ABM Industries has announced an optimistic adjustment to its fiscal 2024 earnings outlook, reporting results that exceeded analysts’ expectations for the third quarter. This positive development comes after a notable double-digit revenue growth within the aviation and technical solutions segments, signaling robust performance in these areas. The facility solutions provider, which specializes in diverse services including janitorial and engineering solutions, anticipates full-year adjusted earnings in the range of $3.48 to $3.55 per share.
This update surpasses the company's earlier projections of $3.40 to $3.50. Analysts surveyed by Capital IQ had predicted normalized earnings per share (EPS) of $3.47, reflecting a consensus that aligned with the company’s optimism. For the three-month period ending July 31, ABM Industries reported adjusted earnings per share of $0.94, a notable increase from $0.79 in the same quarter of the previous year, and well above the estimated consensus of $0.85 by Capital IQ.
Revenue for this quarter climbed 3.3% year-over-year to $2.09 billion, exceeding market expectations which had anticipated $2.04 billion. However, the company's financials also revealed a stark contrast when viewed on a GAAP basis, with net income per share experiencing a staggering decline of 95%.
This drastic drop was primarily influenced by a $73.2 million expense associated with the contingent consideration for the acquisition of micro-grid systems company Ravenvolt, a transaction that was finalized in 2022. In the aftermath of these announcements, ABM’s stock experienced a decrease of 6.3% during Friday's trading session, reflecting the mixed nature of the financial results. Chief Executive Officer Scott Salmirs expressed his thoughts on the third-quarter performance, noting that the results were modestly above expectations and reinforcing confidence in sustained performance for the rest of the fiscal year.
Salmirs stated, "Our third quarter results support our increased full-year outlook." Despite the overall positive projections, not all segments within the company mirrored the same growth trajectory. Revenue from the business and industry segment saw a decline of 1.1% year-over-year, settling at $1.01 billion.
This reduction was primarily attributed to the ongoing challenges faced in the commercial real estate market, which has struggled with softness affecting demand for facility service providers. On a brighter note, the aviation segment achieved an impressive revenue growth of 13%, reaching $268.4 million.
Meanwhile, the education sector reported a 4.2% increase in revenue, totaling $228.3 million. Additionally, the technical solutions division experienced substantial growth, with sales surging 25% to $209.7 million, buoyed by advancements in their micro-grid service line. Salmirs further highlighted the company’s commitment to leveraging technology for enhanced service delivery, stating, "We are pleased with the progress we have made delivering our core janitorial and engineering services through advanced use of data and analytics.
We have begun to see the benefits of this technology in terms of improved efficiency and client outcomes, and look forward to more broadly implementing these newly developed tools." As of recent market signals, ABM Industries’ share price stands at $52.64, reflecting a change of -3.46, which is a -6.17% change from the previous trading period..