuing operations came in at 60 cents per share, which outpaced the consensus mark by more than 100% and the year-ago quarter’s reported figure by 27.7%. The bottom line benefited from higher margin improvement in Work Orders. Additionally, the company managed its direct labor and related personnel costs well to align with the operating environment and reduced certain corporate expenses such as information technology costs and share-based compensation.
Total revenues of $1.49 billion beat the consensus estimate by 3.7% but declined 6.2% from the year-ago quarter. The year-over-year decline was due to coronavirus-related disruptions, facility closures, and service scope changes, mainly within the Aviation, Technical Solutions and Education segments. These were, however, partially offset by huge demand for COVID-19 related Work Orders (tags) in the Business & Industry, Technology & Manufacturing and Education segments.
ABM Industries Incorporated Price, Consensus and EPS Surprise
Business & Industry revenues (53% of total revenues) decreased 2.7% year over year to $785.6 million. Aviation revenues (12%) decreased 26.1% year over year to $184.7 million. Education revenues (13%) of $200.1 million decreased 4.4% from the prior-year quarter. Technical Solutions revenues (8%) decreased 10% year over year to $122.3 million.
Technology & Manufacturing revenues (16%) improved 4.2% year over year to $233.7 million.
Operating Results
Adjusted EBITDA came in at $91 million compared with $84.7 million in the prior-year quarter. Also, adjusted EBITDA margin came in at 6.1% compared with 5.3% in the year-ago quarter.
Adjusted income from continuing operations was $40.4 million, up 28.3% year over year. Operating expenses decreased 7.6% from the year-ago quarter to $1.31 billion. Selling, general and administrative expenses increased 10.1% from the year-ago quarter to $119.4 million.
Balance Sheet & Cash Flow
ABM Industries exited second-quarter fiscal 2020 with cash and cash equivalents of $555.9 million compared with $69.8 million at the end of the prior quarter. Long-term debt was $1.11 billion compared with $786.3 million at the end of the prior quarter.
Net cash used in operating activities totaled $162.2 million in the reported quarter. Free cash flow came in at $154.6 million.
Dividend Payout & Share Repurchases
ABM Industries paid out a quarterly cash dividend of 18.5 cents per share, leading to $12.3 million of total dividend payout in the reported quarter. Additionally, the company’s board of directors announced a cash dividend of 18.5 cents per share, to be paid out on Aug 3, 2020, to its shareholders of record as of Jul 2. This marked the 217th consecutive quarterly cash dividend declared by the company.
During the reported quarter, ABM Industries repurchased nearly 0.2 million shares for $5.1 million. In March 2020, the company had suspended all further share repurchases. As of Apr 30, 2020, the company had $144.9 million authorized shares available for repurchase under its $150 million share repurchase program.
Fiscal 2020 Guidance
On Mar 26, 2020, ABM Industries had withdrawn its previously announced fiscal 2020 guidance due to the uncertainty prevailing in the market as a result of the coronavirus outbreak.
S&P Global Inc.’s (SPGI - Free Report) first-quarter 2020 adjusted earnings per share of $2.73 beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel. The stock currently carries a Zacks Rank #3.
IQVIA Holdings Inc.’s (IQV - Free Report) first-quarter 2020 adjusted earnings per share of $1.50 beat the consensus mark by 1.4% but decreased 1.9% on a year-over-year basis. The reported figure lies within the guided range of $1.46-$1.51. The stock currently carries a Zacks Rank #3.
Insperity, Inc.’s (NSP - Free Report) first-quarter 2020 adjusted earnings of $1.70 per share beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70. The stock currently carries a Zacks Rank #3.
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ABM Industries (ABM) Q2 Earnings & Revenues Top Estimates
ABM Industries Inc.(ABM - Free Report) reported strong second-quarter fiscal 2020 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings from continuing operations came in at 60 cents per share, which outpaced the consensus mark by more than 100% and the year-ago quarter’s reported figure by 27.7%. The bottom line benefited from higher margin improvement in Work Orders. Additionally, the company managed its direct labor and related personnel costs well to align with the operating environment and reduced certain corporate expenses such as information technology costs and share-based compensation.
