ABM Industries Shares Rise on Strong Q3 Results and Data Center Growth

ABM Industries Incorporated shares rose on Tuesday after the facility services company reported fiscal Q3 2026 earnings that beat Wall Street expectations on both profit and revenue.

Earnings Snapshot

Adjusted EPS rose 27% year-over-year to $1.04, beating the analyst consensus of $1.01.

Revenue increased 4.2% to $2.317 billion, exceeding the expected $2.310 billion. Organic growth contributed 2.1%, while acquisitions added another 2.1%.

Adjusted EBITDA grew 11% to $139.6 million. Segment operating margin expanded 40 basis points sequentially to 7.7%.

Operating cash flow totaled $146.8 million, with free cash flow reaching $128.4 million.

ABM ended the quarter with $1.8 billion in debt. Its debt-to-pro-forma-adjusted-EBITDA ratio declined to 2.9x, reaching the company's below-3.0x leverage target one quarter ahead of schedule.

Segment Performance

Aviation revenue rose 12% to $328.1 million. Manufacturing & Distribution revenue jumped 18% to $481 million, including 8% organic growth and a 10% contribution from WGNSTAR.

Education revenue increased slightly to $235.8 million. Operating profit grew 9% to $23 million, with margins expanding 70 basis points to 9.7%.

Technical Solutions revenue grew 4% to $259.9 million. However, Business & Industry revenue declined 2.6%, primarily due to customer attrition.

Data Center Momentum

ABM's semiconductor, microgrid, and data center businesses generated nearly $775 million in revenue over the first nine months of the fiscal year. Revenue grew 26% organically, or approximately 40% including WGNSTAR.

These businesses now represent over 11% of total revenue and delivered double-digit combined operating margins. Semiconductor revenue grew 65% organically.

Meanwhile, ABM's microgrid business has grown approximately fourfold since 2022. Organic revenue grew 17% in the first nine months of fiscal 2026.

Outlook

During the earnings call, ABM management highlighted its growing data center business, noting the pipeline is now several times larger than a year ago.

Management said the current 8% organic growth rate does not reflect the opportunities they see over the next two to three years, and they expect the business to achieve "very, very healthy" double-digit growth over time.

ABM narrowed its fiscal 2026 adjusted EPS guidance to $3.95-$4.10, from the previous range of $3.85-$4.15. The analyst consensus stood at $3.98.

Management expects Technical Solutions to rebound in the fourth quarter. They also anticipate Business & Industry to return to organic growth around mid-fiscal 2027.

ABM expects to execute a roughly $20 million microgrid contract for the U.S. Army Corps of Engineers during calendar 2027.

Stock Movement

ABM shares rose 7.10% to $50.39 as of Tuesday's release, trading at a 52-week high.