ABM Industries Inc. has released its fiscal third-quarter results for 2025, revealing a mixed financial landscape. The company successfully surpassed revenue forecasts, driven by growth in key operational areas. However, its adjusted earnings per share did not meet analyst projections, indicating some challenges on the profitability front. Despite this, ABM demonstrated robust improvements in cash flow and expanded its share repurchase program, signaling confidence in its long-term financial health. Furthermore, a strategic restructuring initiative is underway, designed to enhance operational efficiency and drive future cost reductions.
For the third fiscal quarter of 2025, ABM Industries reported a substantial increase in revenue, reaching $2.22 billion. This figure represents a 6.2% rise from the $2.09 billion reported in the same period last year, and it exceeded the anticipated $2.15 billion. The growth was largely propelled by strong performances across various segments. Specifically, Technical Solutions revenue saw a 19% increase, bolstered by higher microgrid sales and recent acquisitions. The Aviation sector also experienced a 9% uplift, attributed to robust air travel demand. Manufacturing & Distribution recorded an 8% gain, benefiting from new client acquisitions and business expansions. Additionally, the Business & Industry segment grew by 3% due to geographic diversification and client retention, with Education also contributing a 3% growth.
Conversely, the adjusted net income for the quarter stood at $51.7 million, translating to $0.82 per diluted share. This outcome fell short of the $0.95 per share estimate and represented a slight decline from the $53.6 million, or $0.84 per diluted share, reported in the previous year. Despite the earnings miss, adjusted EBITDA saw a 5% increase, reaching $125.8 million, with margins holding steady at 5.9%. A highlight of the quarter was the significant improvement in operating cash flow, which surged by 120.1% to $175 million from $79.5 million. Free cash flow also dramatically improved, rising by 134.3% to $150.2 million from $64.1 million, primarily due to enhanced collection processes following an ERP system conversion.
As of the quarter's end, ABM maintained $69.3 million in cash and cash equivalents, with total indebtedness at $1.6 billion, resulting in a leverage ratio of 2.8x. The company's available liquidity was a healthy $691.0 million. In a move to return value to shareholders, ABM repurchased approximately 0.6 million shares for $27.1 million at an average price of $48.77 per share during the quarter, with an additional 0.5 million shares repurchased for $23.0 million after the quarter concluded. Year-to-date share repurchases amounted to about 1.5 million shares, totaling $71.3 million. The board further demonstrated its commitment to shareholder returns by approving a $150 million increase in the share repurchase authorization, leaving $233 million available for future buybacks. A cash dividend of 26.5 cents per share was also declared, payable on November 3 to shareholders of record on October 2.
In August, ABM initiated a comprehensive restructuring program aimed at streamlining operations and improving the efficiency of its support functions. This program is expected to yield approximately $35 million in annualized cost savings, with benefits beginning in the fourth quarter and achieving full run-rate by early fiscal 2026. The company anticipates incurring about $10 million in restructuring charges during the fourth quarter. Scott Salmirs, President and CEO, expressed satisfaction with the quarter's performance, highlighting the mid-single-digit organic revenue growth and strong free cash flow. He noted that all segments achieved organic growth, and new bookings for the first three quarters exceeded $1.5 billion, marking a 15% year-over-year increase, which positions the company for robust revenue and earnings growth in the upcoming year.
Looking forward, ABM has adjusted its fiscal 2025 adjusted EPS outlook to $3.65, which is at the lower end of its previously projected range of $3.65 to $3.80 and falls below the analyst consensus of $3.75. The company also anticipates an adjusted EBITDA margin of 6.3% to 6.5%. Management expects a significant improvement in adjusted EPS and margins during the fourth quarter, driven by the benefits of the restructuring program and strong performance within the Technical Solutions segment. Following these announcements, ABM shares were observed trading slightly lower in premarket activity.