ABM Industries Announces Second Quarter Financial Results; Company Achieves 39.1% Increase in Income from Continuing Operations.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 income 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 for the second quarter of fiscal 2005 was $10.1 million ($0.20 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 39.1%, compared to $7.3 million ($0.15 per diluted share) for the prior year second quarter. Sales and other income for the second quarter of fiscal 2005 were $639.6 million, up 10.1% from $580.9 million in the second quarter of fiscal 2004. Net income, which includes income from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , was $10.5 million ($0.20 per diluted share) for the second quarter of fiscal 2005, up 43.2% compared to $7.3 million ($0.15 per diluted share) for the prior year second quarter. On June June: see month. 2, 2005, the Company completed the sale of substantially all of the operating assets Operating Assets Another term for working capital. of its wholly owned subsidiary Wholly Owned Subsidiary A subsidiary whose parent company owns 100% of its common stock. Notes: In other words, the parent company owns the company outright and there are no minority owners. , CommAir Mechanical Services, which was included in discontinued operations. The Company will realize a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta gain from the sale of CommAir Mechanical Services of approximately $21.0 million in the third quarter of fiscal 2005. "We're we're Contraction of we are. we're we are very pleased with the performance of our business," commented Henrik Henrik is a male given name of Germanic origin, primarily used in Scandinavia, Hungary and Slovenia[1]. Equivalents in other languages are Henry (English), Hendrik (Dutch), Heinrich (German), Enrico (Italian), Henri (French), Enrique (Spanish), and Henrique (Portuguese). Slipsager, ABM's president and chief executive officer. "Quarterly sales reached an all-time all-time adj. Exceeding all others up to the present time: an all-time speed skating record. all-time Adjective Informal high for a second quarter and, exclusive of one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. items, net income was in line with previous guidance, despite higher costs associated with Sarbanes-Oxley compliance." Slipsager continued, "The Company's sales grew due to contributions from acquisitions, new customers in all operating segments, and an expansion of services with existing Janitorial and Engineering customers. Our Parking, Security, Engineering and Lighting businesses posted double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. growth 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. . Parking benefited from new contracts, improvement at airport locations due to increased air traffic across the country, and the termination of unprofitable contracts. Profit contributions from 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. , Sentinel, and Amguard acquisitions enabled Security to achieve year-over-year growth of 37.9% despite absorbing a pre-tax charge of $0.4 million for bad debt." Quarterly income from continuing operations include a number of one-time items. As previously announced by the Company, the Janitorial operation recognized a $6.3 million pre-tax charge, or $3.8 million ($0.08 per diluted share) after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. , for amounts awarded to the plaintiff in a discrimination lawsuit lawsuit: see procedure; tort. following the Company's loss on appeal. The Company has further appealed to the Washington Supreme Court The Washington Supreme Court is the highest court in the judiciary of the U.S. state of Washington. The Court is composed of a Chief Justice and eight Justices. Members of the Court are elected to six-year terms. Justices must retire at the age of 75. . Substantially offsetting this charge, the Company recognized a $2.7 million ($0.05 per diluted share) income tax benefit from the settlement of prior year state tax audits and recorded a $1.2 million pre-tax gain, or $0.7 million ($0.01 per diluted share) after-tax, related to indemnity Recompense for loss, damage, or injuries; restitution or reimbursement. An indemnity contract arises when one individual takes on the obligation to pay for any loss or damage that has been or might be incurred by another individual. payments received on the Company's World Trade Center insurance. The second quarter of fiscal 2005 had one fewer workday than the comparable period in fiscal 2004, resulting in an after-tax benefit of $1.4 million ($0.03 per diluted share) on contracts with variable labor cost