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

On Sep 13 2019, ABM Industries Incorporated’s (NYSE:ABM) oscillated between $36.24 and $37.50 before concluding trading period lower/higher -1.49% at $36.30. The stock recorded total trading quantity of 468,566 shares as compared to its average volume of 341,617 shares.

ABM (ABM) recently declared financial results for the third quarter of fiscal 2019.

Third Quarter Summary

  • Record third quarter revenue of $1,647.9M.
  • Organic revenue growth (which excludes the impact from ASC 853 and ASC 606) of 2.3%, primarily driven by growth within the Technical Solutions and Aviation sections.
  • Income from continuing operations of $36.5M, or $0.55 per diluted share versus $33.7M, or $0.51 per diluted share last year.
  • Adjusted income from continuing operations of $40.2M, or $0.60 per diluted share versus $38.0M, or $0.57 per diluted share last year.
  • Net income of $36.8M, or $0.55 per diluted share.
  • Adjusted EBITDA of $93.0M contrast to $88.4M last year, leading to an adjusted EBITDA margin of 5.6%.
  • Net cash provided by continuing operating activities of $57.4M for the quarter.
  • Legacy Healthcare business integrated into Business & Industry, Technical Solutions, and Education sections.
  • Results reflect the adoption of Accounting Standards Codification (“ASC”) 853 and ASC 606.  ASC 853, related to service concession arrangements, had a revenue impact of ($12.5)M predominantly in the Aviation section.  ASC 606, related to revenue from contracts with consumers, had a ($0.5)M impact to revenue and $0.02 impact to income from continuing operations per diluted share on both a GAAP and adjusted basis.

Third Quarter Results

For the third quarter of fiscal 2019, the Company achieved record revenues of about $1.6B driven by organic growth of 2.3%, not including the adoption of ASC 853 and ASC 606.  Organic revenue growth was driven primarily by growth within the Technical Solutions and Aviation sections.  Organic revenue growth was partially offset by a decline in revenue primarily within the Business & Industry including the loss of lower margin contracts.

On a GAAP basis, income from continuing operations was $36.5M, or $0.55 per diluted share, contrast to income from continuing operations of $33.7M, or $0.51 per diluted share last year.

Adjusted income from continuing operations for the third quarter of 2019 was $40.2M or $0.60 per diluted share, contrast to $38.0M, or $0.57 per diluted share for the third quarter of fiscal 2018.  Adjusted results exclude items impacting comparability.  A description of items impacting comparability can be found in the “Reconciliation of Non-GAAP Financial Measures” table.

Income from continuing operations for the quarter on both a GAAP and adjusted basis reflects higher revenue contribution from the Technical Solutions section, as well as higher margin revenue mix and benefits of improved labor management primarily within the Business & Industry section.  The Company also saw a $0.02 favorable impact related to the Company’s adoption of ASC 606.  This benefit was partially offset by a higher tax rate versus last year given an predictable decrease in the deductibility of certain taxable items.

Net income for the third quarter of 2019 was $36.8M, or $0.55 per diluted share, contrast to net income of $33.6M, or $0.51 per diluted share last year.

Adjusted EBITDA for the quarter was $93.0M contrast to $88.4M in the third quarter of fiscal 2018.  Adjusted EBITDA margin for the quarter was 5.6% versus 5.4% last year.  Adjusted results exclude items impacting comparability.

ABM return on assets ratio of the Company was 2.40% and return on equity ratio was 6.00% while its return on investment ratio was 5.10%. The stock as of last trading session moved 41.58% up from its 52 week low and was -14.93% behind its 52 week high.

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