ABM opened fiscal 2026 with 5.5% organic revenue growth, its strongest since Q4 2022, alongside nearly $50 million in free cash flow and over $90 million of share repurchases. A weather-driven roughly $20 million in microgrid project delays pushed Technical Solutions margin to 3.7% and created about $0.05 of EPS pressure, but management characterized the delays as timing rather than demand and maintained its full-year outlook, noting it is tracking toward the higher end.
Good morning, everyone, and welcome to ABM's first quarter 2026 earnings call. My name is Paul Goldberg, and I'm the Senior Vice President of Investor Relations at ABM. With me today are Scott Salmirs, our President and Chief Executive Officer, and David Orr, our Executive Vice President and Chief Financial Officer. Please note that earlier this morning, we issued our press release announcing our first quarter 2026 financial results and outlook. A copy of that release and an accompanying slide presentation can be found on our website, abm.com. After Scott and David's prepared remarks, we will host a Q&A session. Before we begin, I would like to remind you that our call and presentation today contain predictions, estimates, and other forward-looking statements.
Our use of the words estimate, expect, and similar expressions are intended to identify these statements, and they represent our current judgment of what the future holds. While we believe them to be reasonable, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially. These factors are described in the slide that accompanies our presentation as well as our filings with the SEC. During the course of this call, certain non-GAAP financial information will be presented. A reconciliation of historical non-GAAP numbers to GAAP financial measures is available at the end of our presentation and on the company's website under the Investor tab. With that, I would like to now turn the call over to Scott.
Good morning, everyone, and thank you for joining us to discuss ABM's first quarter fiscal 2026 results. We're off to a solid start of the year. We delivered 5.5% organic revenue growth, generated nearly $50 million in free cash flow, and repurchased over $90 million of shares in the quarter. While margin performance in Technical Solutions was below our expectations, primarily due to project timing and mix, underlying demand and backlog trends are healthy and the fundamentals across the portfolio remain constructive. As such, our full-year outlook is unchanged. Let me step back and provide some broader context. Across our end markets, demand remains generally healthy. In prime office, recent data from CBRE indicates improving transaction volumes and stabilization in Class A vacancy trends in major gateway markets.
While certain regional markets remain slower to recover, the flight to quality dynamic continues to favor the types of assets where ABM is concentrated. Our B&I segment grew 4% in the quarter, the highest it's been since the third quarter of 2022, reflecting strong international growth, stable client retention, and underlying steady demand. In Aviation, TSA checkpoint volumes remain resilient and airport infrastructure investment continues at elevated levels. The FAA's terminal modernization programs and large-scale capital projects across major U.S. airports support a multi-year pipeline of outsourced service opportunities for us. Our Aviation segment grew double digits year-over-year, and our bid pipeline remains healthy. M&D continues to benefit from secular growth tied to major U.S. infrastructure and technology build-outs.
Public and private investment in semiconductor manufacturing is accelerating, with a recent PwC forecast indicating that more than $1.5 trillion in fabrication facility investment through 2030 as AI, cloud, and edge computing drive demand for advanced chips. This underscores the scale of the opportunity and the multi-year runway it creates for service providers like ABM. With the completion of our acquisition of WGNSTAR at the beginning of Q2, we have meaningfully strengthened our presence in semiconductor fabrication environments and enhanced our ability to support this strategic U.S. growth area. In technical solutions, the secular tailwinds remain intact. Wood Mackenzie projects the U.S. microgrid market will more than double by 2030, driven by electrification, grid resiliency needs, and decarbonization priorities.
At the same time, investments in data center construction and hyperscale capacity expansion remain robust as enterprises build out next-generation infrastructure to support AI and digital transformation. These trends align directly with ABM's strength in energy resiliency, engineering services, and mission-critical operations, and we expect ATS to deliver sustainable long-term growth as these markets continue to expand. In Education, demand remains steady and resilient given the essential nature of services provided to K through 12 districts and higher education institutions. We continue to see opportunities as schools evaluate outsourcing to improve efficiency and service quality. Our focus on higher education, particularly large universities and multi-campus systems, positions ABM well in a segment where scale, complexity, and compliance requirements favor sophisticated multi-service providers. Now turning back to the quarter.
The investments we've made over the last few years in sales resources, technical talent, and strategic contract positioning are clearly contributing to our growth trajectory. Not only do we grow organically in each segment, but our enterprise organic growth rate of 5.5% was the strongest we've delivered since the fourth quarter of 2022, when the business was truly emerging from the pandemic. From a margin perspective, our first quarter shortfall was predominantly concentrated in Technical Solutions. As we've discussed, ATS is inherently project-driven and can vary from quarter to quarter. Q1 was impacted by project timing and service mix, along with some weather-related delays. These factors created approximately $0.05 of EPS pressure relative to our internal expectations, with the majority attributable to delayed revenue recognition rather than reduced demand.
