Executive Summary

Q1 FY25 delivered modest top-line growth and stable profitability: revenue rose 2.2% to $2.11B, adjusted EPS was $0.87 (vs. $0.86 LY), and adjusted EBITDA was $120.6M with a 5.9% margin, while GAAP EPS was $0.69 (vs. $0.70 LY) .
Management raised the lower end of FY25 adjusted EPS guidance to $3.65–$3.80 (from $3.60–$3.80) and maintained adjusted EBITDA margin at 6.3%–6.5%; interest expense guidance increased to $80–$84M (from $76–$80M) .
Segment mix was favorable: Technical Solutions revenue +22% and Aviation +8% offset slight declines in B&I and M&D; Education grew 2%; ATS strength was driven by microgrids and a $490M backlog cited on the call .
Free cash flow was temporarily negative ($123M) due to ERP-related invoicing reviews in B&I and M&D, with management expecting collections normalization and catching up during the year .
Potential stock catalysts: guidance raise (lower end), ATS momentum/backlog, Aviation new wins, and ERP benefits as cash conversion normalizes; offsets include higher interest expense guide and lingering B&I/M&D softness early in the year .

What Went Well and What Went Wrong

What Went Well
- ATS and Aviation led growth; ATS revenue +22% YoY on strong microgrids, Aviation +8% on healthy demand and new wins; Education +2% .
- Adjusted EPS and adjusted EBITDA improved YoY: $0.87 vs. $0.86 and $120.6M vs. $116.7M; management lifted the lower end of FY25 EPS guidance .
- Strategic execution: ERP rollout to B&I and M&D, ABM Connect data platform, and a refreshed brand; management expects efficiency and analytics benefits post-implementation .
What Went Wrong
- Free cash flow was -$122.9M on ERP-driven invoicing delays; net cash from operations -$106.2M .
- Slight revenue declines persisted in B&I (-1.0%) and M&D (-1.6%) as market headwinds and selective contract decisions weighed on growth .
- Higher interest outlook: FY25 interest expense guidance increased by $4M to $80–$84M, which modestly tightens the P&L outlook despite stronger segments .

Financial Results

Metric	Q1 FY24	Q3 FY24	Q4 FY24	Q1 FY25
Revenue ($USD Billions)	$2.070	$2.094	$2.177	$2.115
GAAP Diluted EPS ($)	$0.70	$0.07	$(0.19)	$0.69
Adjusted EPS ($)	$0.86	$0.94	$0.90	$0.87
Adjusted EBITDA ($USD Millions)	$116.7	$128.1	$128.0	$120.6
Adjusted EBITDA Margin (%)	5.9%	6.4%	6.1%	5.9%
Net Income ($USD Millions)	$44.7	$4.7	$(11.7)	$43.6
Net Income Margin (%)	2.2%	0.2%	(0.5)%	2.1%

Segment performance (Q1 FY25 vs. Q1 FY24):

Segment	Revenue Q1 FY25 ($M)	Revenue Q1 FY24 ($M)	YoY %	Operating Profit Q1 FY25 ($M)	Operating Profit Q1 FY24 ($M)	YoY %
Business & Industry	1,022.9	1,033.1	(1.0)%	79.4	79.6	(0.3)%
Manufacturing & Distribution	394.3	400.9	(1.6)%	39.4	41.3	(4.8)%
Aviation	270.1	249.5	8.2%	12.2	9.7	25.9%
Education	225.3	220.1	2.4%	14.0	12.7	9.9%
Technical Solutions	202.3	165.9	21.9%	16.6	6.6	NM

KPIs and balance sheet/cash flow:

KPI	Q1 FY25
Free Cash Flow ($M)	$(122.9) (ERP-related invoicing delay)
Net Cash from Ops ($M)	$(106.2)
Total Indebtedness ($M)	$1,590.2 (incl. $29.7M LOC); leverage 2.9x
Liquidity ($M)	$296.9 (cash $59.0M)
Share Repurchase	0.4M shares for $21.3M at $51.23 avg
Dividend	$0.265 declared; 236th consecutive
Credit Facility	Upsized/extended to $2.2B, revolver $1.6B + $600M term loan thru 2030
ATS Backlog	~$490M cited on call

Estimates vs. actuals:

S&P Global consensus for Q1 FY25 (revenue/EPS) was unavailable at time of analysis due to SPGI rate limits; we could not determine beat/miss vs. consensus. Values retrieved from S&P Global were unavailable at run time.*

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EPS	FY2025	$3.60–$3.80	$3.65–$3.80	Raised lower end
Adjusted EBITDA Margin	FY2025	6.3%–6.5%	6.3%–6.5%	Maintained
Interest Expense	FY2025	$76–$80M	$80–$84M	Raised
Tax Rate (ex-discrete)	FY2025	29%–30%	29%–30%	Maintained
Quarterly Dividend	Ongoing	$0.265 (raised Dec-24)	$0.265 declared for May 5, 2025	Maintained