but fixed monthly pricing. On a fiscal year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. basis, workdays were the same as the comparable prior year period. The Company's income from continuing operations during the first six months of fiscal 2005 was $18.2 million ($0.36 per diluted share), up 35.4%, compared to $13.4 million ($0.28 per diluted share) for the same period last year. Sales and other income for the six months ended April 30, 2005 were $1.28 billion, up 11.8%, compared to $1.14 billion for the comparable period last year. Net income, which includes income from discontinued operations, was $18.4 million ($0.36 per diluted share) up 34.8% compared to $13.7 million ($0.28 per diluted share) for the first half of 2004. "ABM is focusing its financial and management resources on businesses that contribute to our position as a leader in the facility services industry," Mr. Slipsager continued. "Our financial position remains very strong. At the end of the second quarter, excluding the proceeds from the CommAir sale, the Company had over $52 million in cash and cash equivalents, approximately $246 million in working capital and no debt giving us the base to expand our existing operations by continuing to execute ABM's acquisition strategy." Mr. Slipsager concluded, "Given the current economic climate, our operations are expected to continue to generally perform at or above our earlier forecasts. The time and costs associated with the initial certification of internal controls, as required by Section 404 of Sarbanes-Oxley, is higher than anticipated. Reflecting continued operational strength and the previously mentioned third-quarter gain related to the sale of CommAir, we are increasing our fiscal 2005 guidance for net income to $1.17 to $1.23 per diluted share." CONFERENCE CALL Wednesday Wednesday: see week. morning, June 8, 2005 at 6:00 a.m. (PDT PDT abbr. Pacific Daylight Time PDT Pacific Daylight Time PDT n abbr (US) (= Pacific Daylight Time) → hora de verano del Pacífico PDT ), ABM will host a live webcast of remarks by President & Chief Executive Officer Henrik C. Slipsager, and Executive Vice President & Chief Financial Officer George George, river, c.345 mi (560 km) long, rising in a lake on the Quebec-Labrador boundary, E Canada. It flows N through Indian Lake (125 sq mi/324 sq km) to Ungava Bay (an arm of Hudson Strait). B. Sundby. A webcast of the conference call will be accessible at www.irconnect.com/primecast/05/q2/abm_2q2005.html. Listeners are asked to be online at least 15 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. Following the call, the webcast will be 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 accessible during the period from two hours to seven days after the call by dialing 800/642-1687, and then entering ID # 6676327. About ABM Industries 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 and lighting 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 Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of . The ABM Family of Services includes ABM Janitorial; Ampco System Parking; ABM Security, which includes 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 ) and 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 of America (SSA); ABM Facility Services; ABM Engineering; and Amtech Lighting Services. 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) acquisition activity slows or is unsuccessful; (2) an increase in costs that the Company cannot pass on to customers; (3) intense competition that lowers revenue or reduces margins; (4) 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; (5) 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; (6) 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; (7) financial difficulties 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 a major customer; (8) major labor disputes that disrupt business; (9) the loss of long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. customers; (10) weakness in airline travel and the hospitality industry that affects the results of the Company's Parking segment; (11) low levels of capital investments by customers that impacts project sales of the Lighting segment; (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 det·ri·men·tal adj. Causing damage or harm; injurious. det  ri·men 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 Impairment1. 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. Additional information regarding these and other risks and uncertainties the Company faces is contained in the Company's Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and in other reports it files from time to time with the Securities and Exchange Commission.
