ABM Industries Incorporated (NYSE:ABM) today announced revenues for the first quarter of fiscal year 2011 of $1.03 billion compared to first quarter of fiscal year 2010 revenues of $869.9 million. Net income for the first quarter of fiscal year 2011 was $8.4 million, a 34.3% decrease from $12.8 million in the first quarter of fiscal year 2010. Net income per diluted share for the first quarter of fiscal year 2011 decreased 33.7% to $0.16 compared to net income per diluted share of $0.24 in the first quarter of fiscal year 2010. Net income for the first quarter of fiscal year 2011 was impacted by $2.5 million after-tax of transaction costs associated with The Linc Group acquisition in 2010, $2.3 million after-tax of labor expense from one additional work day and $0.5 million after-tax in higher state unemployment insurance tax compared to the year-ago quarter.
"The Company's financial results met our expectations for the first quarter and were consistent with our guidance targets for the fiscal year," said Henrik Slipsager, president and chief executive officer, ABM Industries Incorporated. "Revenues increased 18% year-over-year, reaching a quarterly record of $1.03 billion, and improved sequentially by 14%. The businesses we acquired during 2010 – Diversco, L&R Parking companies and The Linc Group – drove sales growth in the quarter. Sales generated by the newly-acquired businesses and a return to organic growth will continue to produce year-over-year revenue gains for the 2011 fiscal year. Despite the top line growth, net income in the first quarter also was impacted by increased year-over-year amortization and interest costs related to the Linc acquisition. However, our focus on improving margins and profitability produced 9% growth in adjusted EBITDA in the first quarter, including the impact of one additional working day.
"All four Divisions produced revenue increases as the acquired companies generated more than $156 million in sales during the first quarter, ahead of plan, and we saw small overall improvement in organic growth as well. ABM Janitorial slightly increased organic revenues year-over-year for the first time in eight quarters. Janitorial's profitability was impacted by one additional working day, higher state unemployment insurance expense and unanticipated costs associated with snow removal which impacted certain clients. Engineering revenues nearly doubled compared to the year-ago quarter on the strength of sales generated by The Linc Group, which contributed more than $93 million in revenues. Engineering's operating profit increased year-over-year, driven by the Linc business, which was slightly accretive to earnings in the first quarter excluding transaction costs, ahead of our expectations. Parking increased revenues more than 35%, bolstered by new sales and contributions from the L&R companies, while profitability was essentially flat, partly resulting from snow and other weather-related costs. Security revenues were up modestly, including more than $3 million in sales from Diversco, while operating profit remained even with the year-ago quarter."
Slipsager concluded: "We are encouraged by the pace of integration and sales contributions of the companies we acquired last year. The additional revenues will generate year-over-year sales growth and help drive profitability. We will leverage our recent investments in an expanded footprint, increased sales and additional talent to deliver on our financial plans and projections for the year."
Income from continuing operations for the first quarter of fiscal year 2011 was $8.4 million ($0.16 per diluted share) compared to $12.8 million ($0.24 per diluted share) in the year-ago quarter. Excluding items impacting comparability, adjusted income from continuing operations was $11.7 million, or $0.22 per diluted share, for the first quarter of fiscal year 2011. This compares to adjusted income from continuing operations of $14.0 million, or $0.27 per diluted share, in the first quarter of fiscal year 2010, with the year-over difference primarily a result of the additional work day in the first quarter of fiscal year 2011.
The Company's adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and excluding discontinued operations and items impacting comparability) for the first quarter of fiscal year 2011 was $35.7 million compared to $32.7 million in the first quarter of fiscal year 2010.
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