ABM Industries reported better-than-expected fiscal first-quarter results on Wednesday, revealing that the facility solutions provider has raised the lower end of its full-year earnings outlook. The company now anticipates per-share adjusted earnings to be in a range of $3.65 to $3.80 for fiscal 2025, which reflects a higher minimum than the previous forecast's estimate of $3.60.
Currently, the consensus on FactSet estimates non-GAAP EPS at $3.73, leading to a stock gain of 2.4% in premarket trading. Highlighting the positive outlook, ABM expects growth in the commercial real estate market this year, bolstered by a remarkable 24% sequential increase in US commercial office leasing activity in the fourth quarter of the previous calendar year, as reported by Chief Executive Scott Salmirs.
Salmirs articulated a strong sense of confidence in the broader markets ABM serves, noting that they “remain broadly healthy.” "Coupled with our strong sales pipeline and market-leading technology, these factors strengthen our confidence in achieving our 2025 objectives," Salmirs stated. This optimism is reflected in their adjusted earnings per share outlook, prompting the company to raise the lower end of the forecast. During the three months ending in January, ABM's adjusted EPS rose slightly to $0.87 from $0.86 the year before, defying Wall Street expectations predicting a decline to $0.78.
Moreover, revenue increased 2.2% year over year to $2.11 billion, surpassing the average analyst estimate on FactSet for $2.09 billion. In more detailed financials, revenue in the technical solutions segment surged nearly 22% to $202.3 million, primarily driven by significant annual growth in the micro-grid service line.
Meanwhile, aviation revenue grew by 8.2% to $270.1 million, benefiting from robust market demand and recent contracts won by ABM. However, sales in the education segment saw a modest increase of 2.4% to $225.3 million, while the business and industry as well as manufacturing and distribution units faced declines of 1% and 1.6%, respectively, amid some moderating headwinds.
Operating expenses climbed to $1.86 billion from $1.83 billion in the previous year’s quarter. Salmirs acknowledged temporary delays in cash flow but expressed optimism for improvement next quarter and full normalization in the latter half of the year. He noted, "Once fully implemented, we expect this system to drive significant cost efficiencies, enhance our ability to capture synergies from mergers and acquisitions, and provide real-time analytics and reporting to unlock commercial opportunities.".