fiscal third quarter 2026
Filed Sep 8, 2026ABM Reports Fiscal Third Quarter 2026 Results; Raises Midpoint of Outlook For Fiscal 2026 Adjusted EPS and Increases Free Cash Flow Expectations
Record quarterly revenue, 19% growth in net income and adjusted net income, and substantially improved nine-month cash generation supported the higher adjusted EPS midpoint and increased cash flow outlook. The quarter also included ATS project deferrals, a 2.6% Business & Industry revenue decline, lower third-quarter operating cash flow and free cash flow versus the prior year, and a reduced full-year segment operating margin range.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $2,317.1 million | – | 4.2% |
| Organic revenue growthother | 2.1% | – | – |
| Acquisition-related revenue growthother | 2.1% | – | – |
| Operating expensesGAAP | $2,031.0 million | – | 4.2% |
| Selling, general and administrative expensesGAAP | $171.3 million | – | (3.5)% |
| Restructuring and related expensesGAAP | $7.8 million | – | NM* |
| Amortization of intangible assetsGAAP | $15.5 million | – | 15.8% |
| Operating profitGAAP | $91.5 million | – | 9.6% |
| Income from unconsolidated affiliatesGAAP | $1.2 million | – | (2.1)% |
| Interest expenseGAAP | $(29.5) million | – | (16.6)% |
| Income before income taxesGAAP | $63.2 million | – | 6.4% |
| Income tax provisionGAAP | $(13.5) million | – | 23.3% |
| Net incomeGAAP | $49.7 million | – | 18.9% |
| Net income marginGAAP | 2.1% | – | – |
| Diluted net income per common shareGAAP | $0.84 | – | 25.4% |
| Basic net income per common shareGAAP | $0.84 | – | 25.4% |
| Adjusted net incomenon-GAAP | $61.5 million | – | – |
| Adjusted net income per diluted sharenon-GAAP | $1.04 | – | – |
| Adjusted EBITDAnon-GAAP | $139.6 million | – | – |
| Segment operating profitnon-GAAP | $178.3 million | – | 4.6% |
| Segment operating marginnon-GAAP | 7.7% | improved 40 basis points sequentially | – |
| Net cash provided by operating activitiesGAAP | $146.8 million | – | – |
| Free cash flownon-GAAP | $128.4 million | – | – |
| Nine months revenueGAAP | $6,850.6 million | – | 6.2% |
| Nine months operating profitGAAP | $253.0 million | – | 4.0% |
| Nine months net incomeGAAP | $131.6 million | – | 3.1% |
| Nine months diluted net income per common shareGAAP | $2.20 | – | 8.4% |
| Nine months adjusted net incomenon-GAAP | $164.8 million | – | – |
| Nine months adjusted EBITDAnon-GAAP | $389.2 million | – | – |
| Nine months adjusted net income per diluted sharenon-GAAP | $2.76 | – | – |
| Nine months net cash provided by operating activitiesGAAP | $275.0 million | – | – |
| Nine months free cash flownon-GAAP | $199.6 million | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| Business & IndustryDeclined 2.6%, largely as expected, reflecting the previously announced exit of a large UK-based client and continued softness on the US west coast. | $1,012.2 million | – | (2.6)% |
| Manufacturing & DistributionGrowth was driven by the WGNstar acquisition, recent client wins and ongoing expansions, especially in technology-related markets. | $481.0 million | – | 17.6% |
| AviationGrowth reflected healthy air travel trends and the continued ramp of the recently won London Heathrow contract. | $328.1 million | – | 12.5% |
| EducationEducation grew modestly. | $235.8 million | – | 0.3% |
| Technical SolutionsGrowth was driven by strong HVAC activity and contributions from its recent acquisition; revenue was below expectations due to the deferral of certain projects by a large client. | $259.9 million | – | 4.2% |
full year fiscal 2026 outlook
- RevenueOrganic revenue growth near the top end of the 3% to 4% range; total revenue growth toward the top end of the 4% to 5% range
- Tax ratebetween 29% and 30%, excluding discrete and non-taxable items
- NoteSegment operating margin of 7.7% to 7.8%
- NoteInterest expense of approximately $110 million
- NoteAdjusted EPS of $3.95 to $4.10
- NoteNet cash provided from operations of approximately $300 million
- NoteFree cash flow of $210 million
- NoteThe Company expects to further reduce its total leverage ratio by fiscal year-end.
