Facility management services provider ABM Industries Inc posted a 4.2% year-over-year increase in fiscal third-quarter revenue to $2.3171 billion for the period ended July 31, 2026, setting a new quarterly record, with organic growth and acquisitions each contributing 2.1 percentage points. Net income climbed 19%, and the company lifted its full-year free cash flow projection while modestly raising the midpoint of its adjusted earnings per share guidance.

Manufacturing and distribution, along with aviation operations, led the growth as total revenue rose from $2.224 billion in the same period last year. Manufacturing and distribution revenue advanced 17.6% to $481 million, driven by the WGNstar acquisition, new client contracts, and expansion in the technology market segment. ABM completed the WGNstar purchase in February 2026 for roughly $283.4 million in cash, and the company, which provides staffing and equipment support services to semiconductor and high-tech clients in the U.S. and Ireland, was a primary contributor to acquisition-related revenue growth during the quarter.

Aviation revenue grew 12.5% to $328.1 million, which ABM attributed to air travel demand and the gradual ramp-up of a previously secured contract at London Heathrow Airport. Technology solutions revenue rose 4.2% to $259.9 million, though performance lagged company expectations as one major client deferred certain projects. Education revenue was essentially flat, edging up 0.3% to $235.8 million. The largest segment, commercial and industrial, saw revenue decline 2.6% to $1.0122 billion, reflecting the exit from a major UK client contract and continued softness in the U.S. West Coast market.

Third-quarter net income increased 19% to $49.7 million from $41.8 million in the prior-year period, with diluted earnings per share rising to $0.84 from $0.67, an approximate 25% gain. Net margin improved to 2.1% from 1.9%. Adjusted net income grew 19% to $61.5 million, and adjusted diluted EPS increased to $1.04 from $0.82, a roughly 27% jump. Adjusted EBITDA rose 11% to $139.6 million. Profit improvements were primarily driven by higher segment operating income, lower taxes, and reduced ongoing corporate expenses, partially offset by increased interest costs from the WGNstar acquisition. Segment operating margin stood at 7.7%, flat year-over-year but up 40 basis points from the prior quarter.

Free cash flow for the first nine months approached $200 million. Operating cash flow for the third quarter totaled $146.8 million and free cash flow reached $128.4 million, both below year-ago levels. However, on a nine-month basis, operating cash flow rose to $275 million from $101 million, and free cash flow climbed to $199.6 million from $42.4 million. ABM attributed the improvement in nine-month cash flow to working capital management and stabilization of its enterprise resource planning system.

At quarter-end, total debt stood at approximately $1.8 billion, with a leverage ratio of 2.9 times as defined under the revolving credit agreement. Available liquidity was $605.8 million, including $110.5 million in cash and cash equivalents. The company also established a $300 million accounts receivable financing facility during the quarter to broaden funding sources, and management expects to further reduce leverage before the fiscal year closes.

ABM maintained its full-year organic revenue growth guidance of 3% to 4%, with actual growth expected to land near the upper end of that range, while total revenue growth is also projected to approach the top of the 4% to 5% range. Full-year adjusted EPS guidance was narrowed to $3.95 to $4.10 from $3.85 to $4.15, raising the midpoint to $4.025 from $4.00. Operating cash flow and free cash flow expectations for the year were increased to roughly $300 million and $210 million, respectively, with the free cash flow projection raised by approximately $25 million. Meanwhile, the company trimmed its full-year segment operating margin outlook to 7.7% to 7.8% from 7.8% to 8.0%, reflecting margin pressure in aviation, merger-related amortization in manufacturing and distribution, and project deferrals in technology solutions.