ABM Industries Announces Third Quarter Fiscal 2006 Financial Results; Sales Increase 6.0% to a Quarterly Record of $689.3 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 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 third quarter of fiscal 2006 of $17.3 million ($0.35 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), down 16.2%, compared to $20.6 million ($0.41 per diluted share) for the prior year third quarter. Sales and other income for the third quarter of fiscal 2006 were $689.3 million, up 6.0% from $650.1 million in the third quarter of fiscal 2005. "During the third quarter, we achieved record revenue and quarterly earnings above our previous guidance," 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. "We delivered positive top-line comparisons across our janitorial, parking, security, engineering and lighting segments. Income from continuing operations for the quarter was solid. Our 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 strong, generating $30 million for the quarter." There were two items that specifically impacted the quarterly comparison for janitorial operations. The third quarter of fiscal 2006 included one more work day than the comparable period in fiscal 2005, unfavorably impacting janitorial fixed-price contracts by approximately $2.4 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta . In addition, a gender discrimination lawsuit lawsuit: see procedure; tort. was settled in the third quarter of 2005 for an amount lower than accrued ac·crue v. ac·crued, ac·cru·ing, ac·crues v.intr. 1. To come to one as a gain, addition, or increment: interest accruing in my savings account. 2. , which increased income from continuing operations by $1.3 million pre-tax in that quarter. The 2006 actuarial ac·tu·ar·y n. pl. ac·tu·ar·ies A statistician who computes insurance risks and premiums. [Latin report covering substantially all of the Company's self-insurance self-insurance, n the setting aside of funds by an individual or organization to meet anticipated dental care expenses or dental care claims, and accumulation of a fund to absorb fluctuations in the amount of expenses and claims. reserves was completed in the third quarter of 2006. The report showed favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. developments in the Company's California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. and general and auto liability claims, offset in part by adverse development in the Company's workers' compensation claims outside of California, which resulted in a $7.9 million pre-tax reduction in the Company's self-insurance reserve in the third quarter of 2006. This reduction was $1.1 million less than the $9.0 million pre-tax reduction in self-insurance reserves recorded in the third quarter of 2005. Of the $7.9 million pre-tax benefit in 2006, $4.7 million pre-tax was recorded by Corporate while $3.2 million pre-tax was allocated to the operating segments. The Company reported income from continuing operations during the nine months ended July July: see month. 31, 2006 of $31.6 million ($0.64 per diluted share) on sales and other income of $2.0 billion, compared to $35.1 million ($0.69 per diluted share) on sales and other income of $1.9 billion for the same period last year. The 9.8% year-over-year decrease in income from continuing operations was primarily due to the $2.6 million pre-tax of share-based compensation costs as a result of 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, and $2.4 million pre-tax of professional fees for the Audit Committee's independent investigation of the prior year accounting at 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. . Income from continuing operations in 2005 included a $5.0 million pre-tax litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. loss and a $3.4 million pre-tax charge for the amount the Company believes it overpaid o·ver·pay v. o·ver·paid , o·ver·pay·ing, o·ver·pays v.tr. 1. To pay (a party) too much. 2. To pay an amount in excess of (a sum due). v.intr. To pay too much. SSA LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , which reserve was reduced by $1.0 million pre-tax in the third quarter of 2006. Also included in 2005 was $2.7 million of income tax benefit resulting from a state tax audit settlement and $1.2 million pre-tax gain on the World Trade Center 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. payment. ABM's financial position remains very strong as the Company ended the quarter with $51.5 million in cash and cash equivalents, $261.8 million in working capital and no long term debt. "Given the strength of our balance sheet and our cash flow from continuing operations, we remain well positioned to expand our business through a combination of acquisitions and