TLDR
- Q2 FY25 revenue rose 4.6% to $2.1B, with 3.8% from organic growth
- Adjusted EPS rose to $0.86, but GAAP EPS dipped to $0.67
- Net income dropped slightly to $42.2M amid higher costs
- Cash flow from operations fell sharply vs. last year
- Stock closed down 9.07% at $46.61 on June 6
ABM Industries posted Q2 2025 revenue of $2.1 billion, up 4.6% year-over-year, including 3.8% organic growth. Segments such as Technical Solutions (ATS) and Aviation led gains with 19% and 9% growth, respectively.
The Business & Industry segment returned to growth, climbing 3% as U.S. office markets showed signs of recovery. Manufacturing & Distribution also improved by 2% due to new contracts. At close, on June 6th at 4:00:02 PM EDT, the stock traded at 46.61, down 9.07%.
ABM Industries Incorporated (ABM)
However, GAAP net income edged down to $42.2 million, or $0.67 per diluted share, from $43.8 million ($0.69 EPS) in the prior year. The dip came as interest expenses and transformation costs rose.
Adjusted net income, which excludes certain one-time items, rose to $54.1 million ($0.86 EPS), compared to $52.3 million ($0.82 EPS) a year ago. Adjusted EBITDA was $125.9 million, with a flat 6.2% margin.
ABM Industries, $ABM, Q2-25. Results:
🔴 -2% Pre-Market📊 Adj. EPS: $0.86 🟢
💰 Revenue: $2.1B 🟢
🔎 Business & Industry and Manufacturing & Distribution segments returned to organic growth; $1.1B in new bookings in H1. pic.twitter.com/fXEYbUiuzc— EarningsTime (@Earnings_Time) June 6, 2025
Cash Flow Concerns Hit Sentiment
Despite revenue gains, ABM’s cash flow metrics raised concerns. Operating cash flow dropped to $32.3 million from $117 million in Q2 2024, and free cash flow plummeted to $15.2 million versus $101.4 million. The decline was largely due to elevated working capital tied to ABM’s ERP system rollout. However, the company noted a $138.5 million sequential improvement from Q1, signaling progress.
Total debt stood at $1.6 billion with a leverage ratio of 2.9x. Liquidity remains solid with $657.8 million in available funds.
Long-Term Strategy and Bookings Show Strength
ABM is optimistic for the second half of fiscal 2025. CEO Scott Salmirs highlighted a rebound in high-quality office demand and a strong pipeline for manufacturing, distribution, aviation, and microgrid solutions. ABM also reported $1.1 billion in new bookings during the first half, an 11% increase year over year.
Despite Q2 delays in some ATS projects, management expects those revenues to materialize in Q3. The company reaffirmed its full-year adjusted EPS guidance of $3.65 to $3.80 and an adjusted EBITDA margin of 6.3% to 6.5%.
Dividend and Performance Snapshot
The Board declared a $0.265 quarterly dividend, payable August 4, continuing ABM’s 237-quarter payout streak. Yet despite the dividend and earnings consistency, stock performance has lagged. As of June 6, ABM shares are down 7.96% YTD and 1.81% over the past year, trailing far behind the S&P 500’s 12.09% 1-year return.
Outlook
While ABM’s underlying business appears resilient with steady revenue growth and bookings momentum, investors are clearly concerned about margin pressure and weak cash flow. Execution on the ERP transition and recovery of delayed projects in Q3 will be key to restoring investor confidence.
