Q3 2026 ABM Industries Inc Earnings Call Transcript
Key Points
- ABM Industries Inc (ABM) delivered record quarterly revenue of over $2.3 billion, with 27% adjusted EPS growth and a 40 basis point sequential improvement in segment margins.
- The company's high-growth areas—semiconductor, microgrids, and data centers—generated nearly $775 million in revenue year-to-date, growing 26% organically and now represent over 11% of total revenue with double-digit operating margins.
- Free cash flow improved by over $150 million year-to-date, leading to a raised full-year free cash flow outlook to approximately $210 million on a reported basis.
- ABM Industries Inc (ABM) achieved its leverage target of below 3x a quarter earlier than planned, ending the quarter at 2.9x total debt to pro forma adjusted EBITDA.
- The company secured a new $20 million microgrid contract with the Army Corps of Engineers, expanding its government and diversification opportunities.
- Aviation and Manufacturing & Distribution segments delivered strong organic growth of 12% and 8%, respectively, with continued momentum expected into fiscal 2027.
- Technical Solutions revenue came in below expectations due to project deferrals from an important client, impacting Q3 results despite expectations for a Q4 recovery.
- Aviation margins were pressured by airline clients seeking cost relief due to elevated jet fuel costs, leading to lower operating profit year-over-year.
- Business & Industry revenue declined 3% as expected, with continued challenges in Northern California and the impact of client exits, including a large UK-based client.
- Segment operating margin was essentially flat year-over-year, with pressures in Aviation and higher amortization from the WGNSTAR acquisition offsetting operational efficiencies.
- The company faces ongoing pricing pressure in the West Coast commercial real estate market, where competitors are bidding at levels ABM is unwilling to match.
- Interest expense increased by $4.2 million year-over-year due to higher average debt balances from the WGNSTAR acquisition.
Greetings, welcome to ABM Industries third quarter 2026 earnings call. (Operator Instructions) Please note that this conference is being recorded.
At this time, I'll turn the conference over to Paul Goldberg, Senior Vice President, Investor Relations.
Thank you. You may now begin.
Good morning, everyone, and welcome to ABM's third quarter 2026 earnings call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM. With me today are Scott Salmirs, our President and Chief Executive Officer; and David Orr, our Executive Vice President and Chief Financial Officer.
Please note that earlier this morning, we issued our press release announcing our third quarter 2026 financial results and outlook. A copy of that release and an accompanying slide presentation can be found on our website, abm.com. After Scott and David's prepared remarks, we will host a Q&A session.
But before we begin, I would like to remind you that
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