organic growth and to repurchase re·pur·chase tr.v. re·pur·chased, re·pur·chas·ing, re·pur·chas·es To buy (something) again. n. The act of buying something that one previously sold or owned. Noun 1. shares. We expect income from continuing operations for fiscal 2006 will be in the range of $1.80 to $1.85 per diluted share, which includes approximately $45 million or $0.90 per diluted share for the settlement of the business interruption insurance Noun 1. business interruption insurance - insurance that provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities due to the occurrence of a peril claim related to the destruction of the World Trade Center complex in New York City New York City: see New York, city. New York City City (pop., 2000: 8,008,278), southeastern New York, at the mouth of the Hudson River. The largest city in the U.S. . We are reviewing strategic investments in our information technology infrastructure. Should we decide to implement these programs and enhancements, there will be one-time one-time adj. 1. or one·time a. Occurring or undertaken only once: a one-time winner in 1995. b. costs that are not reflected in our guidance," Slipsager concluded. Conference Call On Thursday Thursday: see week. , September September: see month. 7, 2006 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 and Chief Executive Officer Henrik C. Slipsager, and Executive Vice President and 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. The webcast will be accessible at www.irconnect.com/primecast/06/q3/abm_3q2006.html. Listeners are asked 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. 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 three months. 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 800-524-4293 within fifteen 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 # 5032449. About ABM Industries ABM Industries Incorporated (NYSE:ABM) 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 2005 revenues in excess of $2.5 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 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 , which includes American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of 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); ABM Facility Services; ABM Engineering; and Amtech Lighting Services. Cautionary Statement Under the Private Securities Litigation Reform Act of 1995. 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) delays in remediating the material weakness in controls identified in the Company's security business; (2) 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; (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) inadequate technology systems that cannot support the growth of the business; (5) labor disputes that lead to a loss of sales or expense variations; (6) acquisition activity slows or is unsuccessful; (7) a decline in commercial office building occupancy and rental rates lowers sales and profitability; (8) weakness in airline travel and the hospitality industry that affects the results of the Company's Parking segment; (9) 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; (10) 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; (11) intense competition that lowers revenue or reduces margins; (12) an increase in costs that the Company cannot pass on to customers; (13) natural disasters or acts of terrorism that disrupt the Company in providing services; (14) significant accounting and other control costs that reduce the Company's profitability; and (15) other issues and uncertainties that may include: new accounting pronouncements or changes in accounting policies, 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, 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, unanticipated adverse jury determinations, judicial rulings
or other developments in litigation to which the Company is subject, 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, and 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. 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. The Company undertakes no obligation to publicly update forward-looking statements, whether as a result of new information, future events or otherwise.
BALANCE SHEET SUMMARY
July 31, October 31,
2006 2005
----------------------------------------------------------------------
(UNAUDITED)
Assets
Cash and cash equivalents $51,540,000 $56,793,000
Trade accounts receivable, net 368,903,000 345,104,000
Other current assets 114,199,000 119,556,000
----------------------------------------------------------------------
Total current assets 534,642,000 521,453,000
Goodwill 247,869,000 243,559,000
Other intangibles, net 24,759,000 24,463,000
All other assets 113,504,000 114,235,000
----------------------------------------------------------------------
