ABM Industries (NYSE: ABM) reported Q1 EPS of $1.01, $0.42 better than the analyst estimate of $0.59. Revenue for the quarter came in at $1.49 billion versus the consensus estimate of $1.48 billion.

First Quarter Summary

• Revenue of $1,492.4 million, a decrease of 7.5% versus last year, reflecting full quarter impact of COVID-19 operating environment.
• Increased demand for higher margin Work Orders and EnhancedClean™ services, as well as efficient labor management drove operating results for the quarter on both a GAAP and adjusted basis.
• GAAP income from continuing operations increase of 167.8% to $74.6 million, or $1.10 per diluted share compared to $27.9 million, or $0.41 per diluted share last year.
• Adjusted income from continuing operations increase of 160.7% to $68.3 million, or $1.01 per diluted share versus $26.2 million, or $0.39 per diluted share last year.
• Net income of $74.6 million, or $1.10 per diluted share.
• Adjusted EBITDA of $123.7 million compared to $68.8 million last year, resulting in an adjusted EBITDA margin of 8.3%.
• Net cash provided by continuing operating activities of $45.3 million and free cash flow of $38.7 million despite working capital seasonality that typically occurs during the first quarter.
• Fiscal 2021 outlook issued.

Scott Salmirs, President and Chief Executive Officer of ABM Industries commented, “Our strong performance for the first quarter underscores our clients’ focus on protecting their people and spaces. Revenue performance exceeded our expectations as we saw an acceleration of higher margin, Work Orders for virus protection and EnhancedClean™ services. Effective labor management also remained a critical component of our results as we navigated the hybrid occupancy environment across our Industry Groups. Our industry-leading execution during these challenging times led to record first quarter profit and earnings results.”

Mr. Salmirs continued, “In addition to our operational performance, we also built upon the disciplines we instituted last year in areas such as liquidity and working capital management. While the first quarter has historically been a period of cash flow usage, we have achieved more than $45 million in cash flow year-to-date. I am so proud of our entire organization for delivering an exceptional start to the new fiscal year.”

GUIDANCE:

ABM Industries sees FY2021 EPS of $3.00-$3.25, versus the consensus of $2.41.

For fiscal 2021, the Company expects GAAP income from continuing operations of $2.85 to $3.10 per diluted share, and adjusted income from continuing operations of $3.00 to $3.25 per diluted share. With the exception of the 2021 Work Opportunity Tax Credit and anticipated excess tax benefits on stock-based awards, this guidance does not include any potential effects associated with certain other discrete tax items and other unrecognized tax benefits.

Mr. Salmirs concluded, “The impact of COVID-19 on our clients and communities continues to evolve and based on our current visibility, we believe the implications to our clients and end-markets will remain throughout fiscal 2021. We are encouraged by the development and rollout of the multiple vaccines and look forward to continuing to work with our clients as they develop re-entry plans and cultivate robust facility protections. When COVID-19 becomes more manageable, we believe post-pandemic normalcy will reflect a heightened sensitivity to health and hygiene. As such, we are making investments in our business that will allow us to continue to protect the safety of our employees and clients and maximize our strengths and market position.”

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