ABM Industries Inc.

Second-quarter revenue increased 8.4% year over year to $2.3 billion, driven by 6.1% organic growth and 2.3% from acquisitions. Net income was $43.1 million, or $0.73 per diluted share, versus $42.2 million, or $0.67 per share, a year ago; adjusted net income was $52.9 million, or $0.90 per diluted share, versus $54.1 million, or $0.86 per share. Adjusted EBITDA rose to $131.7 million. Segment operating margin was 7.3%, down 60 basis points year over year but up 20 basis points sequentially. By segment, Technical Solutions revenue grew 27% to $267.3 million, Aviation rose 20% to $310.8 million, Manufacturing & Distribution rose 17% to $463.8 million, Education grew 2% to $232.2 million, and B&I was essentially flat at $1 billion. For the year, management kept adjusted EPS guidance at $3.85 to $4.15, maintained organic revenue growth guidance of 3% to 4% but now expects the high end, and reiterated free cash flow of about $250 million before certain transformation, earn-out, integration, and restructuring items. Segment operating margin for fiscal 2026 is expected toward the low end of the 7.8% to 8% range, with improvement weighted to the back half.

Scott Salmirs described the quarter as strong and emphasized that ABM is seeing broad underlying demand in secular growth areas like energy infrastructure, semiconductors, airport modernization, and education. He repeatedly pointed to a more favorable second-half setup, especially in ATS and M&D, where he expects higher volume, better mix, and margin expansion as project pipelines mature. His tone was constructive and confident, but he acknowledged near-term macro uncertainty, B&I pressure from client exits and weak West Coast office markets, and the need to keep reducing leverage.

David Orr led with the hard numbers: $2.3 billion in revenue, $0.90 adjusted EPS, $131.7 million of adjusted EBITDA, and segment margin of 7.3%. He said leverage ended at 3.2x with $1.9 billion of indebtedness and $614 million of liquidity, including $95 million of cash, and noted second-quarter free cash flow of $22.4 million and first-half free cash flow of $71.2 million versus a negative $107.8 million last year. He also quantified guidance items, including about $110 million of interest expense, a 29% to 30% normalized tax rate, and roughly $250 million of free cash flow before about $65 million of excluded items such as transformation costs, RavenVolt earn-out, WGNSTAR-related acquisition costs, and restructuring.

Analysts focused on the ATS microgrid and battery storage ramp, B&I client-exit pressure, ERP progress, WGNSTAR integration, and whether the new self-insurance accounting treatment changes guidance. Management said ATS had a couple of large battery energy storage projects and expects more traditional microgrid work in the second half, with better margin mix as design/engineering ramps. On B&I, Scott said the TfL exit and West Coast pricing pressure are the main drags, but margin should improve in the back half; on self-insurance, David said the company now feels it can better predict the adjustment and has folded it into full-year guidance for transparency.