ABM Industries (ABM) investor relations material

Executive summary

• Revenue grew 6.2% year-over-year to $2.2 billion, with 5% organic growth and 1.2% from acquisitions, and all segments contributing.

• Net income rose to $41.8 million ($0.67 per diluted share) from $4.7 million ($0.07) last year, mainly due to the absence of a $36 million contingent consideration adjustment and lower corporate costs.

• Adjusted net income was $51.7 million ($0.82 per diluted share), slightly down from $53.6 million ($0.84) last year, reflecting higher interest and tax expense.

• Free cash flow reached $150.2 million, up $86 million year-over-year and $135 million sequentially, with operating cash flow at $175 million.

• Over $1.5 billion in new business bookings through the first three quarters, up 15% year-over-year.

Financial highlights

• Adjusted EBITDA increased 5% to $125.8 million; margin remained flat at 5.9%.

• Net income margin improved to 1.9% from 0.2% in the prior year quarter.

• Free cash flow for Q3 was $150.2 million, up from $64.1 million in Q3 2024.

• Total debt to pro forma adjusted EBITDA ratio was 2.8x; total indebtedness at $1.6 billion; available liquidity stood at $691 million.

• Gross margin for the quarter was 12.3%, down 23 bps year-over-year, mainly due to strategic pricing and contract escalation timing.

Outlook and guidance

• Fiscal 2025 adjusted EPS and adjusted EBITDA margin expected at the low end of prior guidance ($3.65–$3.80 EPS; 6.3%–6.5% margin).

• Q4 earnings and margins are expected to improve, driven by restructuring benefits and strong segment performance.

• Fourth quarter interest expense projected at $25 million; normalized tax rate of 29%–30%.

• Normalized free cash flow for the year expected at the low end of $250–$290 million, excluding one-time items.

• Full normalization of operating cash flows anticipated in Q4 2025 as ERP transition issues resolve.