ABM Industries Incorporated (NYSE:ABM) stock is trading higher Tuesday after the facility services company reported third-quarter fiscal 2026 results that beat Wall Street earnings and revenue expectations.

Earnings Snapshot

Adjusted earnings per share rose 27% year over year to $1.04, beating the $1.01 analyst estimate.

Revenue increased 4.2% to $2.317 billion, topping the $2.310 billion estimate. Organic growth contributed 2.1%, while acquisitions added another 2.1%.

Adjusted EBITDA climbed 11% to $139.6 million. Segment operating margin improved 40 basis points sequentially to 7.7%.

Operating cash flow totaled $146.8 million, while free cash flow reached $128.4 million.

ABM ended the quarter with $1.8 billion in debt. Its debt-to-pro forma adjusted EBITDA ratio fell to 2.9x, reaching the company’s below-3x leverage target one quarter early.

Business Performance

Aviation revenue rose 12% to $328.1 million. Manufacturing and Distribution revenue jumped 18% to $481 million, including 8% organic growth and a 10% contribution from WGNSTAR.

Education revenue edged higher to $235.8 million. Operating profit rose 9% to $23 million, while margin expanded 70 basis points to 9.7%.

Technical Solutions revenue increased 4% to $259.9 million. However, Business & Industry revenue fell 2.6%, mainly due to client exits.

ABM’s semiconductor, microgrid and data-center businesses generated nearly $775 million in revenue through the first nine months. Revenue grew 26% organically and about 40% including WGNSTAR.

Those businesses accounted for more than 11% of total revenue and generated a double-digit blended operating margin. Semiconductor revenue surged 65% organically.

Meanwhile, ABM’s microgrid business has grown roughly fourfold since 2022. Organic revenue increased 17% during the first nine months of fiscal 2026.

Outlook

During the earnings call, ABM Industries highlighted its growing exposure to data centers, where its pipeline is now a multiple of where it stood a year ago.

Management said the current 8% organic growth rate does not reflect the opportunity it sees over the next two to three years and expects “very, very healthy” double-digit growth in the business over time.

ABM narrowed its fiscal 2026 adjusted EPS guidance to $3.95-$4.10 from $3.85-$4.15. The analyst estimate is $3.98.

Management expects Technical Solutions to rebound in the fourth quarter. It also expects Business & Industry to return to organic growth around the middle of fiscal 2027.

ABM expects to execute an approximately $20 million microgrid contract for the U.S. Army Corps of Engineers in calendar 2027. Data-center revenue, meanwhile, grew 8% organically year to date.

ABM Price Action: ABM Indus shares were up 7.10% at $50.39 at the time of publication on Tuesday. The stock is trading near its 52-week high of $50.12, according to Benzinga Pro data.

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