ABM Industries (NYSE: ABM) has announced its April ended second quarter financial results on June 17, 2020. The Chief Executive Officer, Scott Salmirs, has commented that, as the company is an essential service provider it is focusing on keeping its facilities safe and sanitized for the customers’ and its team members safety, the company has leveraged its business model to adapt to the current pandemic environment and it has helped to achieve a great margin performance rapidly and effectively in the second quarter to meet their customers’ demand across diversified markets.
- Revenue: The Revenue in Q2 2020 was $1.49 billion which has decreased by 6.18% compared to $1.59 Billion in Q2 2019 (Y-o-Y) and the revenue has decreased by 7.24% compared to $1.61 Billion in Q1 2020 (Q-o-Q).
- Gross Profit: The Gross Profit in Q2 2020 was $1.30 Billion which has decreased by 7.6% compared to $1.41 in Q2 2019 (Y-o-Y).
- Gross Margin: The Gross Margin for Q2 2020 was 87.3 % which has decreased by approximately 100 basis points compared to a gross margin of 88.68 in Q2 2019.
- Operating Expenses: The Total Operating Expenses in Q2 2020 was $306.5 million which has increased compared to $125.9 million in Q2 2019, this increase was primarily due to impairment cost of $172.8 million related to goodwill and intangible assets.
- Loss from operations: The loss from operations in Q2 2020 was $116.7 million which is due to the disruptions in its daily operations caused by the pandemic.
- Net Loss: The Net loss in Q2 2020 was $136.8 million which shows the effect of the pandemic on the business, compared to a net profit of $29.7 million in Q2 2019.
- Earnings/ Loss per Share: The Company has incurred a loss per share of $1.63 per share in Q2 2020 compared to a profit of $0.64 per share in Q2 2019.
Revenue by Segment
The Company has six reportable segments generating its total revenue.
- Business and Industry: This segment has generated a revenue of $785.6 million which has decreased by 2.7% compared to $807.7 million in Q2 2019 (Y-o-Y).
- Technology & Manufacturing: The Revenue from this segment for Q2 2020 was $233.7 million which has increased by 4.2% compared to $224.3 million in Q2 2019 (Y-o-Y).
- Aviation: The Revenue from this segment for Q2 2020 was $184.7 million which has decreased by 26.1% compared to 250 million in Q2 2019 (Y-o-Y) as aviation is one of the worst affected industries during the pandemic crisis.
- Education: The Revenue from this segments for Q2 2020 was $200.1 million which has decreased by 4.4% compared to $209.3 in Q2 2019 (Y-o-Y).
- Technical Solutions: The revenue from these segment for Q2 2020 was $122.3 million which has decreased by 10% compared to $135.9 million in Q2 2019 (Y-o-Y).
The Company has eliminated $30.4 million of intersegment revenue reaching total revenue of $1.49 Billion. The Company has said that the decline in technical solutions, aviation and education segments was due to the disruption caused by COVID- 19 pandemic.
Cash Flow Highlights
The operating activities has generated a positive net cash flow of $162.2 million which has increased by 69% compared to cash flow of $95.7 million in Q2 2019, the net cash flow from investing activity was negative $7 million, net cash flow generated from financing activity was $328.4 million. The company in Q2 2020 has generated free cash flow of $154.6 million which has increased compared to a free cash flow of $79.8 million in Q2 2019.
The Total current assets in Q2 2020 were $1.71 Billion which has increased by 34% compared to $1.27 Billion in Q2 2019. The Company had a short term debt of $87.4 million and a long term debt of $1.10 billion in Q2 2020, the company has a long term investment of $10.6 million in Q2 2020. The Shareholders Equity for Q2 2020 was $1.39 billion which has decreased by 9.5% compared to $1.54 billion in Q2 2019 (Y-o-Y).
The Company on March 24, 2020, decided to use the remaining of its outstanding credit facility and has added approximately $300 million credit to its balance sheet resulting in a cash position of $555.9 million as of Q2 2020. In the second quarter, the company has repurchased its common stock for $5.1 million which is around 0.2 million shares and has suspended any further share repurchases. The company has about $144.9 million outstanding under its $150 million share repurchase facility as of April 30, 2020. The Company has declared a quarterly dividend of $0.185 per common stock which amounts to a total distribution of $12.3 million.