Capital returns
- Repurchases of common stock, including excise taxes: — for the three months ended July 31, 2026, compared to $(27.2) million for the three months ended July 31, 2025.
- Repurchases of common stock, including excise taxes: $(94.7) million for the nine months ended July 31, 2026, compared to $(48.5) million for the nine months ended July 31, 2025.
- Dividends paid: $(17.0) million for the three months ended July 31, 2026, compared to $(16.5) million for the three months ended July 31, 2025.
- Dividends paid: $(51.2) million for the nine months ended July 31, 2026, compared to $(49.4) million for the nine months ended July 31, 2025.
- Dividends declared per common share: $0.290, compared to $0.265 in the prior-year quarter.
- After the quarter’s close, the Board declared a cash dividend of $0.29 per common share, payable on November 2, 2026, to shareholders of record on October 1, 2026.
What drove it
- Record quarterly revenue of $2.3 billion reflected 2.1% organic growth and 2.1% acquisition-related growth.
- Manufacturing & Distribution and Aviation led revenue growth, increasing 17.6% and 12.5%, respectively.
- Net income growth primarily reflected higher segment operating profit, lower tax expense and reduced ongoing corporate costs, partially offset by higher interest expense related to the WGNstar acquisition.
- EPS growth further benefited from the Company’s share repurchase activities earlier in the year.
- Operational efficiencies offset pressures in Aviation and increased acquisition-related amortization in Manufacturing & Distribution.
- Nine-month operating cash flow and free cash flow improvement was primarily driven by strong working capital management and stabilization in the ERP system implementation.
- The Company reported a $3 million reduction in ongoing corporate costs versus the prior year.
Concerns
- Technical Solutions revenue was below expectations because a large client deferred certain projects.
- Business & Industry revenue declined 2.6%, reflecting the exit of a large UK-based client and continued softness on the US west coast.
- Aviation segment operating profit declined 6.9% despite 12.5% revenue growth.
- Third-quarter operating cash flow of $146.8 million and free cash flow of $128.4 million were below $175.0 million and $150.2 million, respectively, in the prior-year quarter.
- Full-year segment operating margin guidance was reduced to 7.7% to 7.8% from 7.8% to 8.0%.
- Interest expense was $(29.5) million in the quarter, compared to $(25.3) million in the prior-year quarter.
What to watch
- The expected sequential ramp in Technical Solutions during the fourth quarter as deferred projects are executed.
- Whether full-year organic revenue growth reaches the top end of the 3% to 4% range and total revenue growth reaches the top end of the 4% to 5% range.
- Delivery of segment operating margin within the revised 7.7% to 7.8% range.
- Progress toward approximately $300 million of full-year net cash provided from operations and $210 million of free cash flow.
- Further reduction of the total leverage ratio by fiscal year-end.
- Continued Manufacturing & Distribution contribution from WGNstar, client wins and technology-related market expansion.
Balance sheet and cash flow
- Cash and cash equivalents were $110.5 million at July 31, 2026, compared to $104.1 million at October 31, 2025.
- Total indebtedness stood at $1.8 billion, including $22.4 million in standby letters of credit.
- Total leverage ratio was 2.9x, as defined by the Company's revolving credit facility.
- Available liquidity was $605.8 million, including $110.5 million in cash and cash equivalents.
- Current portion of long-term debt, net was $41.8 million at July 31, 2026, compared to $29.4 million at October 31, 2025.
- Long-term debt, net was $1,732.2 million at July 31, 2026, compared to $1,537.1 million at October 31, 2025.
- Total assets were $5,601.0 million at July 31, 2026, compared to $5,269.5 million at October 31, 2025.
- Total liabilities were $3,810.8 million at July 31, 2026, compared to $3,483.8 million at October 31, 2025.
- Total stockholders’ equity was $1,790.2 million at July 31, 2026, compared to $1,785.6 million at October 31, 2025.
- Additions to property, plant and equipment were $(18.4) million for the three months ended July 31, 2026, compared to $(24.8) million in the prior-year quarter.
- Additions to property, plant and equipment were $(75.4) million for the nine months ended July 31, 2026, compared to $(58.6) million in the prior-year period.
