ABM Industries Inc (ABM) Q2 2025 Earnings Call Highlights: Strong Revenue Growth and Strategic ...

Revenue: $2.1 billion, a 4.6% year-over-year increase. Organic Revenue Growth: 3.8%. Adjusted EPS: $0.86. Net Income: $42.2 million or $0.67 per diluted share. Adjusted Net Income: $54.1 million or $0.86 per diluted share.

Adjusted EBITDA: $125.9 million. Adjusted EBITDA Margin: 6.2%. Free Cash Flow: $15 million, an improvement of $138 million over Q1. Total Indebtedness: $1.6 billion. Available Liquidity: $657.8 million.

B&I Revenue: $1 billion, up 3% year-over-year. Aviation Revenue: $260.1 million, a 9% increase. M&D Revenue: $398.1 million, a 2% increase. Education Revenue: $227.8 million, a 1% increase. Technical Solutions Revenue: $210.2 million, a 19% increase.

Full-Year Adjusted EPS Guidance: Reaffirmed at $3.65 to $3.80. Full-Year Adjusted EBITDA Margin Guidance: 6.3% to 6.5%. Warning! GuruFocus has detected 5 Warning Signs with ABM. Release Date: June 06, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Positive Points ABM Industries Inc (NYSE:ABM) achieved a record $1.1 billion in new bookings during the first half of 2025.

The company posted 3.8% organic revenue growth, driven by recovery in core commercial office markets and new contract wins. ABM Industries Inc (NYSE:ABM) saw strong performances in its Aviation and Education segments, with Aviation revenue growing by 9%. The M&D segment returned to organic growth earlier than anticipated, driven by expansion with existing clients and new business wins. ABM Industries Inc (NYSE:ABM) is well-positioned to benefit from strong demand in high-growth sectors like semiconductors and e-commerce, with significant investments in technical sales and industry-specific capabilities. Negative Points Temporary project delays and service mix headwinds impacted profitability in the ATS segment.

The M&D segment experienced a year-over-year margin decline due to investments in technical sales talent and strategic pricing on new contracts. Higher interest expenses were noted, impacting the overall financial results. Free cash flow for the first half of the year was negative, requiring a strong second half to meet full-year targets. The Technical Solutions segment faced margin pressure due to project timing and service mix shifts, particularly within Microgrid projects. Q & A Highlights Q: Can you remind me what the earnout on RavenVolt is expected to be? A: Earl Ellis, CFO: The total earnout for this year is expected to be about $30 million, with the original purchase being $170 million, making it approximately $280 million in total.

Story Continues Q: How do you plan to achieve the strong cash flow guidance for the second half of the year? A: Earl Ellis, CFO: We have made significant progress in improving cash flow, evidenced by a $138 million improvement quarter-over-quarter. We expect continued improvements in Q3 and Q4, allowing us to meet our full-year normalized free cash flow target of $250 million to $290 million. Q: How are you thinking about organic growth in the B&I business for the second half of the fiscal year? A: Scott Salmirs, CEO: We are optimistic about maintaining positive organic growth in B&I. While there might be some variability, we believe we are now in positive organic growth territory for B&I moving forward. Q: Can you provide more details on the M&D segment's strategy and its potential impact? A: Scott Salmirs, CEO: We are expanding our service offerings beyond traditional cleaning and maintenance to include material handling and test and balancing services.

This strategy is being applied to multiple clients and is expected to create more strategic value and stickiness, particularly in sectors like semiconductors and automotive. Q: What is causing the project delays in ATS, and when do you expect normalization? A: Earl Ellis, CFO: The delays are primarily due to customer approval processes. ATS typically sees more activity in the second half of the year, and we expect margins to normalize to 9% to 10% as delayed projects resume. Q: How is ABM positioned to win in prime office markets? A: Scott Salmirs, CEO: ABM is well-positioned due to our execution ability, strong client relationships, and extensive experience in prime office markets. Our scale, client base, and technology investments give us a competitive edge, allowing us to capture a greater market share.

Q: Can you discuss the potential acquisition pipeline and current market attractiveness? A: Earl Ellis, CFO: The M&A pipeline is robust, with increased activity from private equity firms looking to monetize portfolio companies. We are focused on acquisitions that enhance our strategic value and client stickiness, particularly in sectors like M&D. Q: What are the regional differences in activity levels within B&I? A: Scott Salmirs, CEO: There are regional variations, with some areas like Century City in LA booming, while others like Downtown LA lag. San Francisco is seeing a resurgence due to AI investments, and New York City is experiencing high activity levels. For the complete transcript of the earnings call, please refer to the full earnings call transcript.

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