ABM Posts 3Q Double-Digit Revenue Hike

Contributed by BSM Staff

NEW YORK -- Continued broad-based demand helped ABM, a provider of facility solutions, post a double-digit increase in revenues in the third quarter of fiscal 2021.

Still, the company said it lost $13.7 million, or 20 cents per share, on revenues of $1.54 billion, compared to a profit of $56 million, or $0.83 a share on sales of $1.39 billion in the same quarter last year.

Scott Salmirs, President and Chief Executive Officer of ABM Industries said, “ABM generated strong third quarter financial results, driven by continued broad-based demand for our services and efficient execution within an improving business environment.”

Each of the company’s business segments achieved year-over-year growth, led by Aviation and Technical Solutions, along with continued solid growth in Business & Industry. The loss was attributed to higher corporate expenses, primarily reflecting planned investments in information technology, as well as higher personnel costs than the prior year due to furlough and related cost-saving actions taken at the beginning of the pandemic.

“Demand for our virus protection services remained strong, a trend that we expect to continue as clients value the health and safety benefits associated with frequent cleaning and disinfecting of high traffic locations,” said Salmirs.

“Higher revenues, favorable mix, labor efficiencies, as well as lower interest expense led to a 20 percent gain in adjusted earnings per share to $0.90. At the same time, we continued to execute on our long-term growth strategy by making investments in people and in technology that enhance our capabilities.”

He added, “Our recently-announced acquisition of Able Services is expected to close by the end of September, and we will be delighted to welcome their talented and dedicated team to ABM. This transaction strengthens our engineering capabilities and expands our janitorial services, enabling us to better serve our clients with a broader array of services and solutions. We expect the addition of Able will be immediately accretive to our adjusted earnings per share, and we have identified $30 million to $40 million in operating synergies, the majority of which we expect to achieve in the first year after the transaction closes.”

For the third quarter of fiscal 2021, the Company reported revenue of $1.54 billion, up 10.7 percent versus the third quarter of fiscal 2020.

Year-over-year revenue growth in the Business & Industry segment benefited from the gradual re-occupancy of offices and the return of fans to sports venues. Aviation revenue grew more than 50 percent, and segment operating margin was higher than pre-pandemic levels, driven by increased domestic air travel and a favorable mix of airport business.

Technical Solutions’ revenues and operating income increased at double-digit rates, reflecting effective execution on a growing backlog of energy efficiency projects and greater access to client sites. Client demand for disinfection-related services remained elevated, driving revenue growth and enhancing operating profitability.

Adjusted income from continuing operations for the third quarter of 2021 was $61.3 million, or $0.90 per diluted share, increases of 22 percent and 20 percent, respectively, from the $50.1 million, or $0.75 per diluted share for the third quarter of fiscal 2020.

The company had cash and cash equivalents totaling $505.4 million as of July 31, 2021.

Salmirs concluded, “ABM has performed exceptionally well through the first nine months of our fiscal year, reflecting excellent execution on the part of ABM’s team members as we accommodated heightened demand for our specialized services and managed labor scarcity in an evolving business environment. Our outlook for the fourth quarter is positive, supported by current business trends, and we look forward to joining with Able Services in a transaction that expands our core businesses, enhances our capabilities and accelerates our next phase of growth.”

The company has assets of $3.9 billion, and liabilities of $2.3 billion.