Why ABM Industries Stock Is Falling Today

ABM Industries Incorporated ABM reported Q3 FY23 revenue growth of 3.4% Y/Y to $2.028 billion, beating the consensus of $2.01 billion.

Adjusted EPS of $0.79 missed the consensus of $0.89.

Revenues growth comprised 2.5% organic growth and 0.9% growth from acquisitions.

Organically, revenue grew 17% Y/Y in Aviation, 6% in Education and 7% in Manufacturing and distribution segments.

However, organically, revenues declined 6% in Technical Solutions and 1% Y/Y in Business & Industry segments.

Adjusted EBITDA of $125.3 million was essentially flat with the prior year. Adjusted EBITDA margin for the quarter was 6.4% versus 6.6% last year. 

Net income margin was 4.8% compared to 2.9% last year. The change in margin was largely attributable to inefficiencies related to project delays in ATS and the impact of lower volume in B&I.

The company exited the quarter with cash and equivalents worth $97.7 million. 

Dividend: The company declared a cash dividend of $0.22 per common share payable on November 6 to shareholders of record on October 5.

FY23 Outlook: ABM narrowed FY23 adjusted EPS guidance range to $3.40-$3.50, compared to the prior forecast of $3.40-$3.60 and consensus of $3.52.

The company's expectations for an adjusted EBITDA margin of 6.5% to 6.8% remain unchanged.

"While we believe the delayed project starts in Technical Solutions are transitory and should be resolved in fiscal 2024, we expect that the commercial real estate market, particularly commercial office building occupancy, will likely remain soft throughout 2024," said Scott Salmirs, ABM's President & Chief Executive Officer.

Price Action: ABM shares are trading lower by 5.02% at $42.56 premarket on the last check on Thursday.