ABM Industries Announces First Quarter Financial Results; Company Achieves a 25% Increase in Net Income on Record Revenue of $647 Million.SAN FRANCISCO San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden -- ABM Industries ABM Industries Incorporated NYSE: ABM is an American corporation involved in outsourced, building maintenance. Divisions include ABM Janitorial, Ampco System Parking, ABM Engineering, American Commercial Security (ACSS), Security Services of America (SSA), Amtech Lighting, and Incorporated (NYSE NYSE See: New York Stock Exchange :ABM ABM: see guided missile. ABM - Asynchronous Balanced Mode ), a leading facility services contractor in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , today reported net income for the first quarter of fiscal 2005 was $7.9 million ($0.16 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share) up 25.4% compared to $6.3 million ($0.13 per diluted share) for the prior year first quarter. Sales and other income for the first quarter of fiscal 2005 increased 13.4% to $647.4 million from $570.8 million in the first quarter of fiscal 2004. Net cash flow from continuing operating activities was $14.9 million, up 6.4% compared to $14.0 million for the comparable quarter last year. "We are very pleased with our first quarter performance," stated Henrik Slipsager, ABM's president and chief executive officer. "All of our major operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon experienced gains in both sales and operating profits Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. , including our Lighting business. In particular, Parking, Security, and Engineering businesses showed substantial year-over-year improvements. ABM's operating results benefited from contributions from acquisitions completed in the last twelve months, new contracts and an expansion of services with existing customers," he added. "During the quarter, we extended our geographic reach with the acquisitions of Sentinel Guard Systems and Colin Service Systems," Mr. Slipsager continued. "These strategic acquisitions enhanced our security services Security services are state institutions for the provision of intelligence, primarily of a strategic nature, but also including protective security intelligence. Examples include the Security Service (MI5) and the Secret Intelligence Service (MI6) in the United Kingdom, and the in Los Angeles Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. and San Francisco and our janitorial businesses in the Northeast and Mid-Atlantic states Mid-At·lan·tic States See Middle Atlantic States. Noun 1. Mid-Atlantic states - a region of the eastern United States comprising New York and New Jersey and Pennsylvania and Delaware and Maryland U.S.A. . In addition to these acquisitions, I am encouraged by the progress we are making in our Lighting business. This segment of our business is still a turnaround situation, but our move from being primarily focused on national coverage to targeted regional and local sales, coupled with adding new local salespersons in each of our key markets, is having a positive effect on our results," he added. Mr. Slipsager concluded, "Our net cash flows from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the improved by approximately 6% to $14.9 million. We ended the quarter with $63 million in cash and cash equivalents, $235 million in working capital and no debt. Given our strong sales and marketing momentum, continued organic growth, and the benefit of recent acquisitions, we are increasing our fiscal 2005 guidance to $0.98 to $1.03 per diluted share. This is exclusive of future acquisitions, and does not include the adoption of SFAS SFAS Statement of Financial Accounting Standards SFAS Special Forces Assessment and Selection SFAS Student Financial Aid Services SFAS Sport Fishing Association of Singapore SFAS Safety Features Actuation System SFAS Statewide Fixed Assets System 123R, which will require the Company to expense stock options and become effective in the Company's fourth quarter beginning August 1, 2005. Currently, the Company estimates that stock-based compensation expense for the fourth quarter of 2005 will be approximately $0.02 per diluted share. For the second quarter of fiscal 2005, we are projecting earnings per diluted share of $0.21 to $0.23. The second quarter has one less work day compared to the same period last year." Conference Call ABM Industries Incorporated will host a conference call on Tuesday, March 8, 2005, at 6:00 a.m. Pacific Time (9:00 a.m. Eastern Time). The call will be hosted by Henrik Slipsager, president and chief executive officer, and George Sundby, executive vice president and chief financial officer. A live broadcast over the Internet will be accessible at www.irconnect.com/primecast/05/q1/abm_1q2005.html and through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's Web site at www.abm.com. The webcast will be archived online within one hour of the completion of the conference call and available at this URL URL in full Uniform Resource Locator Address of a resource on the Internet. The resource can be any type of file stored on a server, such as a Web page, a text file, a graphics file, or an application program. for a period of one year. In addition to the webcast, a limited number of toll-free telephone lines will also be available for listeners who are among the