ABM Industries Reports Mixed Q3 Results with Revenue Growth and Declining Profitability

ABM Industries Inc. reported its financial results for the third quarter and nine months ended July 31, 2024, showing a mixed performance in revenue and profitability compared to the previous fiscal period. Total revenues for the three months reached $2,094.2 million, an increase of $66.0 million or 3.3% from $2,028.2 million in the same period of 2023. For the nine months, revenues rose to $6,182.0 million, up $178.5 million or 3.0% from $6,003.5 million in the prior year. The growth was attributed to organic revenue increases of 2.8% and acquisition contributions, notably from the Quality Uptime Acquisition, which added $8.2 million in revenue.

Despite the revenue growth, the company faced significant declines in profitability. Operating profit for the three months ended July 31, 2024, fell to $37.4 million, a decrease of $101.5 million or 73.1% from $138.9 million in the prior year. For the nine months, operating profit was $192.8 million, down from $303.1 million, marking a 36.4% decline. The drop in operating profit was primarily due to a fair value adjustment related to the RavenVolt Acquisition, the absence of employee retention credits, and unfavorable self-insurance reserve adjustments.

Net income for the three months ended July 31, 2024, was $4.7 million, a sharp decline of 95.2% from $98.1 million in the same period last year. For the nine months, net income decreased to $93.1 million from $188.5 million, a 50.6% drop. The effective tax rate for the quarter was notably high at 74.0%, compared to 17.7% in the previous year, contributing to the reduced net income.

The company’s operating expenses increased, with total operating expenses for the three months rising to $1,831.0 million, up 3.7% from the prior year. Selling, general, and administrative expenses surged by 27.9% to $526.3 million for the nine months, largely due to a $36.0 million fair value adjustment related to the RavenVolt Acquisition.

Strategically, ABM completed the acquisition of Quality Uptime Services, Inc. for approximately $118.2 million in June 2024, which is expected to enhance its Technical Solutions segment. The company continues to navigate challenging market conditions, particularly in the commercial real estate sector, which has seen softness due to hybrid work trends. The company’s strategic plan, ELEVATE, aims to enhance client and team member experiences through innovative solutions and technology improvements, with expected investments of $200 to $215 million.

As of July 31, 2024, ABM reported total assets of $5,040.4 million and total stockholders’ equity of $1,835.0 million. The company’s cash and cash equivalents stood at $86.3 million, an increase from $69.5 million at the end of the previous fiscal year.