Earnings Recap — Q3 FY2026
CY Q3 2026 · Reported September 8, 2026 · Beat 3 of last 7 quarters
ABM Industries Inc. reported Q3 FY2026 revenue of $2.32B, in line with consensus, and EPS of $1.04, a beat of 3.0%.
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ABM's semiconductor, microgrid, and data center businesses reached nearly $775 million in nine-month revenue, growing 26% organically, and now represent more than 11% of the company at double-digit margins — a signal that facility and infrastructure services are becoming a larger slice of the AI buildout supply chain. The WGNSTAR acquisition moved ABM inside the fab ("the bull's eye") and the data center pipeline and backlog continue to build, with conversion expected in fiscal 2027 and 2028. The microgrid deferral was characterized as client capital-project timing rather than a demand change, with work already underway.
ABM reported record quarterly revenue of slightly above $2.3 billion, up 4.2% year over year, with 2.1% organic growth and 2.1% from acquisitions. Adjusted EPS rose 27% to $1.04, and adjusted EBITDA increased 11% to $139.6 million. Aviation grew 12% and M&D grew 18% (8% organic), while B&I declined 2.6% on previously discussed client exits and Technical Solutions grew 4% (2% organic) as certain project deferrals from an important client pushed revenue below expectations. Segment operating margin improved 40 basis points sequentially to 7.7%. Free cash flow for the first nine months was $199.6 million versus $42.4 million a year ago, an improvement of over $150 million, and leverage fell below 3x a quarter earlier than planned.
ABM raised the midpoint of its fiscal 2026 adjusted EPS range to $3.95–$4.10, citing strong Q3 performance and confidence in Q4 delivery. Full-year organic revenue growth guidance remains 3%–4%, with management expecting to land toward the higher end; WGNSTAR adds roughly 1 point, bringing total growth to the high end of the 4%–5% range. Segment operating margin guidance was modestly updated to 7.7%–7.8% for the full year, reflecting slightly higher WGNSTAR intangible amortization. Q4 margin is projected to be meaningfully above the high end of the 7.7%–7.8% full-year range, reflecting anticipated seasonal improvements in ATS mix and continued operational actions. Full-year reported free cash flow guidance was raised to approximately $210M from $185M (normalized ~$285M), a $25M improvement on strong working capital performance. Management expects B&I to return to organic growth around the middle of fiscal 2027 as it laps the large UK client exit, and sees M&D positioned to sustain strong organic growth into fiscal 2027 and beyond. ATS is expected to deliver another year of strong growth in fiscal 2027, with data center pipeline converting meaningfully in fiscal 2027 and 2028.
“Through the first 9 months, these businesses generated nearly $775 million of revenue growing 26% organically and approximately 40% when including WGNSTAR. Together, they now represent more than 11% of ABM's revenue and carry a double digit blended operating margin.”
on High-tech segment scale
“Technical Solutions was the 1 area where revenue came in below our expectations, driven by certain project deferrals from an important client. Based on our discussions with that client, we believe this is principally a timing issue rather than a change in the underlying demand environment.”
on Microgrid project deferrals
“We now expect normalized free cash flow of approximately $285 million in fiscal 2026 before the impact of transformation and integration costs. Final RavenVault earnout, and any incremental restructuring. On a reported basis, free cash flow is expected to be approximately $210 million versus our prior forecast of $185 million, a $25 million improvement reflects the strong working capital performance we have delivered through the first 9 months of the year.”
on Free cash flow guidance raise
What will semiconductors, data centers, and microgrids represent as a share of sales a couple of years from now, and how does the profitability of these three businesses compare to the corporate average?
Scott Salmirs said the high-tech businesses will keep becoming a more meaningful part of the mix because they are growing double digits while other segments are closer to GDP or GDP-plus, and ABM continues to invest in experts and sales associates. He said these businesses carry double-digit margins versus ABM's typical low-single-digit average, and in many cases EBITDA margins could be double those of the broader business.
On the deferred projects, how much has already started and what is the visibility on those deferrals? And can you quantify the aviation margin impact from airline cost-relief pressure?
Salmirs said Q3 was affected by project deferrals at an important client, not driven by interest rates, supply chain, or permitting, and ABM is now executing on many deferred projects, expecting significant sequential improvement in ATS revenue, operating profit, and margin in Q4. On aviation, David Orr said profit and margin were pressured by airline clients seeking cost relief due to elevated fuel costs, which was factored into the outlook and is being managed through operational efficiencies.
How much of the high-growth end-market revenue is recurring versus project-based, and can you shift more toward recurring? Also, how should we think about cash flow in 2027?
Salmirs said the goal is to convert project work into long-term maintenance contracts to build recurring revenue. On cash flow, Orr said no big expense items out of the ordinary for 2027, noting ABM funded a roughly $250 million acquisition, used $100 million for buybacks and $51 million for dividends while driving leverage below 3x, and will give more detail in December.