first to call (877) 440-9648 within 15 minutes before the event. Telephonic replays will be available for 48 hours after the call by dialing (800) 642-1687, and then entering ID #4346231. About ABM Industries Incorporated ABM Industries Incorporated is among the largest facility services contractors listed on the New York Stock Exchange New York Stock Exchange (NYSE) World's largest marketplace for securities. The exchange began as an informal meeting of 24 men in 1792 on what is now Wall Street in New York City. . With fiscal 2004 revenues in excess of $2.4 billion and more than 73,000 employees, ABM provides janitorial, parking, security, engineering, lighting and mechanical services for thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across the United States and British Columbia British Columbia, province (2001 pop. 3,907,738), 366,255 sq mi (948,600 sq km), including 6,976 sq mi (18,068 sq km) of water surface, W Canada. Geography , Canada. The ABM Family of Services includes ABM Janitorial, Ampco System Parking, ABM Security Services, which includes American Commercial Security Services (ACSS ACSS Africa Center for Strategic Studies ACSS Aluminum Conductor Steel Supported (cable) ACSS African Crop Science Society ACSS Association of Computer Support Specialists ACSS Aviation Communication and Surveillance Systems ) and Security Services of America (SSA (Serial Storage Architecture) A fault tolerant peripheral interface from IBM that transfers data at 80 and 160 Mbytes/sec. SSA uses SCSI commands, allowing existing software to drive SSA peripherals, which are typically disk drives. ), ABM Facility Services, which includes ABM Engineering and CommAir Mechanical, and Amtech Lighting. Cautionary Statement Under the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. that set forth management's anticipated results based on management's plans and assumptions. Any number of factors could cause the Company's actual results to differ materially from those anticipated. These risks and uncertainties include, but are not limited to: (1) an increase in costs that the Company cannot pass on to customers; (2) intense competition that lowers revenue or reduces margins; (3) a change in actuarial analysis Actuarial Analysis The analysis of an investment's risk done by an actuary. Notes: A highly educated actuary will use statistics and historical data in an attempt to measure the risk of a particular investment. See also: Actuary, Life Insurance, Risk, Risk Averse that causes an unanticipated change in insurance reserves; (4) a change in the frequency or severity of claims against the Company, a deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in claims management, or the cancellation or non-renewal of the Company's primary insurance policies; (5) a decline in commercial office building occupancy rates Noun 1. occupancy rate - the percentage of all rental units (as in hotels) are occupied or rented at a given time pct, per centum, percent, percentage - a proportion in relation to a whole (which is usually the amount per hundred) lowers sales and profitability; (6) financial difficulties or bankruptcy of a major customer; (7) major labor disputes that disrupt business; (8) the loss of long-term customers; (9) weakness in airline travel and the hospital industry that affects the results of the Company's Parking segment; (10) low levels of capital investments by customers that impacts project sales of the Lighting and Mechanical segments, (11) acquisition activity slows or is unsuccessful; (12) the Company's significant accounting and other control costs increase; (13) an adverse internal control evaluation under Section 404 of the Sarbanes-Oxley Act See SOX. affects ABM's stock price; and (14) other issues and uncertainties that may include: labor shortages A Labor shortage is an economic condition in which there are insufficient qualified candidates (employees) to fill the market-place demands for employment at any price. This condition is sometimes referred to by Economists as "an insufficiency in the labor force. that adversely affect the Company's ability to employ entry level personnel, a reduction or revocation The recall of some power or authority that has been granted. Revocation by the act of a party is intentional and voluntary, such as when a person cancels a Power of Attorney that he has given or a will that he has written. of the Company's line of credit that increases interest expense and the cost of capital, legislation or other governmental action that detrimentally impacts the Company's expenses or reduces sales by adversely affecting the Company's customers such as state or locally-mandated healthcare benefits, new accounting pronouncements or changes in accounting policies, impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. of goodwill and other intangible assets Intangible Asset An asset that is not physical in nature. Notes: Examples are things like copyrights, patents, intellectual property, and goodwill. These are the opposite of tangible assets. , the resignation, termination, death or disability of one or more of the Company's key executives that adversely affects customer retention or day-to-day management of the Company, and inclement in·clem·ent adj. 1. Stormy: inclement weather. 2. Showing no clemency; unmerciful. in·clem weather that disrupts the Company in providing services.
