ABM Industries Shares Gain 11% on Higher Q1 Earnings and Positive FY21 Outlook

Source: Streetwise Reports   03/10/2021

ABM Industries Inc. shares reached a new 52-week high after the building services company reported positive YoY gains in earnings and cash flow and expectations for further improvement in FY/21.

Integrated and stand-alone facility solutions company ABM Industries Inc. (ABM:NYSE) yesterday announced financial results for the first quarter of fiscal year 2021 ended January 31. 2021.

ABM Industries’ President and CEO Scott Salmirs remarked, “Our strong performance for the first quarter underscores our clients’ focus on protecting their people and spaces. Revenue performance exceeded our expectations as we saw an acceleration of higher margin, Work Orders for virus protection and EnhancedClean™ services…Our industry-leading execution during these challenging times led to record first quarter profit and earnings results.”

“While the first quarter has historically been a period of cash flow usage, we have achieved more than $45 million in cash flow year-to-date.” CEO Salmirs added.

The company reported that in Q1/21 revenues decreased 7.5% to $1.492 billion, compared to $1.613 billion in Q1/20. The firm indicated that negative change in revenue was mostly due to COVID-19 related issues and client disruptions in the scope of services required and facility access limitations within its Aviation and Technical Solutions segments. ABM noted that these declines were partially offset by increased demand for disinfection-related work orders and EnhancedClean™ services in both the Business & Industry and Technology & Manufacturing segments.

The firm stated that adjusted EBITDA in Q1/21 totaled $123.7 million, compared to $68.8 million in Q1/20 and that the adjusted EBITDA margin in Q1/21 improved to 8.3%, versus 4.3% in Q1/20.

The adjusted income from continuing operations for the first quarter of 2021 was $68.3 million, or $1.01 per diluted share, compared to $26.2 million, or $0.39 per diluted share for the first quarter of fiscal 2020.

The company reported GAAP income from continuing operations of $74.6 million, or $1.10 per diluted share in Q1/21, compared to $27.9 million, or $0.41 per diluted share in Q1/20.

The company indicated that as January 31, 2021, it held cash and cash equivalents totaling $378.3 million on its balance sheet. The firm stated that at the end of Q1/21 it had a total debt of $850.6 million, including $151.0 million in standby letters of credit.

The firm added that in Q1/21 it paid its 219th consecutive quarterly cash dividend of $0.19 per common share for a total distribution of $12.7 million and noted that its Board of Directors also recently declared a cash dividend of $0.19 per common share payable to shareholders of record on April 1, 2021, to be paid on May 3, 2021, extending the dividend streak to 220 consecutive fiscal quarters.

The company also provided some forward guidance on earnings and stated that for FY/21 it expects GAAP income from continuing operations will be $2.85-3.10 per diluted share and adjusted income from continuing operations will be in the range of $3.00-3.25 per diluted share.

ABM Industries is headquartered in New York City and is large provider of integrated facility solutions. The company’s operations are conducted through five main business segments including Janitorial, Facility Services, Parking, Building & Energy Solutions, and other. The firm provides services in all types of markets in urban, suburban and rural settings to properties of all types and sizes including airports, commercial buildings, data centers, hospitals, manufacturing plants and schools. Specific integrate or stand-alone services provided by ABM include electrical & lighting, energy solutions, facilities engineering, HVAC & mechanical, janitorial, landscape & turf, mission critical solutions and parking. The company has yearly revenues of around US$6 billion and employs over 100,000 people in more than 350 offices throughout the U.S. and several international locations.

ABM Industries began the day with a market capitalization of around $3.2 billion with approximately 67.08 million shares outstanding and a short interest of about 1.7%. ABM shares opened 8% higher today at $51.20 (+$3.86, +8.15%) over yesterday’s $47.34 closing price and reached a new 52-week high this morning of $55.48. The stock has traded today between $50.0 and $55.48 per share and is currently trading at $52.52 (+$5.18, +10.94%).

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