Total assets $920,774,000 $903,710,000
======================================================================
Liabilities
Current liabilities $272,844,000 $275,074,000
Non-current liabilities 156,212,000 152,710,000
----------------------------------------------------------------------
Total liabilities 429,056,000 427,784,000
Stockholders' Equity 491,718,000 475,926,000
----------------------------------------------------------------------
Total liabilities and stockholders'
equity $920,774,000 $903,710,000
======================================================================
SELECTED CASH FLOW INFORMATION (UNAUDITED)
Three Months Ended July 31,
2006 2005
----------------------------------------------------------------------
Net cash flows from continuing operating
activities $30,104,000 $(2,221,000)
Net operational cash flows from
discontinued operations - (690,000)
----------------------------------------------------------------------
Net Cash Provided By (Used In) Operating
Activities $30,104,000 $(2,911,000)
----------------------------------------------------------------------
Net Cash (Used In) Provided By Investing
Activities $(3,546,000) $18,297,000
----------------------------------------------------------------------
Common stock issued $5,355,000 $3,662,000
Common stock purchases - (27,160,000)
Dividends paid (5,379,000) (5,199,000)
----------------------------------------------------------------------
Net Cash Used In Financing Activities $(24,000) $(28,697,000)
----------------------------------------------------------------------
Nine Months Ended July 31,
2006 2005
----------------------------------------------------------------------
Net cash flows from continuing operating
activities $32,556,000 $7,490,000
Net operational cash flows from
discontinued operations - 372,000
----------------------------------------------------------------------
Net Cash Provided By Operating Activities $32,556,000 $7,862,000
----------------------------------------------------------------------
Net Cash Used In Investing Activities $(19,070,000) $(5,501,000)
----------------------------------------------------------------------
Common stock issued $11,412,000 $17,387,000
Common stock purchases (13,942,000) (31,318,000)
Dividends paid (16,209,000) (15,597,000)
----------------------------------------------------------------------
Net Cash Used In Financing Activities $(18,739,000) $(29,528,000)
----------------------------------------------------------------------
INCOME STATEMENT (UNAUDITED)
Three Months Ended July 31, Increase
2006 2005 (Decrease)
----------------------------------------------------------------------
Revenues
Sales and other income $689,275,000 $650,140,000 6.0 %
Gain on insurance claim - - -
----------------------------------------------------------------------
Total revenues 689,275,000 650,140,000 6.0 %
----------------------------------------------------------------------
Expenses
Operating expenses and cost
of goods sold 612,434,000 572,759,000 6.9 %
Selling, general and
administrative expenses 48,428,000 44,417,000 9.0 %
Intangible amortization 1,357,000 1,430,000 (5.1)%
Interest expense 122,000 220,000 (44.5)%
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Total expenses 662,341,000 618,826,000 7.0 %
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Income from continuing
operations before income
taxes 26,934,000 31,314,000 (14.0)%
Income taxes 9,682,000 10,720,000 (9.7)%
----------------------------------------------------------------------
Income from continuing
operations 17,252,000 20,594,000 (16.2)%
Loss from discontinued
operations, net of income
taxes - (15,000) -
Gain on sale of discontinued
operations, net of income
taxes - 14,221,000 -
----------------------------------------------------------------------
Net Income $17,252,000 $34,800,000 (50.4)%
======================================================================
Net Income Per Common Share
- Basic
Income from continuing
operations $0.35 $0.42 (16.7)%
Loss from discontinued
operations - (0.01) -
Gain on sale of
discontinued operations - 0.29 -
----------------------------------------------------------------------
$0.35 $0.70 (50.0)%
======================================================================
Net Income Per Common Share
- Diluted
Income from continuing
operations $0.35 $0.41 (14.6)%
Loss from discontinued
operations - (0.01) -
Gain on sale of
discontinued operations - 0.29 -
----------------------------------------------------------------------
$0.35 $0.69 (49.3)%
======================================================================
Average Common And Common
Equivalent Shares
Basic 48,846,000 49,487,000 (1.3)%
Diluted 49,306,000 50,462,000 (2.3)%
Nine Months Ended July 31, Increase
2006 2005 (Decrease)
