Please note that earlier this morning, we issued our press release announcing our third quarter 2025 financial results and outlook. David has been in the room on many previous earnings calls, but this is his first time as CFO, and I couldn't be happier. David brings tremendous experience, strong relationships, and deep industry knowledge, and we are already seeing the benefits of his leadership, highlighted by our cash flow performance in Q3. We delivered 5% organic revenue growth, generated strong free cash flow, and continued to win new business despite an uncertain macro environment.
Each of our segments once again contributed to organic growth, and we generated over $150 million in free cash flow, driven by disciplined cash collection, resulting in a meaningful reduction in day sales outstanding. Through the first three quarters, we have secured over $1.5 billion in new business, a 15% increase year- over- year, positioning us well for revenue and earnings growth in the year ahead. In these areas, we're pushing long-term growth by strategically pricing rebates and extensions and by managing the timing of escalations to protect and expand our footprint. While these choices did pressure margins and adjusted EPS, we were able to win multi-year contracts and extensions and protect long-term clients, which will support stronger and more sustainable growth over time.
cleaning and maintenance exposure have recently reported meaningful organic revenue declines, we delivered mid-single-digit organic growth this quarter. We're also acting decisively to address the near-term margin impact of our choices. This program is designed to better align our core structure and operating model with our growth priorities. Our actions to boost growth and improve margins, combined with our highly cash-generative business model, reinforce our confidence in ABM 's long-term growth trajectory.
| Metric | Period | Current guidance |
|---|---|---|
| Normalized free cash flow | FY2025 | toward the low end of $250M-$290M (Reiterated, toward low end) |
| Restructuring annualized savings | Run-rate by start of FY2026 | $35M at a cost of ~$10M (New) |
| Q4 implied free cash flow needed | Q4 FY2025 | ~$140M (New) |
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +6.2% to $2.2B | 5% organic growth plus 1.2% from recent acquisitions |
| Net income | Increased to $41.8M ($0.67/sh) from $4.7M ($0.07/sh) | Absence of prior-year $36M RavenVolt contingent consideration adjustment and lower corporate costs, partially offset by higher interest and taxes |
| Adjusted EPS | $0.82 vs $0.84 | Higher interest and tax expense, partially offset by lower corporate costs |
| Adjusted EBITDA | +5% to $125.8M | Largely the result of lower corporate costs |
| B&I revenue | +3% to over $1B | Escalations, expansion with existing clients, and strength in U.K. and sports and entertainment |
| Aviation revenue | +9% to $291.8M | Positive travel trends and new wins ramping, partially offset by weather-related headwinds |
| M&D revenue | +8% to $408.9M | New contract wins and client expansions, including semiconductor manufacturers |
| Education revenue | +3% to $235.1M | Escalations and stable retention rates |
| Technical Solutions revenue | +19% to $249.5M | 7% organic plus 12% acquisitions; robust microgrid, data center and power services demand |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Strategic pricing on contracts | Firing on most cylinders, little weakness called out | Concurrent wave of rebids/renegotiations pressured margins; deliberate concessions to protect long-term clients | Emerged this quarter, viewed as episodic |
| Commercial office recovery (B&I) | Returning to organic growth | Prime office getting healthier overall, but West Coast, Midwest, Mid-Atlantic slower to recover | Improving but uneven |
| AI and automation | — | Investing in AI tools (RFP automation, HR support); exploring agentic AI; views core people-led services as AI-resilient | Early-stage, expected meaningful impact 2026-2028 |
| Semiconductor/M&D end markets | Headwinds from large customer rebalance | Accelerating growth from semiconductor and pharma investments and salesforce expertise | Strengthening |