ABM Industries Reports Disappointing Third Quarter Results, Narrows Guidance

ABM Industries Inc. (NYSE: ABM), a prominent provider of facility, engineering, and infrastructure solutions, has released its financial results for the fiscal third quarter of 2025. The company reported significant growth in revenue and operating cash flow, though its earnings per share fell short of market expectations. The company also provided guidance for the remainder of the fiscal year.

ABM Industries Reports Adj. EPS of $0.82, Lower than Expected

ABM Industries reported a revenue increase of 6.2% for the third quarter of 2025, totaling $2.2 billion. This growth was driven by a mix of organic expansion and acquisitions, with organic growth contributing 5.0% and acquisitions adding 1.2%. The company’s segments, particularly Technical Solutions and Aviation, were key drivers of this growth, with increases of 19% and 9% respectively. Manufacturing and Distribution also saw an 8% rise due to new client wins and expansions. The revenue was slighlty above the expected $2.15 billion.

Despite the revenue growth, ABM’s earnings per diluted share (EPS) for the quarter were $0.67, falling short of the market’s expectation of $0.95. The adjusted EPS was $0.82, down from $0.84 in the same quarter last year. The decline in adjusted EPS was attributed to higher interest and tax expenses, though partially offset by reduced corporate costs.

Operating cash flow saw a significant increase of 120.1%, reaching $175 million, while free cash flow rose by 134.3% to $150.2 million. This improvement was primarily due to enhanced cash collection efforts amid the company’s ERP conversion. The Board also approved a $150 million increase in share repurchase authorization, reflecting confidence in the company’s strategic direction.

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ABM Expects Adj. EPS for Full Fiscal Year 2025 to Be at Lower End of Projection

Looking ahead, ABM Industries expects its adjusted EPS for the full fiscal year 2025 to be toward the lower end of its previously projected range of $3.65 to $3.80. This outlook considers higher than anticipated interest expenses and ongoing margin pressures in certain markets. The company anticipates its adjusted EBITDA margin to range between 6.3% and 6.5%.

ABM is implementing a restructuring program aimed at streamlining operations and enhancing efficiency. This program is expected to generate approximately $35 million in annualized cost savings, with benefits starting in the fourth quarter and reaching full run-rate by early fiscal 2026. The company is also focusing on labor efficiency actions and cost controls to address near-term margin challenges.

In terms of strategic growth, ABM continues to invest in AI capabilities and client-facing solutions to drive higher growth and improved margins over time. The company has also been actively repurchasing shares, totaling over one million shares during July and August, underscoring its confidence in its long-term earnings trajectory and cash-generative capabilities.

Disclaimer: The author does not hold or have a position in any securities discussed in the article. All stock prices were quoted at the time of writing.