ABM reported a “solid start” to fiscal 2026 with revenue up 6.1% YoY to $2.2 billion (5.5% organic), improved free cash flow of $48.9 million, and maintained guidance including organic growth of 3–4% and adjusted EPS of $3.85–$4.15.
Profitability weakness was concentrated in Technical Solutions: revenue rose 14% but operating margin fell to 3.7% from 8.2%, driven largely by roughly $20 million of weather-related project delays that created about a $0.05 EPS headwind, with management expecting margin recovery in the back half.
On capital allocation, ABM repurchased 2.1 million shares for $91.1 million and will close the WGNSTAR acquisition (adding ~$120–130 million of revenue), temporarily pushing leverage above 3x but management expects to bring net leverage back below 3x by fiscal year-end.
ABM Industries (NYSE:ABM) reported what management described as a “solid start” to fiscal 2026, highlighted by broad-based organic revenue growth, improved free cash flow, and significant share repurchases, while also acknowledging a quarterly margin shortfall concentrated in its Technical Solutions segment.
For the first quarter, ABM said revenue increased 6.1% year-over-year to $2.2 billion, driven primarily by 5.5% organic revenue growth and a modest contribution from an acquisition in Ireland completed last year. Chief Executive Officer Scott Salmirs said the 5.5% organic growth rate was the company’s strongest since the fourth quarter of 2022.
ABM reported net income of $38.8 million, or $0.64 per diluted share, compared with $43.6 million, or $0.69 per share, in the prior-year period. Adjusted net income was $50.4 million, or $0.83 per diluted share, versus $55.3 million, or $0.87 per diluted share a year earlier. CFO David Orr attributed the year-over-year decline primarily to lower segment income—most notably within Technical Solutions—along with higher tax and interest expense, partly offset by lower corporate costs.
Segment operating margin was 7.1% compared with 7.6% a year ago, and adjusted EBITDA was $117.8 million compared with $120.6 million in the prior-year quarter.
Cash flow was a bright spot. ABM said first-quarter cash from operations was $62 million and free cash flow was $48.9 million, a “significant improvement” over the prior year driven by working capital management and continued progress in ERP stabilization.
Organic growth was “broad-based across the portfolio,” the company said, led by Aviation at 10%. ABM’s segment results included:
Business & Industry (B&I): Revenue was $1.1 billion, up 4% year-over-year, driven by higher work orders, strong performance in the U.K., and price escalations. Operating profit was $79.7 million and margin was 7.5%, compared to 7.8% last year. Orr said margin reflected shifts in contract mix and increased sales investments. Management also cautioned that B&I growth is expected to moderate in the back half of the year due to the anticipated exit of a large U.K. client.
Aviation: Revenue rose 10% to $297.7 million, supported by global travel demand and ramping of new contract wins. Operating profit was $12.6 million, and margin was 4.2% versus 4.5% last year, pressured by incremental weather-related costs. The company reiterated that a large passenger services contract at Heathrow Airport is expected to begin ramping in the second quarter.
Manufacturing & Distribution (M&D): Revenue increased 7% to $422.3 million on recent contract wins—particularly in the technology sector—and client expansions. Operating profit was $36.3 million, with margin at 8.6% versus 10% last year. ABM said margins reflected the mix of newer contracts won last year and continued investments in technical sales talent and sector-specific capabilities.
Education: Revenue rose 2% to $228.7 million, supported by escalations and stable retention. Operating profit jumped 54% to $21.6 million and margin expanded 320 basis points to 9.4%. Management attributed the improvement to labor efficiency, effective escalation management, and some temporary operating benefits tied to severe winter weather in certain regions.
Technical Solutions: Revenue increased 14% to $229.7 million, including 7% organic growth and 7% from acquisitions. However, operating profit fell to $8.4 million and margin declined to 3.7% from 8.2% a year ago. ABM said the quarter was impacted by project timing and service mix dynamics, including approximately $20 million in delayed revenue from temporary project delays in microgrids, many of which were weather-related.
