ABM Industries Announces Second Quarter 2011 Financial Results, Declares Quarterly Dividend and Reaffirms Guidance
Revenues Increase 24% to $1.06 Billion
EPS from Continuing Operations Rises to $0.26; Adjusted EPS Increases to $0.28
EPS from Continuing Operations Rises to $0.26; Adjusted EPS Increases to $0.28
ABM Industries Incorporated (NYSE:ABM) today announced revenues for the second quarter of fiscal year 2011 of $1.06 billion, a 23.9% increase compared to second quarter of fiscal year 2010 revenues of $855.5 million. Income from continuing operations for the second quarter of fiscal year 2011 was $14.2 million, a 64.7% increase from $8.6 million in the second quarter of fiscal year 2010. Income from continuing operations per diluted share for the second quarter of fiscal year 2011 increased 63.9% to $0.26 compared to income from continuing operations per diluted share of $0.16 in the second quarter of fiscal year 2010. Income from continuing operations increased primarily as a result of a $4.7 million after-tax increase in Divisional operating profit in the second quarter of fiscal year 2011, driven by the companies acquired in 2010, and including a $2.3 million after-tax benefit from lower labor expense as a result of one less work day, partially offset by higher state unemployment insurance tax expense and fuel costs. In addition, the second quarter of fiscal year 2010 included a $2.7 million after-tax expense for a specific legal contingency. This combined benefit to the year-over-year increase in income from continuing operations in the second quarter of fiscal year 2011 was partially offset by a $1.9 million after-tax increase in interest expense compared to the year-ago quarter, primarily as a result of financing the Linc acquisition.
"The strength of our acquired businesses, combined with our continued focus on job profitability, drove second quarter results, which came in as expected," said Henrik Slipsager, president and chief executive officer, ABM Industries Incorporated. "The quarter generated top and bottom line growth for the Company as we delivered our second consecutive quarter exceeding $1 billion in revenues and both income from continuing operations and adjusted income from continuing operations increased by double digits year-over-year. Revenue growth in the quarter was driven by the companies we acquired in 2010, which together contributed nearly $200 million. We also achieved slight organic growth, both year-over-year and sequentially. Adjusted income from continuing operations increased 26% to $15 million while adjusted income from continuing operations per diluted share increased 20% year-over-year to $0.28. The quarter also generated 43% growth in Adjusted EBITDA, which increased to $42 million compared to $29 million in the year-ago quarter.
"As with last quarter, all four Divisions produced revenue increases year-over-year. The acquisitions of The Linc Group, L&R Parking companies and Diversco continue to increase the Company's revenues and profitability while expanding our reach in key vertical markets. Engineering revenues increased by more than $135 million driven by The Linc Group, which also helped increase the Division's operating profit by more than 36%. Linc Government Services, however, was impacted by the delay in passing a federal budget that postponed the start of existing projects and delayed bidding and awarding of new contracts.
"Janitorial revenues grew through the combination of Diversco sales and strong revenue growth in the Northeast. Janitorial increased operating profit by more than 21% as a result of lower labor expense from one less work day in the quarter, which added $2.3 million after-tax, as well as the savings generated by the Division's regional consolidation. Parking revenues increased about 37% on the strength of $43 million in sales from the L&R companies. Parking's operating profit was down slightly as a result of a contract settlement and higher state unemployment insurance expenses in the quarter. Security revenues increased slightly with Diversco generating nearly $3 million. Security's operating profit was essentially flat year-over-year."
Slipsager concluded: "With the addition and successful integration of The Linc Group, Engineering continued to expand the number and scope of facility solutions we offer to reduce energy consumption and costs for clients ranging from colleges and universities to biotechnology centers and governments. Across all Divisions, we continued to win new business and expand existing businesses in key vertical markets, including financial services, health care, education, telecommunications, transportation and commercial real estate. We will continue to focus on and generate growth from the integrated facility services we deliver to our target vertical markets, leveraging our experience and expertise in meeting the distinct needs of these client sectors."
Excluding items impacting comparability, adjusted income from continuing operations was $15.0 million, or $0.28 per diluted share, for the second quarter of fiscal year 2011. This compares to adjusted income from continuing operations of $11.9 million, or $0.23 per diluted share, in the second quarter of fiscal year 2010.
The Company's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and excluding discontinued operations and items impacting comparability) for the second quarter of fiscal year 2011 was $42.0 million, a 43.1% increase compared to $29.4 million in the second quarter of fiscal year 2010.
Net cash from continuing operations was $31.3 million in the second quarter of fiscal year 2011 compared to $50.0 million in the second quarter of fiscal year 2010. The decrease in net cash provided by operating activities was primarily related to the timing of both collections received from clients and payments made on vendor invoices as well as an increase in cash taxes paid as a result of the runoff in the utilization of tax assets acquired in the 2007 OneSource acquisition.
The Company reported revenues for the six months ended April 30, 2011 of $2.09 billion, a 21.1% increase compared to year-ago revenues of $1.73 billion. Income from continuing operations for the first six months of fiscal year 2011 was $22.6 million, or $0.42 per diluted share, compared to $21.5 million, or $0.41 per diluted share, for the first six months of fiscal year 2010. Adjusted income from continuing operations for the first half of fiscal year 2011 was $26.7 million, or $0.50 per diluted share, compared to $26.0 million, or $0.49 per diluted share, for the first six months of fiscal year 2010. Adjusted EBITDA for the first six months of fiscal year 2011 was $77.7 million, a 25.3% increase compared to $62.0 million for the first six months of fiscal year 2010.
