ABM Industries Announces Fourth Quarter and Fiscal 2007 Financial Results
ABM Industries Announces Fourth Quarter and Fiscal 2007 Financial Results
SAN FRANCISCO--(BUSINESS WIRE)-Dec. 11, 2007--ABM Industries Incorporated (NYSE:ABM), a leading facility services contractor in the United States, today reported net income for the fourth quarter of fiscal 2007 of $15.0 million ($0.30 per diluted share), compared to $61.6 million ($1.24 per diluted share) for the prior year fourth quarter. Included in the fourth quarter of 2006 is a $45.1 million after-tax ($0.91 per diluted share) gain recognized into income for the settlement of World Trade Center (WTC) insurance claims. In the fourth quarter of fiscal 2007 there is a $4.2 million after-tax ($0.08 per diluted share) reduction in the benefits realized from self insurance reserve adjustments. The insurance reserve adjustment for prior years is the difference between a benefit of $2.5 million in the Company's self insurance reserves in the fourth quarter of fiscal 2007 compared to a benefit of $9.4 million in the fourth quarter of fiscal 2006.
Sales and other income for the fourth quarter of fiscal 2007 were $723.9 million, up 3.9 percent from $696.7 million in the fourth quarter of fiscal 2006.
"We are pleased to achieve the financial targets that we set early in fiscal 2007 and ended the year with a fourth quarter at the upper range of our guidance," said Henrik Slipsager, ABM's president and chief executive officer. "We took action to generate new business and expand services to customers and delivered solid performance across four of our five operating segments.
"Following the close of the quarter, we completed the acquisition of OneSource Services, which represents a significant milestone for ABM since it helps to secure our standing in the domestic facilities services market and positions us to better compete globally," Mr. Slipsager continued. "This acquisition combines two highly valuable facilities services platforms to create considerable scale, breadth and financial strength to continue to expand our business and increase shareholder value. We are on plan for OneSource to be accretive in the second quarter of fiscal 2008, excluding one-time implementation costs."
Mr. Slipsager concluded, "In addition to our business success, our financial position remains very strong. We ended the year with $136.2 million in cash and cash equivalents, and $353.1 million in working capital. We recently replaced our $300 million line of credit with a syndicated five-year $450 million line of credit in conjunction with the acquisition of OneSource.
"We project strong cash flow from operations over the next several years and expect to use it to make key investments in our expansion, to repay outstanding debt, and to support a strong dividend."
The Company reported net income during the year ended October 31, 2007 of $52.4 million ($1.04 per diluted share) on revenues of $2.84 billion, compared to $93.2 million ($1.88 per diluted share) on revenues of $2.79 billion for fiscal 2006. Sales and other income for fiscal 2007 was $2.84 billion, up 4.8 percent from $2.71 billion in 2006. The difference in net income is primarily due to the recognition of $0.91 per diluted share for the settlement of World Trade Center insurance claims in 2006.
For fiscal 2008, the Company expects non-GAAP diluted earnings per share to be in the range of $1.15 to $1.25. This guidance excludes one-time expenses of approximately $20.0 million ($0.25 per diluted share) associated with achieving synergies on OneSource as well as a major financial systems upgrade, shared service center implementation, and relocation of corporate headquarters. The Company expects these expenses to be evenly distributed over the four fiscal quarters. In addition, fiscal 2008 has one additional work day of labor, which increases cost by approximately $4.0 million ($0.05 per diluted share) on janitorial fixed price contracts. Including the approximately $20.0 million of one-time expenses, the Company expects fiscal 2008 GAAP diluted earnings per share to be in the range of $0.90 to $1.00. For the first quarter, the Company expects diluted earnings per share without one-time expenses to be in the range of $0.14 to $0.18 and on a GAAP basis to be in the range of $0.08 to $0.12 per diluted share.
In addition, ABM expects to realize $14 million in incremental cash flow in fiscal 2008 from acquiring net operating loss carry forwards and existing goodwill amortization related to the OneSource acquisition.