Both Salmirs and Orr emphasized that the first-quarter profitability shortfall was largely a timing issue. Salmirs said project delays and mix in Technical Solutions created about $0.05 of EPS pressure relative to internal expectations, with most of the impact tied to delayed revenue recognition rather than reduced demand.
On the call, management said severe winter weather slowed construction activity across much of the U.S., and noted one large customer temporarily suspended construction operations during the quarter. Orr said labor and material costs largely remained in place even as certain projects were delayed, contributing to the margin decline. ABM said it expects most delayed projects to resume as conditions normalize and described the second half of the year as seasonally stronger for the segment.
In response to an analyst question about whether the issues extended beyond weather (such as project rework), Salmirs said the underperformance was “really about a delay and really pushing to the right rather than canceling projects.” Orr added that in ABM’s U.S. Technical Solutions business over the past three years, about two-thirds of operating profit has been delivered in the second half of the year, with a 350-basis-point margin improvement from the first half to the second half, describing the pattern as consistent seasonality.
ABM repurchased 2.1 million shares during the quarter at an average price of $44.13, for total repurchases of $91.1 million. At quarter-end, $92 million remained under the company’s authorization. Orr said the company balances deleveraging with repurchases and M&A opportunities.
ABM ended the quarter with total indebtedness of $1.7 billion (including $23 million in standby letters of credit). The company’s total debt to pro forma adjusted EBITDA ratio was 2.9x and liquidity was $608 million, including $100 million in cash. Management said leverage will move above 3x in the second quarter following the closing of the WGNSTAR acquisition after quarter end, and it expects to bring leverage back under 3x by the end of fiscal 2026.
Regarding WGNSTAR, Salmirs said the acquisition strengthens ABM’s presence in semiconductor fabrication environments. In Q&A, management said there were no changes to expectations for WGNSTAR’s fiscal 2025 finish, and ABM expects roughly $120 million to $130 million of revenue from WGNSTAR in 2026. Salmirs reiterated prior commentary that the business is expected to have a double-digit growth profile over time and referenced prior acquisition RavenVolt as an example of ABM’s ability to scale in targeted end markets.
ABM maintained its previously communicated fiscal 2026 outlook. The company continues to expect:
Organic growth: 3% to 4% for the full year, with Aviation, M&D, and Technical Solutions above that range and B&I and Education in low single digits.
Total revenue growth: 4% to 5% including an expected ~1% contribution from WGNSTAR.
Segment operating margin: 7.8% to 8.0%, with expansion weighted to the back half as Technical Solutions timing normalizes and seasonal patterns reassert themselves.
Interest expense: $95 million to $105 million.
Normalized tax rate: 29% to 30% before discrete items, including potential extension of the Work Opportunity Tax Credit program.
Free cash flow: approximately $250 million before transformation and integration costs, the RavenVolt buyout, and any incremental restructuring.
Adjusted EPS: $3.85 to $4.15.
Management also discussed macro uncertainty and said it remains “cautiously optimistic.” Salmirs said ABM had not seen deterioration in applicant flow or staffing levels and said wage pressure had not meaningfully increased. Orr noted the company completed a $35 million restructuring initiative last year and said benefits continue to roll through the early part of fiscal 2026, adding that ABM has playbooks for labor flexibility and SG&A cost mitigation if conditions change.
ABM Industries Incorporated is a leading provider of integrated facility services, offering a comprehensive suite of solutions designed to support the operation, maintenance and enhancement of commercial properties. The company’s core services include janitorial and custodial maintenance, HVAC and mechanical systems support, electrical and lighting solutions, and energy optimization. Additional offerings span parking management, security services, landscaping, and specialized support such as technical solutions and sustainability consulting.
Serving a diverse range of markets, ABM caters to clients in commercial real estate, aviation, healthcare, manufacturing, education, government entities, and technology campuses.
