ABM Industries (ABM) Q4 2008 earnings summary

Executive summary

• FY08 revenue rose 33.9% to $3.624B, mainly from OneSource; operating profit increased 28.9% to $99.5M, while net income fell 13.4% to $45.4M.

• OneSource integration generated $29.8M of cost synergies in 2008 before related costs; Lighting was sold and reported as discontinued operations.

Financial highlights

• Revenue increased $917.5M YoY; excluding OneSource and HPSA, revenue grew 3.0% to $80.9M.

• Operating profit rose to $99.5M from $77.2M; continuing income increased 4.1% to $52.7M, while net income declined to $45.4M from $52.4M.

• Net income included a $7.3M loss from discontinued operations, including the $3.5M after-tax Lighting sale loss and $4.5M goodwill impairment.

Outlook and guidance

• Expected total OneSource annual cost synergies of $45M–$50M, with $15M–$20M of additional synergies targeted in 2009 and full implementation expected during 2009.

• Expected approximately $16M of 2009 costs for accounting and payroll/HR system upgrades and OneSource integration; system implementation targeted for completion by end-2009.

• Long-term priorities include growing national service capabilities and expanding into international markets; near-term focus is new business, efficiency and acquisition integration.