Executive Summary
ABM reported a solid Q3 2024, underscoring the resilience of its diversified facility-solutions platform. Revenue of $2.094B rose 3.3% year over year, with organic growth of 2.8% and contribution from the Quality Uptime Services acquisition in Technical Solutions. Adjusted EPS of $0.94 beat internal expectations, supported by margin gains across key segments (Aviation, ATS, and M&D) and a disciplined cost base. Management reaffirmed ABM’s cash-generative, asset-light model and raised full-year guidance, signaling confidence in a constructive late-2024 trajectory despite ongoing CRE headwinds.
The quarter showcased breadth of strength: Aviation revenue up 13% with margins expanding to 6.6%; Technical Solutions up 25% on strong microgrid activity and improved profitability (8.5% margin); Education remained solid, and B&I weathered a soft CRE environment with a 1% decline but stable margins. The company highlighted its workforce-productivity technology (WPO) as a meaningful margin lever and reiterated a disciplined capital-allocation stance (acquisition of Quality Uptime Services for ~$118M, ongoing share repurchases, and a plan to retire excess capital into high-return opportunities).
Looking ahead, ABM raised FY2024 adjusted EPS to $3.48–$3.55 (from $3.40–$3.50), with adjusted EBITDA margin near 6.3% and normalized free cash flow near the top end of $240–$270M (excluding ~$45M of ELEVATE/integration costs). Management emphasized continued cross-sell opportunities, secular growth in data-center and energy-resiliency markets, and a potential rebound in certain CRE demand signals over the next 12–18 months. Investors should monitor (i) the cadence of M&D rebalancing and its impact on near-term growth, (ii) RavenVolt backlog visibility and project timing, (iii) further advances in ABM’s analytics-enabled productivity tools, and (iv) the trajectory of data-center-related services as AI and edge-compute demand scales.
Key Performance Indicators
QoQ: -54.00% | YoY:-73.07%
QoQ: -89.27% | YoY:-95.21%
QoQ: -89.20% | YoY:-94.97%
Key Insights
Revenue: $2.094B, +3.3% YoY; Gross Profit: $263.2M, gross margin 12.57%; Operating Income: $37.4M, margin 1.79%; Net Income: $4.7M, net margin 0.22%; Adjusted EPS: $0.94; GAAP EPS: $0.07; Adjusted EBITDA: $128.1M, margin 6.4%; EBITDA margin trend steady vs prior year.
Segment performance (Q3 2024 vs. prior year): B&I revenue $1.00B (-1%), Aviation revenue $268.4M (+13%), M&D revenue $377.1M (-1%), Education revenue $228.3M (+4%), Technical Solutions revenue $209.7M (+25% total; +20% org...
Financial Highlights
Revenue: $2.094B, +3.3% YoY; Gross Profit: $263.2M, gross margin 12.57%; Operating Income: $37.4M, margin 1.79%; Net Income: $4.7M, net margin 0.22%; Adjusted EPS: $0.94; GAAP EPS: $0.07; Adjusted EBITDA: $128.1M, margin 6.4%; EBITDA margin trend steady vs prior year.
Segment performance (Q3 2024 vs. prior year): B&I revenue $1.00B (-1%), Aviation revenue $268.4M (+13%), M&D revenue $377.1M (-1%), Education revenue $228.3M (+4%), Technical Solutions revenue $209.7M (+25% total; +20% organic, +5% from Quality Uptime).
Segment profitability: B&I operating profit $77.8M, margin 7.7%; Aviation operating profit $17.8M, margin 6.6%; M&D operating profit $40.9M, margin 10.9%; Education operating profit $18.0M, margin 7.9%; Technical Solutions operating profit $17.9M, margin 8.5%.
Cash flow and liquidity: Operating cash flow $79.4M; Free cash flow $63.9M; Nine-month normalized free cash flow $187M; Cash at period end $86.3M; Total debt $1.459B; Net debt $1.373B; Debt to pro forma adjusted EBITDA 2.5x; Available liquidity $513.9M.
Capital allocation: Acquisition spend $118M; Dividends $14.1M; Share repurchases $0 in Q3; Remaining buyback authorization $186M.
Outlook: FY2024 adj EPS $3.48–$3.55; Adjusted EBITDA margin ~6.3%; Normalized free cash flow near the top end of $240–$270M (excluding $45M ELEVATE/integration costs).