The Company also announced that the Board of Directors has declared a third quarter cash dividend of $0.14 per common share payable on August 1, 2011 to stockholders of record on July 7, 2011. This will be ABM's 181st consecutive quarterly cash dividend.
"The strength of our acquired businesses, combined with our continued focus on job profitability, drove second quarter results, which came in as expected," said Henrik Slipsager, president and chief executive officer, ABM Industries Incorporated. "The quarter generated top and bottom line growth for the Company as we delivered our second consecutive quarter exceeding $1 billion in revenues and both income from continuing operations and adjusted income from continuing operations increased by double digits year-over-year. Revenue growth in the quarter was driven by the companies we acquired in 2010, which together contributed nearly $200 million. We also achieved slight organic growth, both year-over-year and sequentially. Adjusted income from continuing operations increased 26% to $15 million while adjusted income from continuing operations per diluted share increased 20% year-over-year to $0.28. The quarter also generated 43% growth in Adjusted EBITDA, which increased to $42 million compared to $29 million in the year-ago quarter.
"As with last quarter, all four Divisions produced revenue increases year-over-year. The acquisitions of The Linc Group, L&R Parking companies and Diversco continue to increase the Company's revenues and profitability while expanding our reach in key vertical markets. Engineering revenues increased by more than $135 million driven by The Linc Group, which also helped increase the Division's operating profit by more than 36%. Linc Government Services, however, was impacted by the delay in passing a federal budget that postponed the start of existing projects and delayed bidding and awarding of new contracts.
"Janitorial revenues grew through the combination of Diversco sales and strong revenue growth in the Northeast. Janitorial increased operating profit by more than 21% as a result of lower labor expense from one less work day in the quarter, which added $2.3 million after-tax, as well as the savings generated by the Division's regional consolidation. Parking revenues increased about 37% on the strength of $43 million in sales from the L&R companies. Parking's operating profit was down slightly as a result of a contract settlement and higher state unemployment insurance expenses in the quarter. Security revenues increased slightly with Diversco generating nearly $3 million. Security's operating profit was essentially flat year-over-year."
Slipsager concluded: "With the addition and successful integration of The Linc Group, Engineering continued to expand the number and scope of facility solutions we offer to reduce energy consumption and costs for clients ranging from colleges and universities to biotechnology centers and governments. Across all Divisions, we continued to win new business and expand existing businesses in key vertical markets, including financial services, health care, education, telecommunications, transportation and commercial real estate. We will continue to focus on and generate growth from the integrated facility services we deliver to our target vertical markets, leveraging our experience and expertise in meeting the distinct needs of these client sectors."
Excluding items impacting comparability, adjusted income from continuing operations was $15.0 million, or $0.28 per diluted share, for the second quarter of fiscal year 2011. This compares to adjusted income from continuing operations of $11.9 million, or $0.23 per diluted share, in the second quarter of fiscal year 2010.
The Company's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and excluding discontinued operations and items impacting comparability) for the second quarter of fiscal year 2011 was $42.0 million, a 43.1% increase compared to $29.4 million in the second quarter of fiscal year 2010.
Net cash from continuing operations was $31.3 million in the second quarter of fiscal year 2011 compared to $50.0 million in the second quarter of fiscal year 2010. The decrease in net cash provided by operating activities was primarily related to the timing of both collections received from clients and payments made on vendor invoices as well as an increase in cash taxes paid as a result of the runoff in the utilization of tax assets acquired in the 2007 OneSource acquisition.
The Company reported revenues for the six months ended April 30, 2011 of $2.09 billion, a 21.1% increase compared to year-ago revenues of $1.73 billion. Income from continuing operations for the first six months of fiscal year 2011 was $22.6 million, or $0.42 per diluted share, compared to $21.5 million, or $0.41 per diluted share, for the first six months of fiscal year 2010. Adjusted income from continuing operations for the first half of fiscal year 2011 was $26.7 million, or $0.50 per diluted share, compared to $26.0 million, or $0.49 per diluted share, for the first six months of fiscal year 2010. Adjusted EBITDA for the first six months of fiscal year 2011 was $77.7 million, a 25.3% increase compared to $62.0 million for the first six months of fiscal year 2010.
The Company also announced that the Board of Directors has declared a third quarter cash dividend of $0.14 per common share payable on August 1, 2011 to stockholders of record on July 7, 2011. This will be ABM's 181st consecutive quarterly cash dividend.
Guidance
The Company reaffirmed its guidance and continues to estimate that income from continuing operations per diluted share for the full 2011 fiscal year will be in the range of $1.23 to $1.33 and adjusted income from continuing operations per diluted share, for the same period, of $1.43 to $1.53.About ABM Industries Incorporated
ABM Industries Incorporated (NYSE:ABM), which operates through its subsidiaries (collectively "ABM"), is a leading provider of integrated facility services. With fiscal 2010 revenues of approximately $3.5 billion and nearly 100,000 employees, ABM provides commercial cleaning and maintenance, facility engineering, energy efficiency, parking and security services for thousands of commercial, industrial, government and retail clients across the United States and various international locations. ABM's business services include ABM Janitorial Services, ABM Facility Services, ABM Engineering Services, Ampco System Parking and ABM Security Services. 
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