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ABM Reports In Line, Retains Guidance - Analyst Blog

ABM Industries Inc. ( ABM ) reported first quarter fiscal 2012 adjusted EPS of 22 cents, in line with the Zacks Consensus Estimate. Results were flat year over year.

Including one-time items, EPS in the quarter was 20 cents compared with 16 cents in the year-ago quarter.

Operational Update

In the first quarter, revenue improved 4.3% year over year to $1.074 billion. The improvement largely stemmed from contributions from the acquisition of Linc Group. The top line outperformed the Zacks Consensus Estimate of $1.067 billion.

Operating expense jumped 4.6% year over year to $966 million. Selling, general and administrative expenses increased 1.7% to $84.0 million. Operating profit also increased 5.2% year over year to $17.8 million in the quarter.

Segmental Performance

Janitorial: Revenue from the segment slipped marginally year over year to $594 million in the first quarter of fiscal 2012. Operating profit in the segment increased 2% year over year to $31 million. Improvement in billing processes and cost control measures were partially offset by higher state unemployment insurance expense.

Facility Solutions: Revenue from the segment increased 21% year over year to $234 million. Operating profit dropped 14.6% year over year to $6.4 million. This was attributable to the mix and timing of government projects.

Parking: Revenue from the segment rose marginally year over year to $153 million during the quarter. Operating profit in the segment also increased marginally year over year to $4.8 million.

Security: Revenue from the segment rose 3.6% to $91.9 million from the prior year quarter while operating profit dipped 35% to $845 million year over year.

Financial Position

Cash and cash equivalents of the company as of January 31, 2012 were $17.7 million, lower than $26.5 million as of October 31, 2011. Cash from operating activities increased to $11.9 million in the reported quarter from $1.3 million in the year-ago quarter.

Dividend

The board of directors of ABM Industries also declared a second quarter cash dividend of 14.5 cents per share, payable on May 7, 2012, to stockholders of record as on April 5, 2012.

Guidance

The company reaffirmed its previous guidance range for fiscal 2012 adjusted earnings of $1.40 to $1.50 per share and GAAP earnings of $1.26 to $1.36. For fiscal 2012, the Zacks Consensus Estimate for adjusted earnings is pegged at $1.43 per share.

Healthy cash flow generation has helped ABM to pay dividends on a regular basis. The acquisition of Linc Group in December 2010 has benefited ABM and given a better growth profile. However, reduced government spending and delay in payments significantly affected margins in the Facility Solution segment.

We retain our Neutral recommendation on ABM Industries. The quantitative Zacks #3 Rank (short-term Hold" rating) for the company indicates no directional pressure on the stock over the near term.

ABM INDUSTRIES ( ABM ): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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