BALANCE SHEET SUMMARY
April 30, October 31,
2005 2004
------------------------------------------ ---------------------------
Assets (UNAUDITED)
Cash and cash equivalents $52,513,000 $63,369,000
Trade accounts receivable, net 326,151,000 307,237,000
Assets held for sale 13,912,000 14,441,000
Other current assets 108,922,000 100,079,000
------------------------------------------ ---------------------------
Total current assets 501,498,000 485,126,000
Goodwill 233,378,000 225,495,000
Other intangibles, net 26,491,000 22,290,000
All other assets 110,563,000 109,613,000
------------------------------------------ ---------------------------
Total assets $871,930,000 $842,524,000
========================================== ===========================
Liabilities
Liabilities held for sale $4,184,000 $3,926,000
Other current liabilities 251,378,000 250,502,000
Non-current liabilities 152,174,000 145,935,000
------------------------------------------ ---------------------------
Total liabilities 407,736,000 400,363,000
Stockholders' Equity 464,194,000 442,161,000
------------------------------------------ ---------------------------
Total liabilities and stockholders'
equity $871,930,000 $842,524,000
========================================== ===========================
SELECTED CASH FLOW INFORMATION (UNAUDITED)
Three Months Ended April 30,
2005 2004
----------------------------------------------------------------------
Net cash flows from continuing operating
activities $(749,000) $22,786,000
Net operational cash flows from
discontinued operations (341,000) (490,000)
----------------------------------------------------------------------
Net Cash (Used In) Provided By Operating
Activities $(1,090,000) $22,296,000
Net Cash Used In Investing Activities $(5,129,000) $(49,452,000)
Common stock issued $5,130,000 $1,506,000
Stock buyback (4,158,000) -
Dividends paid (5,215,000) (4,880,000)
----------------------------------------------------------------------
Net Cash Used In Financing Activities $(4,243,000) $(3,374,000)
Six Months Ended April 30,
2005 2004
----------------------------------------------------------------------
Net cash flows from continuing operating
activities $12,711,000 $34,769,000
Net operational cash flows from
discontinued operations 1,062,000 (28,943,000)
----------------------------------------------------------------------
Net Cash Provided By Operating Activities $13,773,000 $5,826,000
Net Cash Used In Investing Activities $(23,798,000) $(50,836,000)
Common stock issued $13,725,000 $5,662,000
Stock buyback (4,158,000) (1,689,000)
Dividends paid (10,398,000) (9,735,000)
----------------------------------------------------------------------
Net Cash Provided By (Used In) Financing
Activities $(831,000) $(5,762,000)
INCOME STATEMENT (UNAUDITED)
Three Months Ended April 30, Increase
2005 2004 (Decrease)
------------------------------- --------------------------------------
Revenues
Sales and other income $639,555,000 $580,923,000 10.1%
Gain on insurance claim 1,195,000 - -
------------------------------- --------------------------------------
Total revenues 640,750,000 580,923,000 10.3%
------------------------------- --------------------------------------
Expenses
Operating expenses and cost of
goods sold 576,726,000 526,748,000 9.5%
Selling, general and
administrative expenses 50,331,000 41,558,000 21.1%
Intangible amortization 1,478,000 1,077,000 37.2%
Interest expense 241,000 241,000 -
------------------------------- --------------------------------------
Total expenses 628,776,000 569,624,000 10.4%
------------------------------- --------------------------------------
Income from continuing
operations before income taxes 11,974,000 11,299,000 6.0%
Income taxes 1,850,000 4,019,000 -54.0%
------------------------------- --------------------------------------
Income from continuing
operations 10,124,000 7,280,000 39.1%
Income from discontinued
operations, net of income
taxes 387,000 60,000 -
------------------------------- --------------------------------------
Net Income $10,511,000 $7,340,000 43.2%
=============================== ======================================
Net Income Per Common Share -
Basic
From continuing operations $0.20 $0.15 33.3%
From discontinued operations 0.01 - -
------------------------------- --------------------------------------
$0.21 $0.15 40.0%
=============================== ======================================
Net Income Per Common Share -
Diluted
From continuing operations $0.20 $0.15 33.3%
From discontinued operations - - -
------------------------------- --------------------------------------
$0.20 $0.15 33.3%
=============================== ======================================
Average Common And Common
