Hot stock to watch: ABM Industries, Inc. (NYSE: ABM)

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ABM Industries, Inc. (NYSE: ABM) stock rose over 1.8% on 19th June, 2020 (As of 10:47 am GMT-4; Source: Google finance) after the company posted better than expected results for the second quarter of FY 20. The company has reported adjusted income from continuing operations for the second quarter of 2020 of $40.4 million compared to $31.5 million for the second quarter of fiscal 2019. This is mainly due to significant increase in higher margin Work Orders as clients reacted to COVID-19 during the second quarter.  The Company also reflects the nimble operating model by managing direct labor and related personnel costs to align with the operating environment.   Further, the Company had reduced certain corporate expenses such as information technology costs and share-based compensation. The company delivered the net loss for the second quarter of 2020 of $136.8 million compared to net income of $29.7 million last year. The Company’s cash position was of total $555.9 million at the end of April, 2020. On May 28, 2020, the Company had amended its Credit Facility to reflect these borrowings, enhance flexibility through the COVID-19 pandemic, and preempt a scheduled stepdown to its maximum total leverage ratio by July 31, 2020.  The Company had ended the second quarter with total debt of $1,357.5 million, that includes $153.1 million in standby letters of credit.

ABM in the second quarter of FY 20 has reported the adjusted earnings per share of 60 cents, beating the analysts’ estimates for the adjusted earnings per share of 27 cents, according to the Zacks Consensus Estimate. The company had reported 6.2 percent fall in the adjusted revenue to $1.50 billion in the second quarter of FY 20, beating the analysts’ estimates for revenue by 3.67%. The fall in revenues was on back of COVID-19 related disruptions, facility closures, and service scope changes, particularly within the Aviation, Technical Solutions and Education segments.  There was significant demand for COVID-19 related Work Orders (tags) in the Business & Industry, Technology & Manufacturing and Education segments partially offset these results. The COVID-19 pandemic has had a significant effect on economic and market conditions, particularly within the Education, Aviation, and Technical Solutions segments.

On the other hand, the company announced the resignation of Executive Vice President and Chief Financial Officer, D. Anthony Scaglione.  Dean Chin, ABM’s current Senior Vice President, Chief Accounting Officer and Corporate Controller, is now appointed as interim Chief Financial Officer, effective from July 1, 2020.

Additionally, the company during the quarter, had repurchased approximately 0.2 million shares of common stock for $5.1 million. The Company in March 2020, suspended all further share repurchases.  As of April 30, 2020, $144.9 million of repurchases had remained under the $150 million share repurchase authorization. The company has declared a cash dividend of $0.185 per common share payable on August 3, 2020.

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