ABM Industries reported record third-quarter 2026 revenue of $2.3 billion, up 4.2% from a year earlier, as adjusted earnings per share rose 27% to $1.04 from $0.82, matching Wall Street expectations. Revenue growth was split evenly between 2.1% organic growth and 2.1% from acquisitions. GAAP net income increased 19% to $49.7 million from $41.8 million, and GAAP diluted earnings per share rose to $0.84 from $0.67. Adjusted net income rose 19% to $61.5 million from $51.7 million, while adjusted EBITDA grew 11%, or $13.8 million, to $139.6 million. Segment operating margin improved 40 basis points sequentially to 7.7%, flat year over year; excluding acquisition-related amortization, the margin would have been 7.8%.
The company generated $146.8 million in cash from operations and $128.4 million in free cash flow in the quarter, with nine-month free cash flow of $199.6 million. Total debt stood at $1.8 billion, with leverage at 2.9 times pro forma adjusted EBITDA, and liquidity of $606 million, including $110 million in cash and equivalents.
ABM raised full-year adjusted EPS guidance to $3.95 to $4.10 and lifted reported free cash flow guidance to about $210 million from $185 million. It expects organic revenue growth of 3% to 4%, toward the high end, and total revenue growth at the high end of 4% to 5% including WGNSTAR. Segment operating margin is expected to be 7.7% to 7.8%, interest expense about $110 million, and the normalized tax rate 29% to 30%.
Chief Executive Officer Scott Salmirs said the quarter delivered record revenue, 27% adjusted EPS growth and strong cash flow, and described WGNSTAR as extending ABM's semiconductor services from around the fab to inside the fab. Chief Financial Officer David Orr cited a strong working capital quarter and the start of using a new ERP system to accelerate collections.
High-growth businesses in semiconductors, microgrids and data centers accounted for more than 11% of total revenue and produced a double-digit blended operating margin. Those businesses generated nearly $775 million in revenue through the first nine months, growing 26% organically and about 40% including WGNSTAR. Semiconductor revenue rose 65% organically and more than doubled including WGNSTAR; microgrids, including battery energy storage systems, grew 17% organically after quadrupling in size since 2022; data center revenue rose 8% organically year to date.
Other organic segment growth included aviation up 12%, manufacturing and distribution up 8%, and technical solutions up 2%, the latter affected by roughly $15 million in deferred project work from an important client. Business and industry declined 2.6%, or about 3%, due to client exits, including a large U.K. client exit in the second quarter, and West Coast pricing pressure. B&I operating profit rose to $75 million, with margin expanding 30 basis points year over year to 7.4%. Airports represent roughly 60% of aviation revenue, with management targeting a 70/30 airport-to-airline mix over the next three to five years.
ABM also described a contract worth approximately $20 million to build a primary backup power microgrid for the U.S. Army Corps of Engineers through a joint venture with a strategic partner, with execution expected in calendar 2027. Management said B&I is expected to return to organic growth around the middle of fiscal 2027, M&D is positioned to sustain strong organic growth into fiscal 2027 and beyond, and the data center pipeline and backlog are expected to convert into revenue in fiscal 2027 and into 2028.
Shares slipped 0.66% to $46.74 in premarket trading Tuesday, after a previous close of $46.75. The stock trades within a 52-week range of $36.96 to $50.12, about 6.7% below its high and 26.5% above its low.
