ABM Raises Fiscal 2026 Adjusted Earnings Outlook
The company now sees full-year adjusted EPS of $3.95 to $4.10 after a record $2.3 billion quarter and lifted free-cash-flow expectations to about $210 million.
ABM Industries (ABM) raised the midpoint of its fiscal 2026 adjusted earnings-per-share outlook after a record quarter of revenue, even as year-over-year growth cooled and Technical Solutions missed on deferred projects. The company now expects full-year adjusted EPS of $3.95 to $4.10, versus the prior range of $3.85 to $4.15, and lifted free-cash-flow expectations to about $210 million, up approximately $25 million from the prior outlook, with operating cash flow now expected at about $300 million.
Revenue for the fiscal third quarter ended July 31, 2026, rose 4.2% to a quarterly record of $2.3 billion, including 2.1% organic growth and 2.1% from acquisitions. That pace slowed from 8.4% growth (6.1% organic, 2.3% acquisitions) in the prior quarter and 6.1% growth (5.5% organic) two quarters earlier.
President and Chief Executive Officer Scott Salmirs said the quarter reflected strong operational and financial performance despite macro uncertainty and adverse timing of certain projects. Aviation and Manufacturing & Distribution delivered strong organic growth, with M&D benefiting from healthy technology markets and the recent WGNstar acquisition. ATS revenue growth was impacted by some project deferrals, while Business & Industry performance was largely as anticipated.
Manufacturing & Distribution revenue was $481.0 million, up 17.6%, after 17% growth in the prior quarter. The increase was driven by WGNstar, recent client wins, and ongoing expansions, especially in technology-related markets. Aviation revenue was $328.1 million, up 12.5%, reflecting healthy air travel and the continued ramp of the recently won London Heathrow contract. Education revenue was $235.8 million.
Technical Solutions revenue was $259.9 million, up 4.2%, after 27% growth in the prior quarter. ATS was driven by strong HVAC activity and contributions from a recent acquisition, but revenue was below expectations due to the deferral of certain projects by a large client. Salmirs said the company expects ATS to ramp sequentially in the fourth quarter as it executes on many of the deferred projects.
Business & Industry revenue was $1,012.2 million, down 2.6% after being essentially flat in the prior quarter. The decline largely reflected the previously announced exit of a large UK-based client and continued softness on the U.S. West Coast.
Net income increased 19% to $49.7 million, or $0.84 a share, versus $41.8 million, or $0.67, a year earlier. EPS growth of 25% was further driven by share repurchases earlier in the year. Net income margin was 2.1% versus 1.9% a year earlier. Adjusted net income was $61.5 million, or $1.04 a share. Adjusted EBITDA increased 11% to $139.6 million, after a 4.6% increase to $131.7 million in the prior quarter.
Segment operating margin improved 40 basis points sequentially to 7.7%, essentially in line with the prior year. Operational efficiencies helped offset pressures in Aviation and increased acquisition-related amortization in M&D. Segment operating profit was $178.3 million. Corporate costs were $85.4 million. Restructuring and related expenses of $7.8 million appeared in the quarter after none in the year-ago period. Selling, general, and administrative expenses fell 3.5% to $171.3 million. Salmirs said a focus on cost discipline resulted in a $3 million reduction in ongoing corporate costs versus the prior year.
Third-quarter operating cash flow was $146.8 million and free cash flow was $128.4 million, compared with $175.0 million and $150.2 million a year earlier. For the nine months ended July 31, operating cash flow was $275.0 million and free cash flow was $199.6 million, versus $101.0 million and $42.4 million a year earlier. The year-to-date improvement was primarily driven by strong working-capital management and stabilization in its ERP implementation. Salmirs said disciplined working-capital management accelerated deleveraging ahead of schedule.
At quarter-end, total indebtedness stood at $1.8 billion, including $22.4 million in standby letters of credit, for a total leverage ratio of 2.9x. Available liquidity was $605.8 million, including $110.5 million in cash. The company entered a $300 million trade receivables financing agreement during the quarter. It expects to further reduce its total leverage ratio by fiscal year-end.
Full-year organic revenue growth remains expected near the top of the 3% to 4% range, and total revenue growth toward the top of 4% to 5%. Segment operating margin is now projected at 7.7% to 7.8%, versus the previous 7.8% to 8.0%. Full-year interest expense remains forecast at approximately $110 million, and the normalized tax rate is still expected between 29% and 30%. After the quarter’s close, the board declared a cash dividend of $0.29 a share, payable November 2, 2026.