Attention Seeking Stock: ABM Industries Incorporated (NYSE: ABM)

On Monday, Shares of ABM Industries Incorporated (NYSE: ABM) showed the bullish trend with a higher momentum of 1.79% and ended its trading session at $31.07. The company traded total volume of 86,610 shares as contrast to its average volume of 606.29K shares. The company has a market value of $1.99B and about 65.05M shares outstanding.

ABM (ABM), a leading provider of facility solutions, recently declared financial results for the third quarter of fiscal 2018.

Third Quarter Summary

  • Record total revenue of $1,624.30M, reflecting growth of 23.2%.
  • Revenue related to the 2017 acquisition of GCA Services Group (“GCA”) of $260.00M, predominantly reflected in the Education, Technology & Manufacturing, and Business & Industry segments. Organic revenue growth of 4.5% mainly driven by growth within the Business & Industry segment, which includes a large UK-related contract win from September 2017. Strong Technical Solutions organic revenue growth of 14.0%, which drove greater operating leverage. Aviation operating results for the third quarter of fiscal 2018 reflect the absence of a specific, unprofitable contract, which was terminated and revealed during the third quarter of fiscal 2017.
  • Income from continuing operations of $33.70M, or $0.51 per diluted share, was influenced by higher amortization, interest expense and higher share count related to the GCA acquisition.
  • Adjusted income from continuing operations of $38.00M, or $0.57 per diluted share, resulting in an 11.8% increase as compared to last year.
  • Adjusted EBITDA increased 54.3% to $88.40M contrast to $57.30M, reflecting the Company’s GCA acquisition in 2017.  These results led to an adjusted EBITDA margin of 5.4% as compared to 4.3% last year.
  • Net cash offered by continuing operating activities increased to $74.20M for the quarter, reflecting better working capital management and the contribution from GCA. Overall results reflect the absence of Government Services, which was sold on May 31, 2017.

Third Quarter Results:

For the third quarter of fiscal 2018, the Company achieved record revenues of about $1.60B driven by the acquisition of GCA, and organic growth of 4.5% mainly within the Business & Industry segment, Technical Solutions and Technology & Manufacturing segments.  Organic growth was partially offset by the Aviation segment.  The GCA acquisition offered $260.00M of incremental revenues, which is predominantly reflected in the Education, Technology & Manufacturing, and Business & Industry segments in the amounts of $143.50M, $59.60M, and $45.30M, respectively.

On a GAAP basis, income from continuing operations was $33.70M, or $0.51 per diluted share, contrast to income from continuing operations of $32.90M, or $0.58 per diluted share last year.  Income from continuing operations for the third quarter of fiscal 2017 reflected favorable items impacting comparability driven by expiring statutes of limitations for certain tax positions.

Adjusted income from continuing operations for the third quarter of 2018 was $38.00M, or $0.57 per diluted share, contrasts to $29.10M, or $0.51 per diluted share for the third quarter of fiscal 2017.  Adjusted results exclude items impacting comparability.

Weighted average shares outstanding on a diluted basis for the quarter were 66.30M, a boost of about 10.0M shares, mainly because of the GCA transaction.

Net income for the third quarter of 2018 was $33.60M, or $0.51 per diluted share, contrast to net income of $32.90M, or $0.58 per diluted share last year.

Adjusted EBITDA for the quarter was $88.40M contrast to $57.30M in the third quarter of fiscal 2017, mainly as a result of the GCA acquisition.  Adjusted EBITDA margin for the quarter was 5.4% as compared to 4.3% last year.  Adjusted results exclude items impacting comparability.  A description of items impacting comparability can be found in the “Reconciliation of Non-GAAP Financial Measures” table.

Liquidity & Capital Structure:

The Company ended the quarter with total debt, counting standby letters of credit, of $1.20B. Total debt to proforma adjusted EBITDA was about 3.65x, reflecting the Company’s focus on free cash flow conversion as well as its continued reduction of leverage to more historical levels by fiscal 2020.

In addition, the Company paid a quarterly cash dividend of $0.175 per common share for a total distribution of $11.50M.

The Company offered net profit margin of 1.30% while its gross profit margin was 10.70%. ROE was recorded as 5.90% while beta factor was 0.75. The stock, as of recent close, has shown the weekly downbeat performance of -4.03% which was maintained at -19.09% in this year.

Penny Cook

Penny Cook is passionate about business and finance news with over 5 years in the industry starting as a writer working her way up into senior positions. She is the driving force behind www.nasdaqjournal.com with a vision to broaden the company’s readership throughout 2016. Cook is an editor and reporter of “Services” Category.

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