Importantly, B&I and M&D performed largely in line with what we outlined in our third quarter call last year, reflecting the economics of newer contracts that ramped last year and provided immediate growth opportunities as we work more upward over time. Our ability to improve our margin profile can be seen clearly in Education, where we once again delivered strong execution and meaningful expansion in margins. Switching gears briefly to AI, which continues to be a highly topical and source of so much volatility in the market. We believe AI will enhance ABM's capabilities rather than disintermediate our core services. The majority of our janitorial and engineering work takes place in dynamic, non-standard environments such as offices, airports, schools, stadiums, and industrial facilities, where layouts, traffic patterns, compliance requirements, and client expectations continuously evolve. These conditions require human judgment, dexterity, and real-time adaptability.
That said, we're actively researching and testing a wide range of AI-enabled robotics, including emerging humanoid platforms. While robotics can add value in structured applications such as open area floor care and certain repetitive tasks, today's technology is not positioned to operate at scale across the full breadth of our service environments. As innovation continues, we expect robotics to become an increasingly useful complement to our workforce. At the same time, we've been investing in AI-driven predictive maintenance, intelligent scheduling, optimized routing, and back-office automation. These initiatives are already driving incremental improvements in labor efficiency, win rates, and SG&A productivity, and we expect benefits to expand as adoption increases and deepens across the organization. In short, we believe AI strengthens our business, not disintermediates it. In closing, we're encouraged by constructive demand across our markets. At the same time, macro sentiment remains unsettled given evolving policy direction and geopolitical dynamics.
Despite that, we are maintaining our full-year outlook and will continue to operate with discipline and focus. With that, let me turn it over to David.
Good morning, everyone. Let's start on slide six. Revenue grew 6.1% year-over-year to $2.2 billion, driven by 5.5% organic growth and a modest contribution from our acquisition in Ireland completed last year. The WGNSTAR acquisition closed after quarter end and will be included in our Q2 results. As Scott mentioned, consolidated organic growth was the strongest we've delivered since Q4 2022 and broad-based across the portfolio. Aviation led the way with organic growth of 10%, while Technical Solutions and Manufacturing and Distribution both grew 7%. B&I and Education delivered 4% and 2% growth respectively. Overall, we're pleased with the growth trajectory of the business, and our end markets remain constructive as we move into the second quarter. Turning to slide seven.
Net income from the quarter was $38.8 million or $0.64 per diluted share, compared to $43.6 million or $0.69 per share in the prior year period. Adjusted net income was $50.4 million or $0.83 per diluted share versus $55.3 million or $0.87 per diluted share a year ago. These year-over-year changes primarily reflect lower segment income, most notably in Technical Solutions, and higher tax expense and interest expense, partially offset by lower corporate costs. Segment operating margin was 7.1% compared to 7.6% last year.
The year-over-year change primarily reflects unfavorable project timing, including some weather-related delays and service mix within Technical Solutions, as well as by the margin impact of contracts that came online last year in M&D and B&I that we discussed in the third quarter. These factors were partially offset by strong execution and margin expansion in Education. Adjusted EBITDA was $117.8 million, compared to $120.6 million in the prior year. Now, let's turn to segment performance, beginning with slide eight. B&I revenue was $1.1 billion for the quarter, up 4% year-over-year. Growth was driven by higher work orders, strong performance in the U.K., and the benefit of price escalations. Market conditions remain largely consistent with last quarter, and we expect modest, steady growth in 2026.
However, growth is expected to moderate in the back half of the year due to the anticipated exit of a large U.K. client as the contract's economics were no longer aligned with the long-term opportunity. Operating profit was $79.7 million and margin was 7.5% as compared to $79.4 million and 7.8% respectively last year. Margin change primarily reflects shifts in contract mix along with increased investments in sales resources to support long-term growth. Aviation revenue grew 10% to $297.7 million, supported by healthy global travel demand and the continued ramp of several new contract wins. Operating profit was $12.6 million, with a margin of 4.2%, compared to $12.2 million and 4.5% last year.
Profit and margin were modestly pressured by incremental weather-related costs during the quarter, which drove higher labor and supply expenses. As we noted last quarter, the large passenger services contract we secured at Heathrow Airport is expected to begin ramping in the second quarter, reinforcing our confidence in strong organic growth for Aviation in 2026. Turning to slide nine. M&D generated $422.3 million in revenue, a 7% increase year-over-year. This strong organic growth was driven by recent contract wins, particularly in the technology sector, along with continued client expansions across the segment. Based on the momentum we saw over the last few quarters, we believe these growth rates are sustainable as we move throughout 2026.
