ABM Industries Announces First Quarter Financial Results.Business Editors SAN FRANCISCO--(BUSINESS WIRE)--March 11, 2003 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 ) today reported net income for the first quarter ended January 31, 2003 of $4.3 million ($0.09 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) compared to $8.0 million ($0.16 per diluted share) reported for the first quarter of fiscal 2002. The earnings were in line with the lower-than-expected results announced by the Company in its February 28, 2003 press release. Sales and other income for the first quarter of 2003 were $580.6 million, up 10.1% from $527.6 million in the first quarter of 2002. Net cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $17.8 million compared to $12.5 million for the comparable quarter last year. Net income for the first quarter 2003 was adversely impacted by significant declines in 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. from the Janitorial segment, substantially the Northeast region, and the Lighting segment. Partially offsetting these declines were operating profits of $2.6 million ($1.7 million after tax) generated by ABM Lakeside Building Maintenance, which was acquired in July 2002. "First quarter performance was extremely disappointing," said Henrik C. Slipsager, ABM's President and Chief Executive Officer. "We have initiated management changes in our Northeast Janitorial Region, including the recently announced hiring of Scott Salmir as Executive Vice President in charge of overseeing that region from our New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of offices. While we believe this will address a number of the problems that affected the first quarter, we anticipate that this region will continue to perform below earlier expectations for the balance of the fiscal year," said Slipsager. "The disappointing results in Lighting were primarily due to higher labor costs, including those related to a number of newer national contracts. Proper actions have been initiated, although we expect that the second quarter will also be affected. We believe that the problems are short-term," Slipsager continued. "The U.S. economic downturn has increased vacancies throughout the country and particularly contributed to a reduction in higher margin capital project work for our technical divisions and additional service revenue in Janitorial," stated Mr. Slipsager. "Despite the disappointing profits, I was pleased to see the quarter over quarter sales growth, as well as continued strong cash flow," he added. Wednesday morning, March 12, at 6:00 a.m. (Pacific Standard Time), ABM will host a live webcast of remarks by President & Chief Executive Officer Henrik C. Slipsager and Senior Vice President & Chief Financial Officer George B. Sundby, who will also answer questions from a panel of financial analysts who will join Slipsager and Sundby on the conference call. The webcast will be accessible at www.irconnect.com/primecast/03/q1/abm_1q2003/mhtml by clicking on ABM at that site. Listeners are requested to be online at least fifteen minutes early to register, as well as to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any complimentary audio software that might be required. The webcast will be archived at the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. 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 90 days thereafter. In addition to the webcast, a limited number of toll-free telephone lines will be available for listeners who are among the first to call 877/440-9648 within fifteen minutes before the event. Telephonic replays will be accessible during the period from two to 48 hours thereafter by dialing 800/642-1687, and then entering ID #8760469. ABM Industries Incorporated is the largest facility services contractor 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 annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. revenues in excess of $2.1 billion and more than 62,000 employees, ABM provides janitorial, parking, engineering, security, lighting, elevator elevator, in machinery elevator, in machinery, device for transporting people or goods from one level to another. The term is applied to the enclosed structures as well as the open platforms used to provide vertical transportation in buildings, large ships, , mechanical and network services for thousands of commercial, industrial, institutional and retail facilities in hundreds of cities across North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. . The ABM Family of Services includes ABM Janitorial, Ampco System Parking, ABM Engineering, American Commercial Security (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 ), Amtech Lighting, Amtech Elevator, CommAir Mechanical and ABM Service Network. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Cautionary Safe Harbor Disclosure for Forward Looking Statements 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: Because of the factors set forth below, as well as other variables affecting the Company's operating results, past financial performance should not be considered a reliable indicator of future performance, and investors should not use historical trends to anticipate results or trends in future periods. The statements contained herein which are not historical facts are 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 are subject to meaningful risks and uncertainties, including but not limited to: (1) significant decreases in commercial real estate occupancy, resulting in reduced demand and pricing pressure for building maintenance and other facility services in the Company's major markets, (2) inability to pass through cost increases in a timely manner, or at all, or to reduce expenses when sales decline, (3) loss or bankruptcy bankruptcy, in law, settlement of the liabilities of a person or organization wholly or partially unable to meet financial obligations. The purposes are to distribute, through a court-appointed receiver, the bankrupt's assets equitably among creditors and, in most of one or more of the Company's major customers, which could adversely affect the Company's ability to collect its accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying or recover its deferred costs, (4) major collective bargaining collective bargaining, in labor relations, procedure whereby an employer or employers agree to discuss the conditions of work by bargaining with representatives of the employees, usually a labor union. issues that may cause loss of revenues or cost increases that non-union companies can use to their advantage in gaining market share, (5) significant shortfalls in adding additional customers in existing and new territories and markets, (6) a protracted pro·tract tr.v. pro·tract·ed, pro·tract·ing, pro·tracts 1. To draw out or lengthen in time; prolong: disputants who needlessly protracted the negotiations. 2. slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. in the Company's acquisition activities, (7) legislation or other governmental action that severely impacts one or more of the Company's lines of business, such as price controls that could restrict price increases, or the unrecovered cost of any universal employer-paid health insurance, as well as government investigations that adversely affect the Company, (8) 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, which would increase interest expense or the cost of capital, (9) cancellation or nonrenewal of the Company's primary insurance policies, as many customers contract out services based on the contractor's ability to provide adequate insurance coverage and limits, (10) catastrophic uninsured or underinsured un·der·in·sure tr.v. un·der·in·sured, un·der·in·sur·ing, un·der·in·sures To insure under a policy that provides inadequate benefits: Be certain that you are not underinsured against catastrophic illness. claims against the Company, the inability of the Company's insurance carriers to pay otherwise insured claims, or inadequacy in the Company's reserve for self-insured claims, (11) inability to employ entry level personnel due to 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. , (12) resignation, termination, death or disability of one or more of the Company's key executives, which could adversely affect customer retention and day-to-day management of the Company, (13) inability to successfully integrate acquisitions into the Company, and (14) other material factors that are disclosed from time to time in the Company's public filings with 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. Securities and Exchange Commission, such as reports on Forms 8-K, 10-K and 10-Q.
