ABM Industries Inc. (ABM) had a busy Wednesday, and investors loved it. Shares jumped more than 8% after the facility services company delivered fourth-quarter results alongside news of a strategic acquisition that positions it deeper into the lucrative semiconductor industry.
The company reported quarterly revenue of $2.30 billion, up 5.4% year over year and topping the consensus estimate of $2.28 billion. That's the good news. The less-good news is that adjusted net income landed at $54.7 million, or 88 cents per diluted share, missing analyst expectations of $1.09.
Adjusted EBITDA totaled $124.2 million with a margin of 5.6%, down from $125.6 million and 6.0% in the prior year. The margin compression wasn't exactly mysterious: ABM took a $22.2 million pre-tax hit related to prior-year self-insurance adjustments, which shaved roughly 100 basis points off the adjusted EBITDA margin. Not fun, but at least it's a one-time headache.
Operating cash flow came in at $133.4 million, with free cash flow at $112.7 million. The company ended the quarter with $104.1 million in cash and equivalents against total debt of $1.6 billion.
President and CEO Scott Salmirs highlighted the progress made despite a challenging environment: "We advanced several key strategic initiatives in 2025, including meaningful investments in AI and continued strong progress on our ERP implementation following a challenging start."
He also pointed to a major win in the Aviation segment, noting that ABM "secured one of the largest Aviation awards in ABM history at a major gateway airport, which is expected to generate significant annual revenue when it comes online in calendar 2026. Together, these achievements reflect the great work of our team and our ability to execute at a high level in a challenging macro environment."
Capital Returns and Shareholder Love
ABM bought back 1.6 million shares for $73.0 million during the quarter, leaving $183 million available under its share repurchase program at year-end. And if you like dividends, you'll like this: the board approved a quarterly dividend of 29 cents per share, a 9% increase. The dividend will be paid on February 2, 2026, to shareholders of record as of January 14, 2026.
Looking Ahead to 2026
For fiscal 2026, ABM expects organic revenue growth of 3% to 4%, driven by solid demand in Technical Solutions, Aviation, and Manufacturing & Distribution. The WGNSTAR acquisition is expected to add about one percentage point to that, pushing total revenue growth to approximately 4% to 5%.
More importantly for investors, the company guided adjusted EPS to a range of $3.85 to $4.15, comfortably ahead of the $3.64 consensus estimate. That's the kind of beat-and-raise narrative that gets traders excited.
The WGNSTAR Deal Explained
In a separate announcement, ABM revealed it has agreed to acquire WGNSTAR, a leading provider of managed workforce and equipment support services for the semiconductor and high-tech industries, in an all-cash transaction valued at roughly $275 million.
The deal is expected to be slightly dilutive to adjusted EPS in fiscal 2026 due to intangible amortization and interest expense. But here's the thing: ABM projects the acquisition will be 5 to 7 cents accretive in fiscal 2027, with accelerating benefits in the years after as growth and synergies materialize. That's the playbook for strategic M&A—short-term pain for long-term gain.
The transaction is expected to close in ABM's second fiscal quarter of 2026, pending regulatory approvals and customary closing conditions. WGNSTAR will be folded into ABM's Manufacturing & Distribution segment, and the deal will be funded through a mix of cash on hand and existing credit facilities.
ABM Price Action: ABM Industries shares were trading up 8.24% at $49.51 at the time of publication on Wednesday.