Total revenues of $1.49 billion beat the consensus estimate by 3.7% but declined 6.2% from the year-ago quarter. The year-over-year decline was due to coronavirus-related disruptions, facility closures, and service scope changes, mainly within the Aviation, Technical Solutions and Education segments. These were, however, partially offset by huge demand for COVID-19 related Work Orders (tags) in the Business & Industry, Technology & Manufacturing and Education segments.
ABM Industries Incorporated Price, Consensus and EPS Surprise
ABM Industries Incorporated price-consensus-eps-surprise-chart | ABM Industries Incorporated Quote
Revenues by Segment
Business & Industry revenues (53% of total revenues) decreased 2.7% year over year to $785.6 million. Aviation revenues (12%) decreased 26.1% year over year to $184.7 million. Education revenues (13%) of $200.1 million decreased 4.4% from the prior-year quarter. Technical Solutions revenues (8%) decreased 10% year over year to $122.3 million.
Technology & Manufacturing revenues (16%) improved 4.2% year over year to $233.7 million.
Operating Results
Adjusted EBITDA came in at $91 million compared with $84.7 million in the prior-year quarter. Also, adjusted EBITDA margin came in at 6.1% compared with 5.3% in the year-ago quarter.
Adjusted income from continuing operations was $40.4 million, up 28.3% year over year. Operating expenses decreased 7.6% from the year-ago quarter to $1.31 billion. Selling, general and administrative expenses increased 10.1% from the year-ago quarter to $119.4 million.
Balance Sheet & Cash Flow
ABM Industries exited second-quarter fiscal 2020 with cash and cash equivalents of $555.9 million compared with $69.8 million at the end of the prior quarter. Long-term debt was $1.11 billion compared with $786.3 million at the end of the prior quarter.
Net cash used in operating activities totaled $162.2 million in the reported quarter. Free cash flow came in at $154.6 million.
Dividend Payout & Share Repurchases
ABM Industries paid out a quarterly cash dividend of 18.5 cents per share, leading to $12.3 million of total dividend payout in the reported quarter. Additionally, the company’s board of directors announced a cash dividend of 18.5 cents per share, to be paid out on Aug 3, 2020, to its shareholders of record as of Jul 2. This marked the 217th consecutive quarterly cash dividend declared by the company.
During the reported quarter, ABM Industries repurchased nearly 0.2 million shares for $5.1 million. In March 2020, the company had suspended all further share repurchases. As of Apr 30, 2020, the company had $144.9 million authorized shares available for repurchase under its $150 million share repurchase program.
Fiscal 2020 Guidance
On Mar 26, 2020, ABM Industries had withdrawn its previously announced fiscal 2020 guidance due to the uncertainty prevailing in the market as a result of the coronavirus outbreak.
Currently, ABM Industries carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
S&P Global Inc.’s (SPGI - Free Report) first-quarter 2020 adjusted earnings per share of $2.73 beat the consensus mark by 15.7% and improved 29.4% year over year on the back of revenue growth, benefits of productivity initiatives and reduced business travel. The stock currently carries a Zacks Rank #3.
IQVIA Holdings Inc.’s (IQV - Free Report) first-quarter 2020 adjusted earnings per share of $1.50 beat the consensus mark by 1.4% but decreased 1.9% on a year-over-year basis. The reported figure lies within the guided range of $1.46-$1.51. The stock currently carries a Zacks Rank #3.
Insperity, Inc.’s (NSP - Free Report) first-quarter 2020 adjusted earnings of $1.70 per share beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70. The stock currently carries a Zacks Rank #3.
Zacks’ Single Best Pick to Double
From thousands of stocks, 5 Zacks experts each picked their favorite to gain +100% or more in months to come. From those 5, Zacks Director of Research, Sheraz Mian hand-picks one to have the most explosive upside of all.
This young company’s gigantic growth was hidden by low-volume trading, then cut short by the coronavirus. But its digital products stand out in a region where the internet economy has tripled since 2015 and looks to triple again by 2025.
Its stock price is already starting to resume its upward arc. The sky’s the limit! And the earlier you get in, the greater your potential gain.
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