BALANCE SHEET SUMMARY (UNAUDITED)
January 31, January 31, Increase
2003 2002 (Decrease)
------------ ------------- ----------
Assets
------
Current assets $432,087,000 $457,454,000 -5.5%
Goodwill 181,216,000 117,796,000 53.8%
All other assets 104,170,000 102,456,000 1.7%
Total assets $717,473,000 $677,706,000 5.9%
Liabilities
-----------
Current liabilities $242,769,000 $220,193,000 10.3%
Notes payable - 942,000 -
Other non-current liabilities 92,691,000 86,459,000 7.2%
Total liabilities $335,460,000 $307,594,000 9.1%
Stockholders' Equity $382,013,000 $370,112,000 3.2%
--------------------
Total liabilities and
stockholders' equity $717,473,000 $677,706,000 5.9%
SELECTED CASH FLOW INFORMATION (UNAUDITED)
Three Months Ended
January 31, Increase
2003 2002 (Decrease)
------------ ----------- ----------
Net Cash Provided By Operating
Activities $17,814,000 $12,461,000 43.0%
Net Cash Used In Investing
Activities $(16,711,000) $(5,576,000) -
Common stock issued $4,559,000 $3,987,000 14.3%
Stock buyback (9,297,000) - -
Dividends paid (4,640,000) (4,415,000) 5.1%
Net debt borrowings (payments) - (10,877,000) -
Increase in bank overdraft - 8,986,000 -
Net Cash Used In Financing
Activities $(9,378,000) $(2,319,000) -
SUMMARY INCOME STATEMENT (UNAUDITED)
Three Months Ended
January 31, Increase
2003 2002 (Decrease)
------------ ------------ ----------
Sales and other income $580,626,000 $527,552,000 10.1%
Operating expenses and cost of
goods sold 526,383,000 474,783,000 10.9%
Selling, general and
administrative expenses 47,606,000 39,616,000 20.2%
Interest expense 125,000 265,000 -52.8%
Income before income taxes $6,512,000 $12,888,000 -49.5%
Net income $4,338,000 $7,991,000 -45.7%
Net income per common share:
Basic $0.09 $0.16 -43.8%
Diluted $0.09 $0.16 -43.8%
Average common shares
outstanding:
Basic 49,053,000 48,966,000 0.2%
Diluted 49,972,000 50,678,000 -1.4%
SALES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
Three Months Ended
January 31, Increase
2003 2002 (Decrease)
------------- ------------- ----------
Sales And Other Income
Janitorial $330,852,000 $286,800,000 15.4%
Parking 94,415,000 89,486,000 5.5%
Engineering 45,627,000 43,670,000 4.5%
Security 37,789,000 32,163,000 17.5%
Lighting 33,146,000 32,567,000 1.8%
Elevator 28,182,000 26,493,000 6.4%
Other 10,484,000 16,156,000 -35.1%
Corporate 131,000 217,000 -39.6%
------------- -------------
$580,626,000 $527,552,000 10.1%
Operating Profit
Janitorial $7,807,000 $10,843,000 -28.0%
Parking 590,000 1,048,000 -43.7%
Engineering 2,030,000 2,321,000 -12.5%
Security 1,342,000 1,195,000 12.3%
Lighting 680,000 1,909,000 -64.4%
Elevator 951,000 916,000 3.8%
Other (123,000) 698,000 -
Corporate expenses (6,640,000) (5,777,000) 14.9%
------------- -------------
Operating Profit 6,637,000 13,153,000 -49.5%
Interest expense (125,000) (265,000) -52.8%
------------- -------------
Income before income taxes $6,512,000 $12,888,000 -49.5%
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