) second-quarter fiscal 2012 adjusted earnings were 30 cents per
share, in line with the Zacks Consensus Estimate. The results
improved 7% from 28 cents in the year ago quarter.
On a reported basis, earnings were 21 cents per share compared
with 26 cents in the year-ago quarter.
Revenues were flat year over year at $1.06 billion in the
reported quarter due to a delayed start of new contracts along with
declining contribution from government business. Revenues missed
the Zacks Consensus Estimate of $1.09 billion.
Operating expenses inched up 0.4% year over year to $947.9
million in the quarter. Selling, general and administrative
expenses also increased 2.1% to $85.2 million. Operating profit
declined 28.8% to $18.9 million.
Revenues in the segment improved marginally by 0.5% to $593.4
million. Operating profit, however, decreased 4.1% to $33.5
million. The segment's improvement aided by the addition of new
clients in the high-technology sector was offset by delay in new
The segment's revenues declined 2.9% to $222.6 million in the
quarter. Operating profit also fell 6.7% to $6.4 million. The
segment was negatively affected by timing of government contracts
and delay in starting projects.
Revenues declined 2.2% to $152.7 million. Operating profit,
however, improved significantly by 24.5% to $6.1 million, driven by
improvement in work and cost reduction initiatives.
In this segment, revenues improved 5.6% to $88.9 million. Operating
profit in the quarter rose 12.8% to $1 million. Improvement in
revenues stemmed from new business. Operating profit was benefited
by cost cutting initiatives in addition to new business.
Cash and cash equivalents were $25.4 million as of April 30,
2012, compared with $26.5 million as of October 31, 2011. Net cash
provided by operating activities were $43.5 million during the
reported quarter, higher than $31.9 million in the year-ago
The company's Board of Directors authorized it to pay dividends
of 14.5 cents a share in the third quarter of fiscal 2012, payable
on August 6, 2012, to stockholders of record as of July 5,
ABM has reaffirmed its fiscal 2012 adjusted earnings guidance of
$1.40-$1.50 per share and earnings (on a reported basis) target of
$1.26-$1.36 per share. Fiscal 2012 has one additional day compared
with fiscal 2011. The extra day is expected to impact earnings
negatively by 3 cents-5 cents.
Recently, ABM has gained several new contracts in the energy
sector. The company has teamed up with many educational
institutions including Madison County School District in Madison
County and Fayette County Career & Technical Institute
("FCCTI") in Uniontown (Pennsylvania) to provide Bundled Energy
The program will benefit the institutions by reallocating their
savings from the project and paying for the improvements either on
the energy front or in infrastructure development.
However, the company faces severe challenges from the delay in
project starts coupled with reduced government spending which may
weigh on its revenues.
ABM retains a short-term Zacks #3 Rank (Hold). Currently, we
have a long-term Neutral recommendation on the stock.
ABM INDUSTRIES (ABM): Free Stock Analysis
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