- Purchase of businesses, net of cash acquired was $(242.1) million for the nine months ended July 31, 2026, compared to $(16.7) million in the prior-year period.
- The Company entered into a $300 million trade receivables financing agreement during the quarter.
Analysis
ABM reported quarterly record revenue of $2,317.1 million, up 4.2% from $2,224.0 million. Growth comprised 2.1% organic growth and 2.1% acquisition-related growth. Manufacturing & Distribution and Aviation were the principal growth contributors, with revenue up 17.6% and 12.5%, respectively. Manufacturing & Distribution benefited from WGNstar, client wins and technology-related expansions, while Aviation reflected air-travel trends and the London Heathrow contract ramp.
Profit growth exceeded revenue growth. Operating profit increased 9.6% to $91.5 million, net income increased 18.9% to $49.7 million, and diluted EPS increased 25.4% to $0.84. The company attributed the net-income improvement to higher segment operating profit, lower tax expense and reduced ongoing corporate costs, partly offset by higher interest expense tied to WGNstar. The smaller diluted share base of 59.3 versus 62.8 also supported per-share growth. Adjusted net income rose to $61.5 million from $51.7 million, adjusted diluted EPS rose to $1.04 from $0.82, and adjusted EBITDA rose to $139.6 million from $125.8 million.
Segment performance was uneven beneath the consolidated result. Business & Industry revenue fell 2.6% due to the large UK client exit and US west coast softness. Technical Solutions revenue rose 4.2% on HVAC activity and an acquisition contribution, but certain large-client projects were deferred. Aviation revenue growth did not translate into operating-profit growth, as Aviation operating profit declined 6.9% to $18.4 million. Segment operating margin was 7.7%, unchanged from the prior year and up 40 basis points sequentially, as operational efficiencies offset Aviation pressures and higher acquisition-related amortization in Manufacturing & Distribution.
Cash generation was lower year over year in the third quarter but materially stronger on a nine-month basis. Quarterly operating cash flow was $146.8 million and free cash flow was $128.4 million, versus $175.0 million and $150.2 million in the prior-year quarter. Through nine months, operating cash flow was $275.0 million versus $101.0 million and free cash flow was $199.6 million versus $42.4 million. Management cited working capital management and ERP stabilization. The company spent $(242.1) million on business purchases in the nine-month period, repurchased $(94.7) million of common stock including excise taxes, and paid $(51.2) million in dividends.
ABM raised the midpoint of its full-year adjusted EPS outlook to $3.95 to $4.10 from $3.85 to $4.15 and raised cash flow expectations to approximately $300 million of operating cash flow and $210 million of free cash flow. Revenue growth expectations remain near the top ends of the existing ranges. Margin guidance moved lower to 7.7% to 7.8% from 7.8% to 8.0%, which places fourth-quarter execution in Technical Solutions and Aviation profitability in focus. Total indebtedness was $1.8 billion and total leverage was 2.9x at quarter-end; management expects additional deleveraging by fiscal year-end and added a $300 million trade receivables financing agreement.
Management, verbatim
Our third quarter results reflected strong operational and financial performance, including record quarterly revenue, robust EPS growth and substantial cash generation. Our team executed well and delivered on our expectations despite a backdrop of macro uncertainty and adverse timing of certain projects.
Scott Salmirs, President and Chief Executive Officer
Aviation and Manufacturing & Distribution ("M&D") delivered strong organic revenue growth, with M&D benefiting from healthy technology markets and further supported by our recent WGNstar acquisition. Technical Solutions ("ATS") revenue growth was impacted by some project deferrals, while Business & Industry ("B&I") revenue performance was largely as anticipated. We expect ATS to ramp sequentially in the fourth quarter as we execute on many of the deferred projects.
Scott Salmirs, President and Chief Executive Officer
As we enter the fourth quarter, we are focused on finishing the year strong and executing with discipline. We are raising the midpoint of our adjusted EPS outlook and increasing our expectations for full year free cash flow based on our strong third quarter results, and are confident in our ability to achieve it.
Scott Salmirs, President and Chief Executive Officer
Not in the filing
stated, not guessed- Gross profit
- Gross margin
- Prior-quarter revenue, earnings, EPS, cash flow and segment results
- GAAP operating expense guidance
- Forward-looking GAAP reconciliation for segment operating margin and adjusted EPS
AlphAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.