A reconciliation of non-GAAP guidance and non-GAAP adjusted gross margins for the fourth quarter and fiscal year ended October 31, 2007 and applicable prior periods is included in the tables below titled: "Reconciliation of ABM's Consolidated GAAP to Consolidated Non-GAAP."
On Wednesday, December 12, 2007 at 6:00 a.m. (PT), 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 B. Sundby. The webcast will be accessible at www.irconnect.com/primecast/07/q4/abm_4q2007.html
Listeners are asked to be online at least 15 minutes early to register, as well as to download and install any complimentary audio software that might be required.
Following the call, the webcast will be available at this URL for a period of 90 days.
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 15 minutes before the event. Telephonic replays will be accessible two hours after the broadcast and will be available through December 19, 2007 by dialing (800) 642-1687, and entering ID #27182430.
About ABM Industries
ABM Industries Incorporated (NYSE:ABM) is among the largest facility services contractors listed on the New York Stock Exchange. With fiscal 2007 revenues in excess of $2.8 billion and now more than 105,000 employees, ABM provides janitorial, parking, security, engineering and lighting services for thousands of commercial, industrial, institutional and retail facilities across the United States as well as Puerto Rico and British Columbia, Canada. The ABM Family of Services includes ABM Janitorial Services; Ampco System Parking; ABM Security Services; ABM Facility Services; ABM Engineering; and Amtech Lighting Services.
Cautionary Statement under the Private Securities Litigation Reform Act of 1995
This press release contains forward-looking statements 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) diversion of management focus from operations as a result of the OneSource and other acquisitions or the failure to timely realize anticipated cost savings and synergies or at all; (2) a technology environment that may be inadequate to support the growth of the business; (3) disruption in functions affected by the transition to a Shared Services Center; (4) a change in the frequency or severity of claims against the Company, a deterioration in claims management, the cancellation or non-renewal of the Company's primary insurance policies or a change in our customers' insurance needs; (5) a change in estimated claims; (6) debt service requirements that cause expense variations and affect cash flow; (7) labor disputes that lead to a loss of sales or expense variations; (8) a decline in commercial office building occupancy and rental rates lowers sales and profitability; (9) financial difficulties or bankruptcy of a major customer; (10) acquisition activity slows; (11) the loss of long-term customers; (12) intense competition that lowers revenue or reduces margins; (13) an increase in costs that the Company cannot pass on to customers; (14) natural disasters or acts of terrorism that disrupt the Company in providing services; (15) significant accounting and other control costs that reduce the Company's profitability; and (16) other issues and uncertainties that may include: unanticipated adverse jury determinations, judicial rulings or other developments in litigation to which the Company is subject, new accounting pronouncements or changes in accounting policies, changes in U.S. immigration law that raise the Company's administration costs, labor shortages that adversely affect the Company's ability to employ entry level personnel, legislation or other governmental action that detrimentally impacts the Company's expenses or reduces sales by adversely affecting the Company's customers, a reduction or revocation of the Company's line of credit that increases interest expense and the cost of capital, low levels of capital investments by customers, which tend to be cyclical in nature, that adversely impact the results of the Company's Lighting segment; 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 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.
Use of Non-GAAP Financial Information
To supplement ABM's consolidated condensed financial statements presented on a GAAP basis, ABM uses adjusted gross margins to show the amount of sales revenue less cost of goods sold, adjusted for changes to insurance reserves for claims associated with previous periods. It has also presented its earnings per share guidance both in accordance with GAAP and excluding certain expected one-time expenses. These adjustments have been made with the intent of providing financial measures that give management and investors a better understanding of the underlying operational results and trends and ABM's marketplace performance. In addition, the non-GAAP gross margin measure is among the primary indicators management uses as a basis for planning and forecasting future periods. The presentation of these non-GAAP financial measures is not meant to be considered in isolation or as a substitute gross margin or earnings per share prepared in accordance with generally accepted accounting principles in the United States.