BALANCE SHEET SUMMARY
January 31, October 31,
2005 2004
-----------------------------
Assets (UNAUDITED)
Cash and cash equivalents $62,975,000 $63,369,000
Trade accounts receivable, net 331,707,000 317,713,000
Other current assets 109,886,000 101,899,000
-----------------------------
Total current assets 504,568,000 482,981,000
Goodwill 234,995,000 227,447,000
Other intangibles, net 26,977,000 22,290,000
All other assets 108,364,000 109,806,000
-----------------------------
Total assets $874,904,000 $842,524,000
=============================
Liabilities
Current liabilities $269,432,000 $254,428,000
Non-current liabilities 147,958,000 145,935,000
-----------------------------
Total liabilities 417,390,000 400,363,000
Stockholders' Equity 457,514,000 442,161,000
-----------------------------
Total liabilities and stockholders'
equity $874,904,000 $842,524,000
=============================
SELECTED CASH FLOW INFORMATION (UNAUDITED)
Three Months Ended January 31,
2005 2004
-----------------------------
Net cash flows from continuing operating
activities $14,863,000 $14,037,000
Net operational cash flows from
discontinued operation - (30,507,000)
-----------------------------
Net Cash Provided By (Used In) Operating
Activities $14,863,000 $(16,470,000)
Net Cash Used In Investing Activities $(18,669,000) $(1,384,000)
Common stock issued $8,595,000 $4,156,000
Stock buyback - (1,689,000)
Dividends paid (5,183,000) (4,855,000)
-----------------------------
Net Cash Provided By (Used In) Financing
Activities $3,412,000 $(2,388,000)
INCOME STATEMENT (UNAUDITED)
Three Months Ended
January 31, Increase
2005 2004 (Decrease)
--------------------------------------
Revenues
Sales and other income $647,363,000 $570,823,000 13.4%
Expenses
Operating expenses and cost of
goods sold 585,929,000 517,459,000 13.2%
Selling, general and
administrative expenses 47,062,000 42,393,000 11.0%
Intangible amortization 1,356,000 868,000 56.2%
Interest expense 252,000 250,000 0.8%
--------------------------------------
634,599,000 560,970,000 13.1%
--------------------------------------
Income before income taxes 12,764,000 9,853,000 29.5%
Income taxes 4,840,000 3,518,000 37.6%
--------------------------------------
Net Income $7,924,000 $6,335,000 25.1%
======================================
Net Income Per Common Share
Basic $0.16 $0.13 23.1%
Diluted $0.16 $0.13 23.1%
Average Common And Common
Equivalent Shares
Basic 49,192,000 48,512,000 1.4%
Diluted 50,402,000 49,785,000 1.2%
SALES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
Three Months Ended
January 31, Increase
2005 2004 (Decrease)
--------------------------------------
Sales and Other Income
Janitorial $376,123,000 $350,605,000 7.3%
Parking 101,126,000 93,858,000 7.7%
Security 73,111,000 40,876,000 78.9%
Engineering 58,048,000 48,176,000 20.5%
Lighting 29,416,000 26,613,000 10.5%
Other 9,198,000 10,448,000 -12.0%
Corporate 341,000 247,000 38.1%
--------------------------------------
$647,363,000 $570,823,000 13.4%
======================================
Operating Profit
Janitorial $12,432,000 $12,315,000 1.0%
Parking 2,388,000 989,000 141.5%
Security 3,087,000 1,477,000 109.0%
Engineering 3,001,000 2,565,000 17.0%
Lighting 681,000 618,000 10.2%
Other (229,000) 262,000 -
Corporate expenses (8,344,000) (8,123,000) 2.7%
--------------------------------------
Operating Profit 13,016,000 10,103,000 28.8%
Interest expense (252,000) (250,000) 0.8%
--------------------------------------
Income before income taxes $12,764,000 $9,853,000 29.5%
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