Equivalent Shares
Basic 49,730,000 48,713,000 2.1%
Diluted 50,702,000 50,145,000 1.1%
Six Months Ended April 30, Increase
2005 2004 (Decrease)
----------------------------------------------------------------------
Revenues
Sales and other income $1,277,720,000 $1,142,558,000 11.8%
Gain on insurance claim 1,195,000 - -
----------------------------------------------------------------------
Total revenues 1,278,915,000 1,142,558,000 11.9%
----------------------------------------------------------------------
Expenses
Operating expenses and cost
of goods sold 1,155,583,000 1,037,715,000 11.4%
Selling, general and
administrative expenses 95,038,000 81,557,000 16.5%
Intangible amortization 2,834,000 1,945,000 45.7%
Interest expense 493,000 491,000 0.4%
----------------------------------------------------------------------
Total expenses 1,253,948,000 1,121,708,000 11.8%
----------------------------------------------------------------------
Income from continuing
operations before income
taxes 24,967,000 20,850,000 19.7%
Income taxes 6,780,000 7,418,000 -8.6%
----------------------------------------------------------------------
Income from continuing
operations 18,187,000 13,432,000 35.4%
Income from discontinued
operations, net of income
taxes 248,000 243,000 2.1%
----------------------------------------------------------------------
Net Income $18,435,000 $13,675,000 34.8%
======================================================================
Net Income Per Common Share
- Basic
From continuing operations $0.36 $0.28 28.6%
From discontinued
operations 0.01 - -
----------------------------------------------------------------------
$0.37 $0.28 32.1%
======================================================================
Net Income Per Common Share
- Diluted
From continuing operations $0.36 $0.28 28.6%
From discontinued
operations - - -
----------------------------------------------------------------------
$0.36 $0.28 28.6%
======================================================================
Average Common And Common
Equivalent Shares
Basic 49,461,000 48,613,000 1.7%
Diluted 50,552,000 49,965,000 1.2%
SALES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
Three Months Ended April 30, Increase
2005 2004 (Decrease)
------------------------------- --------------------------------------
Sales and Other Income
Janitorial $381,457,000 $355,331,000 7.4%
Parking 99,180,000 93,670,000 5.9%
Security 72,652,000 52,098,000 39.5%
Engineering 57,127,000 50,683,000 12.7%
Lighting 28,787,000 28,937,000 -0.5%
Corporate 352,000 204,000 72.5%
------------------------------- --------------------------------------
$639,555,000 $580,923,000 10.1%
=============================== ======================================
Operating Profit
Janitorial $10,198,000 $11,484,000 -11.2%
Parking 2,448,000 1,822,000 34.4%
Security 2,367,000 1,716,000 37.9%
Engineering 3,180,000 2,892,000 10.0%
Lighting 813,000 666,000 22.1%
Corporate expenses (7,986,000) (7,040,000) 13.4%
------------------------------- --------------------------------------
Operating profit from
continuing operations 11,020,000 11,540,000 -4.5%
Gain on insurance claim 1,195,000 - -
Interest expense (241,000) (241,000) -
------------------------------- --------------------------------------
Income from continuing
operations before income taxes $11,974,000 $11,299,000 6.0%
=============================== ======================================
Six Months Ended April 30, Increase
2005 2004 (Decrease)
--------------------------- ------------------------------------------
Sales and Other Income
Janitorial $757,580,000 $705,936,000 7.3%
Parking 200,306,000 187,528,000 6.8%
Security 145,763,000 92,974,000 56.8%
Engineering 115,175,000 100,119,000 15.0%
Lighting 58,203,000 55,550,000 4.8%
Corporate 693,000 451,000 53.7%
--------------------------- ------------------------------------------
$1,277,720,000 $1,142,558,000 11.8%
=========================== ==========================================
Operating Profit
Janitorial $22,630,000 $23,799,000 -4.9%
Parking 4,836,000 2,811,000 72.0%
Security 5,454,000 3,193,000 70.8%
Engineering 6,181,000 5,417,000 14.1%
Lighting 1,494,000 1,284,000 16.4%
Corporate expenses (16,330,000) (15,163,000) 7.7%
--------------------------- ------------------------------------------
Operating profit from
continuing operations 24,265,000 21,341,000 13.7%
Gain on insurance claim 1,195,000 - -
Interest expense (493,000) (491,000) 0.4%
--------------------------- ------------------------------------------
Income from continuing
operations before income
taxes $24,967,000 $20,850,000 19.7%
=========================== ==========================================
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