ABM Profit Misses View, Cuts FY Guidance; Announces Strategic Initiative

(RTTNews) - ABM Industries Inc (ABM), a provider of facility solutions, on Wednesday reported third-quarter net earnings of $1.5 million or $0.03 per share compared with $19.4 million or $0.34 per share last year.

Excluding items, adjusted earnings for the quarter were $0.47 per share.

Revenues for the quarter were $1.35 billion compared with $1.28 billion in the prior year.

Analysts polled by Thomson Reuters estimated earnings of $0.49 per share on revenues of $1.33 billion for the quarter. Analysts' estimates typically exclude special items.

For the full year 2015, the company cut the top end of its earnings guidance by 5 cents and now expects a range of $1.75 to $1.80 per share. Analysts expect earnings of $1.80 per share.

ABM also announced a $200 million share repurchase program, and said it will pay a quarterly dividend of $0.160 per share.

Separately, ABM announced a comprehensive strategic initiative focused on driving sustainable profitability and growth, as well as creating stockholder value.

As part of its strategic transformation, the company anticipates pre-tax restructuring charges of $45 million to $60 million. The majority of these restructuring charges will be incurred through the third quarter of fiscal 2016 and are primarily for severance, project fees, and the potential write-down of certain investments.

ABM expects the majority of the organizational benefits to be in place by the end of the first half of fiscal 2016.

Once the strategy and realignment is fully implemented by the second half of fiscal 2017, the company expects an annualized run-rate for operational benefits of $40 million to $50 million in EBITDA.

"We have taken a fresh look at how our resources and people are deployed and will be taking steps to better align our structure to the company's long-term strategic goals...Removing cost and complexity from our business will make us more flexible to rapidly meet changing customer demands," said CEO Scott Salmirs.

ABM also announced today that Tracy Price, who has served as ABM executive vice president and president of ABM Facility Solutions Group, will be leaving the company.

In connection with Price's departure, ABM plans to contribute its "Unified Workforce" software platform into a newly formed company. Price will serve as CEO of the new company, and ABM will retain a minority investment interest in the new venture.