----------------------------------------------------------------------
Revenues
Sales and other income $2,015,984,000 $1,927,860,000 4.6 %
Gain on insurance claim - 1,195,000 -
----------------------------------------------------------------------
Total revenues 2,015,984,000 1,929,055,000 4.5 %
----------------------------------------------------------------------
Expenses
Operating expenses and cost
of goods sold 1,810,932,000 1,731,042,000 4.6 %
Selling, general and
administrative expenses 150,851,000 142,855,000 5.6 %
Intangible amortization 4,428,000 4,264,000 3.8 %
Interest expense 366,000 713,000 (48.7)%
----------------------------------------------------------------------
Total expenses 1,966,577,000 1,878,874,000 4.7 %
----------------------------------------------------------------------
Income from continuing
operations before income
taxes 49,407,000 50,181,000 (1.5)%
Income taxes 17,773,000 15,121,000 17.5 %
----------------------------------------------------------------------
Income from continuing
operations 31,634,000 35,060,000 (9.8)%
Income from discontinued
operations, net of income
taxes - 233,000 -
Gain on sale of discontinued
operations, net of income
taxes - 14,221,000 -
----------------------------------------------------------------------
Net Income $31,634,000 $49,514,000 (36.1)%
======================================================================
Net Income Per Common Share
- Basic
Income from continuing
operations $0.64 $0.71 (9.9)%
Income from discontinued
operations - - -
Gain on sale of
discontinued operations - 0.29 -
----------------------------------------------------------------------
$0.64 $1.00 (36.0)%
======================================================================
Net Income Per Common Share
- Diluted
Income from continuing
operations $0.64 $0.69 (7.2)%
Income from discontinued
operations - - -
Gain on sale of
discontinued operations - 0.29 -
----------------------------------------------------------------------
$0.64 $0.98 (34.7)%
======================================================================
Average Common And Common
Equivalent Shares
Basic 49,086,000 49,470,000 (0.8)%
Diluted 49,735,000 50,522,000 (1.6)%
SALES AND OPERATING PROFIT BY SEGMENT (UNAUDITED)
Three Months Ended July 31, Increase
2006 2005 (Decrease)
----------------------------------------------------------------------
Sales and Other Income
Janitorial $395,872,000 $384,381,000 3.0 %
Parking 115,719,000 102,767,000 12.6 %
Security 77,404,000 74,702,000 3.6 %
Engineering 71,665,000 60,882,000 17.7 %
Lighting 28,097,000 26,877,000 4.5 %
Corporate 518,000 531,000 (2.4)%
----------------------------------------------------------------------
$689,275,000 $650,140,000 6.0 %
======================================================================
Operating Profit
Janitorial $23,131,000 $25,165,000 (8.1)%
Parking 4,552,000 4,079,000 11.6 %
Security 1,980,000 2,502,000 (20.9)%
Engineering 4,450,000 4,146,000 7.3 %
Lighting 116,000 927,000 (87.5)%
Corporate expenses (7,173,000) (5,285,000) 35.7 %
----------------------------------------------------------------------
Operating Profit From
Continuing Operations 27,056,000 31,534,000 (14.2)%
Interest expense (122,000) (220,000) (44.5)%
----------------------------------------------------------------------
Income from continuing
operations before income
taxes $26,934,000 $31,314,000 (14.0)%
======================================================================
Nine Months Ended July 31, Increase
2006 2005 (Decrease)
----------------------------------------------------------------------
Sales and Other Income
Janitorial $1,164,830,000 $1,141,961,000 2.0 %
Parking 327,503,000 303,073,000 8.1 %
Security 230,978,000 220,465,000 4.8 %
Engineering 206,705,000 176,057,000 17.4 %
Lighting 84,241,000 85,080,000 (1.0)%
Corporate 1,727,000 1,224,000 41.1 %
----------------------------------------------------------------------
$2,015,984,000 $1,927,860,000 4.6 %
======================================================================
Operating Profit
Janitorial $58,786,000 $47,795,000 23.0 %
Parking 9,202,000 8,915,000 3.2 %
Security 2,442,000 1,856,000 31.6 %
Engineering 11,400,000 10,327,000 10.4 %
Lighting 700,000 2,421,000 (71.1)%
Corporate expenses (32,757,000) (21,615,000) 51.5 %
----------------------------------------------------------------------
Operating Profit From
Continuing Operations 49,773,000 49,699,000 0.1 %
Gain on insurance claim - 1,195,000 -
Interest expense (366,000) (713,000) (48.7)%
----------------------------------------------------------------------
Income from continuing
operations before income
taxes $49,407,000 $50,181,000 (1.5)%
======================================================================
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