ABM Q1 Earnings: Sales And EPS Beat, Cash Flow Challenges, Outlook Boost And More

ABM Industries Inc. ABM shares are trading higher after the company reported first-quarter FY25 earnings.

Sales grew 2.2% year over year to $2.11 billion, beating the consensus of $2.09 billion.

Revenue growth was driven by Technical Solutions (+22% Y/Y) and Aviation (+8.2% Y/Y), with Education revenue rose 2.4% Y/Y.

Operating profit rose 4.7% Y/Y to $77.6 million in the quarter. Adjusted EBITDA rose to $120.6 million from $116.7 million a year ago quarter, with the adjusted EBITDA margin stood at 5.9% (flat Y/Y).

Adjusted EPS of 87 cents beat the consensus of 78 cents.

Net cash used in operating activities was $106.2 million, and free cash flow was negative $122.9 million, primarily reflecting a temporary increase in working capital due to the transition to the new ERP system.

As of January-end, ABM held cash and equivalents of $59.0 million.

ABM declared a cash dividend of $0.265 per common share, payable on May 5, 2025, to shareholders of record on April 3, 2025.

Scott Salmirs, President & Chief Executive Officer, said, “We also successfully launched our cloud-based enterprise resource planning (ERP) system in the first quarter for B&I and M&D. While we encountered temporary delays in cash flow, we anticipate improvement next quarter and full normalization in the second half.”

”Once fully implemented, we expect this system will drive significant cost efficiencies, enhance our ability to capture synergies from M&A, and provide real-time analytics and reporting to unlock commercial opportunities."

Outlook: ABM raised the lower end of its FY25 adjusted EPS outlook by $0.05, now expecting it to be $3.65 to $3.80 versus the consensus of $3.73.

The company continues to see an adjusted EBITDA margin of 6.3%- 6.5% and anticipates interest expense of $80 million – $84 million.

Salmirs added, “We are confident that the commercial real estate markets we serve, particularly high-quality office buildings, will return to growth in 2025. This optimism is supported by a 24% sequential increase in U.S. commercial office leasing activity during the fourth quarter of the calendar year.”

”Additionally, we expect our other end markets to remain broadly healthy. Coupled with our strong sales pipeline and market-leading technology, these factors strengthen our confidence in achieving our 2025 objectives.”

Investors can gain exposure to the stock via VanEck Environmental Services ETF EVX.

Price Action: ABM shares are up 0.86% at $50.26 premarket at the last check Wednesday.

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