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ABM Industries Announces Third Quarter 2012 Financial Results

ABM (NYSE:ABM), a leading provider of integrated facility solutions, today announced financial results for the fiscal 2012 third quarter that ended July 31, 2012.

Three Months Ended

Nine Months Ended
(in millions, except per share data)

July 31,

July 31,

  2011   (Decrease) 2012     2011     (Decrease)
Revenues     $ 1,079.2     $ 1,076.2     0.3 % $ 3,210.3     $ 3,165.5     1.4 %
Income from continuing operations $ 12.6 $ 27.9 (54.8 )% $ 35.0 $ 50.5 (30.7 )%
Income from continuing operations per diluted share     $ 0.23     $ 0.51     (54.9 )% $ 0.64     $ 0.93     (31.2 )%
Adjusted income from continuing operations $ 20.4 $ 27.9 (26.9 )% $ 48.4 $ 54.6 (11.4 )%
Adjusted income from continuing operations per diluted share     $ 0.37     $ 0.51     (27.5 )% $ 0.88     $ 1.01     (12.9 )%
Net income $ 12.6 $ 27.9 (54.9 )% $ 34.9 $ 50.5 (30.8 )%
Net income per diluted share     $ 0.23     $ 0.51     (54.9 )% $ 0.64     $ 0.93     (31.2 )%
Net cash provided by continuing operating activities     $ 27.8     $ 51.0     (45.5 )% $ 82.2     $ 82.6     (0.5 )%
Adjusted EBITDA     $ 49.8     $ 54.9     (9.3 )% $ 126.2     $ 132.7     (4.9 )%
(This release refers to non-GAAP financial measures described as "Adjusted EBITDA", "Adjusted income from continuing operations", and "Adjusted income from continuing operations per diluted share" (or "Adjusted EPS"). Refer to the accompanying financial tables for supplemental financial data and corresponding reconciliation of these non-GAAP financial measures to certain GAAP financial measures.)

Executive Summary:
  • Revenues were $1.08 billion in the fiscal 2012 third quarter, flat compared to $1.08 billion last year, due primarily to the continued adverse impact from contract cancellations of government-related business in the Facility Solutions segment.
  • Janitorial, Parking & Security segments achieved organic growth.
  • Net income for the fiscal 2012 third quarter was $0.23 per diluted share compared to $0.51 per diluted share in the prior year. The decrease is from a $7.8 million after-tax or $0.14 per diluted share increase in insurance expense, primarily for a non-cash charge relating to claims from prior years and because fiscal 2011 included a benefit from lower in-year insurance rates. The third quarter was also impacted by a $2.2 million after-tax or $0.04 per diluted share increase in payroll due to an extra working day in the third quarter fiscal 2012 (66 days compared to 65 days). In addition, the third quarter of fiscal 2011 includes a tax benefit of $4.7 million or $0.09 per diluted share.
  • Adjusted income from continuing operations for the fiscal 2012 third quarter was $20.4 million, or $0.37 per diluted share, compared to $27.9 million, or $0.51 per diluted share, in the third quarter of fiscal 2011. Adjusted income from continuing operations excludes the $5.6 million or $0.10 per diluted share non-cash charge for an increase in the Company’s self-insurance reserves pertaining to prior year’s claims.
  • Operating profit in Parking and Security was up 8.3% and 5.3%, respectively.
  • Net cash flow from continuing operations was $82.2 million for the first nine months of fiscal 2012, compared to $82.6 million for the same period last year.
  • Outstanding borrowings under the Company’s credit facility have been reduced by $48.0 million since the end of fiscal 2011.

Third Quarter Results and Recent Events

“Our third quarter operational results were disappointing and fell short of our expectations primarily due to a shortfall of $25 million in expected sales in the quarter for our Government business and no contribution from the DLITE (Defense Language Interpretation and Translation Enterprises) program to date,” said ABM’s president and chief executive officer Henrik Slipsager. “We generated higher revenues in our Janitorial, Security and Parking segments and continue to build momentum in our energy business, but the profit from this growth was offset by the impact of lower government spending in our Facility Solutions segment and the additional day of labor expense in Janitorial. Excluding the government business, our consolidated revenue grew approximately 1.5% and our Facility Solutions segment produced an approximately 8% increase in operating profit. Janitorial slightly increased organic revenues year-over-year and their operating profit was essentially flat excluding the $3.7 million adverse impact from the additional working day. Parking and Security had solid third quarter performance, producing increases in both revenue and operating profit. Although sales momentum isn’t progressing at the pace we had early anticipated, we continue to make good progress in a number of verticals with recent client wins in high-technology and aviation, and our building and energy solutions business achieved organic sales growth of 10%.”

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