ABM Industries Incorporated ABM reported fourth-quarter fiscal 2015 adjusted earnings of 55 cents per share, beating the Zacks Consensus Estimate by a penny and growing 17% year over year.
On a GAAP basis, earnings per share were 68 cents per share, increasing an impressive 38.8% from 49 cents in the prior-year quarter. A stronger top line drove earnings growth, despite higher operating expenses.
For fiscal 2015, ABM reported adjusted earnings (from continuing operations) of $92.9 million or $1.62 per share, compared with $80.2 million or $1.41 in the year-ago period. The year-over-year increase in earnings was mostly driven by top-line growth.
Inside the Headlines
Total revenue for the quarter increased 6% year over year to $1,277 million, with 3.7% organic growth and accretive acquisitions. However, the revenue figure lagged the Zacks Consensus Estimate of $1,360 million.
Revenues for fiscal 2015 improved 5.3% year over year to $4,897.8 million.
Total operating profit for the quarter decreased 3.9% year over year to $37.2 million, dragged down by higher selling, general and administrative expenses. However, adjusted quarterly EBITDA came in at $69.4 million, up 17.8% from the year-ago quarter.
Segmental Performance
Revenues for the Janitorial segment increased 3.4% year over year to $688.7 million, driven by strong Work Order revenue numbers. Segment operating profit for the reported quarter increased 12% year over year to $43.9 million.
Revenues from the Facility Services segment declined 1.2% year over year to $145.3 million and operating profit declined 16% year over year to $6.8 million.
Revenues from the Parking segment were up 2.6% year over year to $160.7 million, while operating profit decreased 4.4% year over year to $8.6 million.
Revenues from the Building & Energy Solutions segment were up 23.6% to $167.7 million. Operating profit was up 36.6% year over year to $13.8 million.
Revenues from Other segment improved 15.6% year over year to $114.6 million while operating profit improved 50% year over year to $5.1 million.
Business Restructuring Updates
During the quarter, ABM sold its Security Business to Universal Protection Service, a division of Universal Services of America, for $131 million. This resulted in a net gain of $14.4 million, recorded in income from discontinued operations. The divestiture was in line with ABM’s transformation initiative, and will allow the company to focus on its core strengths and unlock greater shareholder value.
Financial Position
Cash and cash equivalents at the quarter end stood at $742.9 million. Net cash provided by operating activities was $43.9 million, compared with $63.7 million in the prior-year period.
The company’s borrowing under the credit facility was $158 million, down $147 million sequentially, primarily due to the divestiture of the ABM Security Business.
The company’s board approved a 3.1% increase for the quarterly cash dividend to $0.165 per share, payable on Feb 1, 2016. ABM repurchased 403,181 shares for $11 million under its $200 million share repurchase program.
Outlook
For fiscal 2016, ABM expects adjusted income from continuing operations to lie in a range of $1.30 – $1.40.
Going forward
ABM announced a comprehensive strategic and transformation initiative focused on driving sustainable profitability by effectively allocating resources to higher margin services and business verticals with a strong competitive edge. We expect this to fuel the company’s growth momentum in the coming quarters.
The company is on its way to becoming a vertically focused, solutions-driven business, which will help create clear competitive differentiation, facilitate deep client penetration, and thus drive long-term, profitable growth.
ABM currently has a Zacks Rank #4 (Sell). Some better-ranked stocks that look promising now include ServiceMaster Global Holdings, Inc SERV, Anadigics, Inc. ANAD and FormFactor Inc. FORM, each carrying a Zacks Rank #2 (Buy).
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