ABM Industries (NYSE: ABM) reported record third-quarter fiscal 2026 revenue of $2.3 billion, a 4.2% increase from a year earlier, as demand from high-growth sectors including semiconductors, microgrids and data centers offset weakness in its largest business line.
Net income rose 19% to $49.7 million, while adjusted net income climbed 19% to $61.5 million. GAAP earnings per share increased 25% to $0.84, and adjusted EPS grew 27% to $1.04, matching Wall Street consensus. Adjusted EBITDA expanded 11% to $139.6 million.
The company's combined semiconductor, microgrid and data-center operations now account for roughly 11% of total revenue and posted 26% organic growth—40% including acquisitions—over the first nine months, generating approximately $775 million in revenue. Semiconductor services produced about $300 million, boosted by the WGNSTAR acquisition, which provides test-and-balance services and equipment installation and maintenance. The RavenVolt microgrid brand generated roughly $300 million, growing nearly fourfold since its acquisition. Data-center services contributed approximately $175 million.
Results varied across segments. The Business & Industry unit, representing 44% of total revenue, saw sales fall 2.6% to $1.012 billion, weighed down by the exit of a Transport for London contract and softness on the U.S. West Coast. Operating profit in the segment rose to $75 million, with margin expanding to 7.4% from 7.1%.
Aviation was the fastest-growing division, with revenue surging 12.5% to $328 million on domestic travel strength and ramp-up of the Heathrow Airport contract. However, operating margin compressed to 5.6% from 6.8%, as management noted the airport-to-airline revenue mix currently stands near 60/40 and targets a 70/30 split over the next three to five years.
Manufacturing and distribution revenue jumped 17.6% to $481 million, with the WGNSTAR acquisition contributing 9.9 percentage points of growth. Operating margin contracted to 8.4% from 8.9%, reflecting $4 million in incremental acquisition-related amortization; adjusted margin excluding that item was 9.2%.
Education revenue held flat at $236 million, while Technical Solutions grew 4.2% organically to $260 million. Approximately $15 million in project work was deferred from Q3 into Q4 within technical solutions.
Free cash flow for the first nine months totaled $199.6 million, up more than $157 million year over year. The leverage ratio fell to 2.9 times adjusted EBITDA from 3.2 times last quarter. Total indebtedness stood at $1.8 billion, with total liquidity of $606 million, including $110 million in cash and equivalents. The company also established a $300 million accounts receivable securitization facility, with $89 million remaining under its share-repurchase authorization.
ABM raised its full-year adjusted EPS guide to $3.95 to $4.10 from $3.85 to $4.15, and lifted reported free-cash-flow guidance to approximately $210 million from $185 million. Full-year organic revenue growth is expected at 3% to 4% (targeting the high end), with total revenue growth of 4% to 5% (also targeting the high end). Segment operating margin is projected at 7.7% to 7.8%, interest expense at roughly $110 million, and the normalized tax rate at 29% to 30%.
"This quarter demonstrated the resilience of our portfolio and our ability to execute operationally," CEO Scott Salmirs said, noting the company now has "highly specialized technical capabilities to operate inside the bullseye" of semiconductor facilities. CFO David Orr highlighted a "really strong working capital quarter" and said the company is beginning to leverage its new ERP system to accelerate collections.
Shares slipped modestly to $46.94 in Tuesday trading, down 0.24% from the prior close of $47.05.