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
2.09B |
3.25% |
3.77% |
| Gross Profit |
263.20M |
0.30% |
3.34% |
| Operating Income |
37.40M |
-73.07% |
-54.00% |
| Net Income |
4.70M |
-95.21% |
-89.27% |
| EPS |
0.07 |
-94.97% |
-89.20% |
Key Financial Ratios
operatingProfitMargin
1.79%
operatingCashFlowPerShare
$1.26
freeCashFlowPerShare
$1.01
priceEarningsRatio
186.48
Management Commentary
Key management takeaways from the QQ3 2024 earnings call:
- Growth & strategy: Scott emphasized breadth of momentum across segments, noting double-digit growth in Technical Solutions and Aviation and the role of the WPO productivity analytics tool in driving efficiency. He highlighted the Quality Uptime Services acquisition as a strategic enhancment in the data-center vertical and reiterated ABM’s flywheel model (capital-light, cash generation, and scale). Quote: “ABM posted another strong quarter driven by double-digit growth in Technical Solutions and Aviation and supported by the continued resilience of our business and industry segments.”
- Financial performance & execution: Earl detailed Q3 revenue of $2.1B (+3.3% YoY) with Adjusted EPS of $0.94 and adjusted EBITDA of $128.1M (6.4% margin). He highlighted the year-over-year drivers (Aviation and ATS) and the offsets (corporate costs). Quote: “Third quarter revenue of $2.1 billion increased 3.3%, comprised of 2.8% organic growth and the balance driven by our recent acquisition.”
- Margin dynamics & operating leverage: Management pointed to favorable labor trends (slower wage growth, better labor availability) and productivity improvements from WPO as key drivers of margin expansion, especially in ATS and Aviation. Quote: “There’s a couple of dynamics here. First on the labor front, wages haven’t been rising to the same extent... availability of labor is getting much better... our workforce productivity optimization tool has been really great.”
- Market conditions & outlook: Scott signaled CRE rebound uncertainty but remained positive on office expansion signals and the secular growth in manufacturing, semiconductors, and data centers. Quote: “The B&I segment has remained quite resilient... things seem to be firming up and pressure to return to offices is definitely on the rise.”
- M&A, capital allocation & guidance: The team underscored disciplined capital allocation (Quality Uptime in Tech Solutions; continued buybacks; strong balance sheet) and raised full-year guidance. Quote: “We are raising our full year guidance for adjusted EPS and now expected to be in the range of $3.48 to $3.55.”
- Backlog & visibility: RavenVolt backlog and project timing were discussed as key contributors to future performance, with management stressing that the earn-out is forecast to reflect ongoing improvements. Quote: “RavenVolt’s backlog has never been stronger... it’s money in the bank.”
"ABM posted another strong quarter driven by double-digit growth in Technical Solutions and Aviation and supported by the continued resilience of our business and industry segments."
— Scott Salmirs
"We acquired Quality Uptime Services, which expands our position in the fast-growing data center vertical by adding new capabilities in uninterrupted power supply systems and battery maintenance."
— Scott Salmirs
Forward Guidance
ABM’s management reaffirmed a constructive near-term path and raised FY2024 guidance to adjusted EPS of $3.48–$3.55, with EBITDA margin around 6.3% and normalized free cash flow near the upper end of $240–$270M (excluding ~$45M of ELEVATE/integration costs). The primary drivers of outperformance are continued strength in Aviation and Technical Solutions, higher utilization of WPO productivity tools, and ongoing monetization of data-center opportunities via APS and UPS-related services from Quality Uptime. The company also highlighted disciplined cost control and revenue diversification across B&I, Education, M&D, and ATS as a buffer against CRE cyclicality.
Strategic trends to monitor:
- M&D rebalancing: Q4 will reflect the full ramp of a major customer rebalancing in M&D; management expects a temporary drag, with a view that growth returns in late 2024 into 2025.
- ATS backlog cadence: Backlog for large-scale microgrid projects (e.g., RavenVolt) provides visibility but timing can shift quarter-to-quarter; management maintains line-of-sight into Q4 and 2025.
- Data-center / energy resiliency: AI-driven demand and data-center expansion should sustain growth in ATS and M&D, complemented by APS deployments in Education.
- Margin trajectory: Labor dynamics (slower wage inflation, better labor supply) and WPO-driven productivity are the key near-term margin accelerants; ABM cautions that near-term rebalancing could compress margins modestly in some segments, though the overall trend remains positive.