Operating profit was $36.3 million, with a margin of 8.6%, compared to $39.4 million and 10% last year. As discussed previously, the margin change primarily reflects the mix of newer contracts secured last year that provide meaningful long-term growth opportunities. Margin was also impacted by continued investments in technical sales talent and sector-specific capabilities. Education rose 2% to $228.7 million, supported by escalations and stable retention rates. The segment delivered strong operating performance, with operating profit increasing 54% to $21.6 million and margin expanding 320 basis points to 9.4%. This improvement was driven by enhanced labor efficiency, effective escalation management, and some temporary operating benefits related to severe winter weather in certain regions during the quarter.
Looking ahead, we remain encouraged by the Education pipeline and are actively pursuing several attractive opportunities, including a potential large award from a major school district in the Midwest. Technical Solutions, which, as we've discussed in the past, can vary quarter to quarter given its project-based nature, experienced a challenging quarter driven primarily by temporary project timing and service mix dynamics. First quarter revenue was $229.7 million, up 14% year-over-year, including 7% organic growth and 7% from acquisitions. Organic growth reflected strong activity in our mission-critical and data center markets, while microgrid growth was lower than anticipated, primarily due to the impact of temporary project delays totaling approximately $20 million in revenue. A significant portion of these delays were weather-related as severe conditions across much of the U.S. slowed construction activity.
In fact, one of our larger customers temporarily suspended construction operations during the quarter. We're also monitoring potential impacts from the February storm in the Eastern U.S., though it's too early to quantify any effect. Importantly, these delays reflect timing rather than demand. We expect the majority of these projects to resume as weather conditions normalize and move further into our seasonally strong second half. Operating profit was $8.4 million, with a margin at 3.7%, compared to $16.6 million and 8.2% last year. The margin decline primarily reflects adverse service mix within our microgrid business, as well as the impact of delayed project completions. In the prior year quarter, we completed a higher volume of engineering-heavy work, which carries structurally higher margins and did not repeat in Q1 of this year.
Additionally, while revenue recognition was delayed on certain projects, our labor and material cost structure remained largely intact during the period. Looking ahead, we remain confident in the underlying demand environment. As projects progress through the pipeline and timing normalizes, we expect service mix to improve. Historically, ATS performance strengthens meaningfully in the second half of the year, and we expect fiscal 2026 to follow a similar seasonal pattern. Now turning to slide 10. We ended the quarter with total indebtedness of $1.7 billion, including $23 million in standby letters of credit. Our total debt to pro forma adjusted EBITDA ratio was 2.9x. Available liquidity stood at $608 million, including $100 million in cash and cash equivalents. Of note, our leverage ratio will be above 3x in Q2, driven by the WGNSTAR acquisition.
We expect to work it back down to under 3x by the end of our fiscal year. First quarter cash from operations was $62 million, and free cash flow was $48.9 million, representing a significant improvement over the prior year. This performance was driven by strong working capital management efforts and continued progress in our ERP stabilization in the quarter, positioning us for a more normalized cash flow in 2026. Now turning to capital allocation. During the first quarter, we repurchased 2.1 million shares at an average price of $44.13 for a total cost of $91.1 million. At quarter end, $92 million remained under our existing authorization. As always, we balance deleveraging with incremental repurchase activity and opportunities within our M&A pipeline to drive long-term value creation.
Interest expense in the quarter was $24 million, up $1.1 million from last year, reflecting larger average debt balances driven by our first quarter share repurchases. Turning to our fiscal 2026 outlook on slide 11, as Scott noted, while we feel good about the relative health of our end markets, we remain mindful of broader economic uncertainty. Accordingly, we're maintaining our previously communicated fiscal 2026 outlook. As a reminder, we expect full year organic growth of 3%-4%. Aviation, M&D and Technical Solutions are expected to grow above that range, while B&I and Education are projected to deliver low single-digit growth. The WGNSTAR acquisition is expected to deliver approximately an additional 1% of revenue growth, bringing total growth to 4%-5% for the year.
Segment operating margin is expected to be between 7.8% and 8% for fiscal 2026, with margin expansion weighted towards the back half of the year as project timing normalizes in Technical Solutions and seasonal patterns reassert themselves. Interest expense is forecast to be $95 million-$105 million and our normalized tax rate before any discrete items, including the possible extension of the Work Opportunity Tax Credit program, is expected to be 29%-30%. Our cash flow expectations are also unchanged. We continue to expect free cash flow of approximately $250 million in 2026 before the impact of transformation and integration costs, the RavenVolt [buyout], and any incremental restructuring. Putting it all together, we continue to expect full year adjusted EPS to be in the range of $3.85-$4.15.
Thanks, David. In closing, we remain confident in ABM's trajectory. We are growing organically. We are generating cash. We are allocating capital decisively. We've strengthened our semiconductor capabilities through WGNSTAR, and the long-term trends across energy resiliency, airport modernization, and prime office stabilization remain supportive. At the same time, we're focused on improving consistency within Technical Solutions and executing with discipline across the enterprise. I want to thank our more than 100,000 team members around the world. Your dedication and professionalism continue to differentiate ABM and position us for long-term success. With that, let's open it up for questions.