Earnings Call Themes & Trends

Topic	Q3 FY24 (Prev-2)	Q4 FY24 (Prev-1)	Q1 FY25 (Current)	Trend
ATS/Microgrids	ATS +25% YoY; microgrids drove growth; outlook raised for FY24 adj EPS	ATS +35% YoY; large RavenVolt earnout accrual reflects strength	ATS +22% YoY; ~$490M backlog; strong 2025 expected	Improving momentum
Aviation demand	+13% YoY revenue; robust markets	+11% YoY revenue; continued wins	+8% YoY; record year expected; new DFW and Southeast hub awards	Strong/steady
B&I/CRE backdrop	Resilient despite office softness	Positioning for 2025 inflection to growth	24% sequential uptick in office leasing; expect H2 growth	Improving
ERP/ELEVATE tech	Efficiency tools cited	Productivity tool benefits in H2	ERP rolled to B&I and M&D; near-term cash drag; long-term cost/analytics benefits	Implementation advancing
Free cash flow cadence	FCF $64.1M in Q3	FCF $15.5M in Q4	FCF $(122.9)M on ERP transition; collections to normalize in-year	Temporarily down; recovery expected
Interest expense	—	FY25 guide $76–$80M	FY25 guide lifted to $80–$84M	Higher

Management Commentary

“We posted 2% organic revenue growth and delivered adjusted EPS of $0.87… we are raising the lower end of our full year adjusted EPS guidance and now see adjusted EPS between $3.65 and $3.80.” — Scott Salmirs, CEO .
“We successfully launched our cloud-based ERP system in the first quarter for B&I and M&D… temporary delays in cash flow… expect improvement next quarter and full normalization in the second half… drive significant cost efficiencies… and provide real-time analytics and reporting.” — Scott Salmirs .
“ABM Connect… consolidates facility, financial, equipment, IoT and service data to provide actionable insights… streamlining airport operations… ensuring compliance… optimizing asset performance with predictive maintenance.” — Scott Salmirs .
“Adjusted EBITDA increased 3% to $120.6 million… ATS operating margin increased 420 bps to 8.2%… supported by $490 million of backlog.” — Earl Ellis, CFO .
“We anticipate Q2 will have a significant increase in cash flow versus Q1… and in the back half we’ll catch up… to deliver full-year cash flows.” — Earl Ellis (ERP collections) .

Q&A Highlights

B&I and office leasing context: Management highlighted a 24% sequential uptick in high-quality office leasing in Q4 CY24 and improving net absorption, supporting an H2 FY25 growth view in B&I .
Federal exposure: Minimal risk; limited exposure mainly in mission-critical with special clearance; not in broad stationary engineering across federal buildings .
Labor costs and supply: ~50% union labor with 3–4% increases locked for 3+ years; non-union wage increases largely passed through to clients; enhanced TA systems reduced time-to-hire .
ERP cash flow mechanics: Manual invoice QC in Q1 delayed billings; collections expected to pick up in Q2 and normalize for full-year FCF delivery .
ATS cadence: Microgrids strong; bundled energy solutions still tied to rates, showing incremental pickup; outlook strengthens as rates ease .
M&D: Lapped major client rebalancing; passed on a ~$50M low-margin opportunity; expect mid-single-digit organic growth in H2 as new wins activate .
Aviation: Scope largely resilient to small changes in traveler volumes; bookings and pipeline remain strong despite airline commentary .

Estimates Context

S&P Global consensus for Q1 FY25 EPS and revenue was not retrievable at run time due to SPGI rate limits, so we cannot assess beat/miss versus Street for the quarter. Values retrieved from S&P Global were unavailable at run time.*
FY25 framework changes to consider for models: raised lower end of adjusted EPS ($3.65–$3.80), unchanged adjusted EBITDA margin (6.3%–6.5%), and higher interest expense ($80–$84M) .

Key Takeaways for Investors

Mix tailwinds intact: ATS (microgrids, data centers) and Aviation continue to outgrow the portfolio, underpinning EPS resilience even as B&I/M&D lag early in the year .
Guidance de-risked at the low end: Raising the floor of FY25 EPS while holding margin targets signals confidence in H2 trajectory across B&I and M&D .
Watch cash conversion: ERP-driven invoicing delays pressured Q1 FCF; management expects sequential improvement in Q2 and normalization in H2—key for valuation and buyback flexibility .
Interest headwind modest but real: Higher interest expense guide partially offsets operating momentum; monitor balance sheet and rate sensitivity .
Aviation pipeline broadening: New airport and airline contracts and ABM Connect differentiation support sustained growth and margin improvement .
CRE inflection in sight: Upticks in leasing and net absorption in Class A office support B&I stabilization and potential H2 growth .
Selectivity remains a positive: Passing on low-margin deals bolsters long-run returns and supports steady margin execution .

Sources: ABM Q1 FY25 8-K and press release, earnings call transcript, and prior quarter press releases and 8-Ks .

Footnote: *SPGI/Capital IQ consensus unavailable at run time due to rate limits; estimates context will be updated when accessible. Values retrieved from S&P Global.

ABM INDUSTRIES INC /DE/ (ABM)·Q1 2025 Earnings Summary