ABM Industries Reports Q2 Revenue Growth Shy Of $2B Consensus, Credits RavenHolt

ABM Industries, Inc ABM reported Q2 FY23 revenue growth of 4.5% Y/Y to $1.98 billion, missing the consensus of $2 billion.

• Revenues growth comprised 2.3% organic growth and 2.2% from acquisitions. 
• Organically, revenue grew 22.2% Y/Y in Aviation, 6.0% Y/Y in Education and 4.5% Y/Y in Manufacturing & Distribution segments.
• However, organically, revenues declined 6% Y/Y in Technical Solutions and 2% Y/Y in Business & Industry segments.
• Adjusted EPS of $0.90 beat the consensus of $0.86.
• Adjusted EBITDA rose 15.2% Y/Y to $137 million, with margins improving to 7.2% from 6.5% a year ago, primarily reflecting the benefit from the parking project, higher pricing and controlled costs.
• ABM held $71.2 million in cash and cash equivalents. 
• Operating cash flow stood at $26 million vs. cash used in operating activities of $(43.9) million a year ago.
• Dividend: The company declared a cash dividend of $0.22 per common share, payable on Aug. 7, to shareholders of record as on July 6.
• FY23 Outlook: ABM reiterates guidance for adjusted EPS to $3.40 - $3.60 versus the consensus of $3.50.
• Adjusted EBITDA margin is now expected to be in the range of 6.5% to 6.8% (vs 6.4% to 6.8% earlier).
• ABM chief executive Scott Salmirs says revenue growth was driven by the RavenVolt acquisition, and also derived from our diversified end-markets, including favorable market dynamics in aviation, education and manufacturing and distribution.
• "We remain on target to achieve our 2023 financial goals, despite a more challenging than anticipated macro-environment, including a soft commercial real estate market," he said.

Price Action: ABM shares are trading higher by 4.75% at $47.45 premarket on the last check on Tuesday.