ABM Industries Inc.
) third quarter fiscal 2012 adjusted earnings were 37 cents per
share, falling short of the Zacks Consensus Estimate of 42 cents as
well as the the year-ago quarter's earnings of 51 cents per share.
ABM INDUSTRIES (ABM): Free Stock Analysis
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Including one-time items, earnings in the quarter were 23 cents per
share compared with 51 cents in the year-ago quarter.
Total revenues remained flat year over year at $1.08 billion.
Contract cancellations of government-related businesses in the
Facility Solutions segment negatively impacted results. The top
line missed the Zacks Consensus Estimate of $1.09 billion.
Operating expense rose 2% year over year to $971.6 million.
Selling, general and administrative expenses increased 3.6% to
$79.1 million. Operating profit dropped 43.1% year over year to
$23.2 million in the quarter.
: Revenues from the segment increased marginally year over year to
$602.5 million in the quarter. Operating profit decreased 13.2%
year over year to $34.9 million. Improvement was unfavorably
affected by one additional day of labor expense.
: Revenues from the segment decreased 2.7% year over year to $230
million. Operating profit declined 11.1% year over year to $8.8
million. The decline was attributable to tight government spending.
: Revenues from the segment rose 1.1% year over year to $155
million during the quarter. Operating profit in the segment also
rose 8.3% year over year to $7.8 million.
: Revenues from the segment rose 4.4% to $91.6 million from the
prior year quarter. Operating profit went up 5.3% to $3 million
year over year.
Cash and cash equivalents of the company as of July 31, 2012, were
$21.7 million, lower than $25.4 million as of April 31, 2012. Cash
from operating activities decreased to $28.3 million in the
reported quarter from $51.7 million in the year-ago quarter.
The Board of Directors of ABM Industries also declared a third
quarter cash dividend of 14.5 cents per share, payable on November
5, 2012, to stockholders of record as on October 4, 2012.
ABM Industries' Board of Directors has authorized a $50 million
share repurchase program. The company had approximately 54 million
shares outstanding as of August 30, 2012.
The company lowered its guidance for fiscal 2012 adjusted earnings
to $1.36-$1.42 from the previous range of $1.40 to $1.50 per share.
Earnings (on a reported basis) target is trimmed down to the range
of $1.08-$1.14 from the previous range of $1.26 to $1.36.
The dearth of government spending along with weak economic
conditions prevailing in the global scenario would weigh on the
margins moving forward. The Facility Solutions segment depends
heavily on government contracts and any further cancellation of
these contracts would affect the revenues negatively.
ABM Industries retains a short-term Zacks #3 Rank (Hold). We have a
long-term Neutral recommendation on the stock.