Sep 8, 2026 earnings call — Record revenue and stronger cash flow
Record quarterly revenue of slightly above $2.3 billion and 27% adjusted EPS growth; company raised its full year free cash flow outlook.
Revenue $2.3B (est $2.3B) · EPS $1.04 (est $1.01)
Key quotes
"Through the first 9 months, these businesses generated nearly $775 million of revenue growing 26% organically and approximately 40% when including WGNSTAR."
"We now expect normalized free cash flow of approximately $285 million in fiscal 2026 before the impact of transformation and integration costs."
"you know, this quarter was about $15 million in deferrals and largely, almost all of those projects are going to land in Q4, a little bit in Q1 of next year."
Analyst Q&A 7
High-tech business share and profit
Q (Tim Mulrooney · William Blair): He asked how big the high-tech businesses (semiconductors, data centers, microgrids) might become in the sales mix in a few years and how their profitability compares to the company average. He also asked David whether the higher free cash flow guidance is apples-to-apples and why it was raised.
A: They said the high-tech area is growing double digits and will become a more meaningful part of the business, and they are hiring experts and sales associates to invest in it. They said profitability in these markets is double digit versus the company's average, which is typically in the low single digits, and EBITDA margins in those markets could be double. David said the free cash flow target is $2.10 on an as reported basis and the raise was driven by a strong working capital quarter and accelerated collections from the new system.
"So look, we are still super optimistic about that area of work." — Scott Salmirs (CEO)
Timing of deferred projects
Q (Robert W. Baird): He asked how much of the deferred projects have already started, what still needs to start, and how much visibility they have on those deferrals. He also asked about aviation margin concessions and how much they affected margins, and about intangible amortization and how much falls off next year.
A: Scott said this quarter had about $15 million in deferrals and largely almost all of those projects are going to land in Q4 and a little bit in Q1, and they are already turning wrenches on those projects now. He said aviation margin pressure is stabilizing and margins showed a modest sequential improvement this quarter. David said they had about $12 million allocated to intangibles this year, expect some modest fall off next year, and that WGNSTAR is tracking well above the roughly $120 to $130 million annualized revenue guidance.
"But, you know, this quarter was about $15 million in deferrals and largely, almost all of those projects are going to land in Q4, a little bit in Q1 of next year." — Scott Salmirs (CEO)
Project vs recurring revenue mix
Q (Faiza Alwy · Deutsche Bank): She asked how much of the high-growth end-market revenue is project-based versus recurring, whether they can shift more to recurring, and under what circumstances. She also asked if there are any big cash items to expect in 2027.
A: Scott said the goal is to convert project work into maintenance contracts so the revenue becomes more recurring. David said right now roughly 15% to 20% of that revenue is on a project basis and over time they want more long-term recurring contracts. On 2027 cash flow David said there are no big expense items out of the ordinary and they will provide more detail in December.
"right now, roughly 15% to 20% of that revenue is on a project basis, which is still great for us because it means we are staying really connected with the client at good margins." — David Orr (CFO)
Data center pipeline and California issues
Q (David Silver · Freedom): He asked whether ABM is bidding on data centers under construction, the cadence of contract awards, and whether quality uptime (UPS) helps win bigger data center projects. He also asked about trends and pressures in California and where the issues sit.
A: Scott said they have been mining the data center market, are adding sales assets, and their pipeline right now is a multiple of where it was at this time last year; they expect healthy double digit growth in data centers over the next 2 to 3 years. He said quality uptime (UPS) is a very important part of the power transition puzzle for data centers and big customers. On California he said the issue is not systemic, it is focused in Northern California, they made pricing decisions they view as no-regret, and they expect much of this to be behind them by mid next year; David added colocators are their main near-term target in the data center space.
"In fact, our pipeline right now is a multiple of where it was at this time last year." — Scott Salmirs (CEO)
Q4 margin outlook and EPS
Q (Brianna Camden · UBS): She asked why the EPS midpoint is higher while margins are lower and other items are similar. She also asked how confident management is that margins will ramp in Q4 and how that should accelerate going forward.
A: David said the EPS outlook reflects where they are 9 months through the year and they use a prescriptive approach to margin forecasting. He said you could expect margins north of 8% in the fourth quarter, which is similar to last year's 8.2%, and that the ATS business (which has done anywhere between 10% and 11% operating profit margin) is the single biggest margin driver in Q4.
"You know, I think you could expect margins north of 8% in the fourth quarter." — David Orr (CFO)
Pricing discipline and aviation mix
Q (Mark Riddick · Sidoti and Company): He asked about current pricing dynamics and comfort level across services and the revenue mix benefits. He also asked about the airport/airline mix (now about 60/40) and what a reasonable long-term mix might be and timing.
A: Scott said they are very positive on their pricing approach and have a pricing council with hurdle rates for medium to large contracts to keep discipline. He said escalations and annual wage escalations are an important, long-standing strength for ABM. On aviation he said a 70/30 airports/airlines split in 3 to 5 years would be a reasonable sentiment given airport upgrades and infrastructure opportunities.
"We are real positive on our pricing approach." — Scott Salmirs (CEO)
Microgrid award and Heathrow impact
Q (Tate Sullivan · Maxim Group): He asked if the Army Corps microgrid award was from a longtime ABM customer or related to an acquisition. He also asked if airport traffic is still good, about Heathrow's contribution to aviation growth, and how the UK international mix looks after the TFL exit and Heathrow win.
A: Scott said the Army Corps is not a long-term client and ABM was part of a joint venture to win the work, and that the Army Corps picked them because of their microgrid experience, which suggests a large government addressable market. He said the aviation pipeline is strong, and David said a good chunk of aviation growth is from the Heathrow start-up; David also said the loss of the TFL contract is a pretty good balance with the win of the Heathrow contract so international mix has not changed much.
"it is really thrilling because they the provider picked us to partner with because of the work that we do in microgrids" — Scott Salmirs (CEO)