ABM Industries Inc.'s
) fourth quarter fiscal 2012 adjusted earnings of 50 cents per
share outpaced the Zacks Consensus Estimate of 40 cents as well
as the year-ago quarter's earnings of 37 cents per share.
Including one-time items, earnings in the quarter were 50 cents
per share compared with 33 cents in the year-ago quarter.
Total revenue inched up 0.8% to $1.09 billion, ahead of the
Zacks Consensus Estimate of $1.084 billion. Weak economic
conditions and lower government spending affected results in the
Operating expense rose 1% year over year to $968 million.
Selling, general and administrative expenses decreased 3% to
$79.6 million. Operating profit increased 10% year over year to
$36.7 million in the quarter. Operating margin improved 30 basis
points to 3.4% in the quarter.
Janitorial: Revenues from the segment increased 1% to $604
million in the quarter. Operating profit increased 4% year over
year to $37 million.
Facility Solutions: Revenues from the segment decreased 1%
year over year to $238 million, attributable to tight government
spending. Operating profit, however, increased 13% year over year
to $10.4 million.
Parking: Revenues from the segment inched up 0.4% year over
year to $154 million during the quarter. Operating profit in the
segment rose 2% year over year to $7.6 million.
Security: Revenues from the segment rose 4% to $93.4 million
from the prior-year quarter. Operating profit went up 2% year
over year to $3 million.
Fiscal 2012 Performance
Adjusted earnings stood at $1.39 in fiscal 2012, ahead of the
Zacks Consensus Estimate of $1.29, but flat compared with the
prior year. Including one-time items, fiscal 2012 earnings were
$1.14 per share compared with $1.27 in fiscal 2011. Total revenue
increased 1.3% to $4.3 billion from $4.2 billion in the prior
Cash and cash equivalents of the company as of fiscal 2012 end
were $43.4 million, up from $26.5 million as of fiscal 2011 end.
Cash flow from operating activities increased to $66.8 million
during the year compared with $75 million in the previous
The board of directors of ABM Industries declared a first
quarter 2013 cash dividend of 15 cents per share, payable on
December 28, 2012, to stockholders of record as of December 21,
ABM Industries' strategy entails growth through acquisitions.
Its recent acquisition of Air Serv Corporation will significantly
expand ABM's capabilities in meeting the end-to-end needs of the
airlines and airport authorities and is expected to generate over
$650 million in annual revenues. This acquisition will augment
ABM's aviation capabilities and position the company as the
industry leader in this space. Furthermore, the acquisition of
HHA Services will fortify ABM Industries' health care
capabilities enabling it to reach to a wider customer base.
The dearth of government spending along with weak economic
conditions prevailing in the global scenario would weigh on the
margins moving forward. Moreover, as the company's Facility
Solution segment depends heavily on government contracts, it will
likely continue to have a negative impact on its revenues. ABM
Industries retains a short-term Zacks #4 Rank (Sell).
San Francisco, California-based ABM Industries provides
engineering, janitorial, parking, and security services to
thousands of commercial, industrial, institutional, and retail
facilities across the U.S. as well as Puerto Rico, British
Columbia, and Canada.
) is a Zacks #2 Rank (Buy) stock in the same industry.
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