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Overall the call conveys a constructive and improving company trajectory: strong top-line growth (record quarterly revenue and robust organic growth), record sales bookings, notable segment outperformance (Technical Solutions, Aviation, M&D), and a large year-over-year improvement in first-half free cash flow. Management is focused on margin recovery in the back half, deleveraging to below 3x, and capital discipline. Offsetting items include margin pressure in certain segments this quarter (mix and acquisition amortization), B&I client exits (notably TfL and West Coast pressure), higher interest expense and temporary leverage above target. Management provided clear plans to address these issues and maintained full-year guidance, and they incorporated prior-year self-insurance volatility into guidance to improve predictability.
ABM maintained its fiscal 2026 outlook: full-year adjusted EPS of $3.85–$4.15, organic revenue growth of 3%–4% (now expected toward the higher end), with the WGNSTAR acquisition adding roughly 1 point and pushing total revenue growth toward the high end of a 4%–5% range; segment operating margin is expected toward the low end of 7.8%–8% with margin expansion weighted to the back half of the year, Aviation, M&D and Technical Solutions expected to grow above the organic range while B&I and Education are below. The company forecasts interest expense of about $110 million, a normalized tax rate of 29%–30%, and roughly $250 million of free cash flow in 2026 (before transformation/integration costs, the final RavenVolt earn‑out and any incremental restructuring); it finished Q2 with $1.9 billion of total indebtedness (3.2x pro‑forma adjusted EBITDA), $614 million of available liquidity (including $95 million cash), Q2 cash from operations of $66.2 million and Q2 free cash flow of $22.4 million, and reiterated its priority to reduce leverage below 3x by year‑end.
Q2 revenue rose 8.4% year-over-year to a record $2.3 billion, driven by 6.1% organic growth and a 2.3% contribution from acquisitions (primarily WGNSTAR). Consolidated organic growth was the strongest since Q3 2022.
First-half new sales bookings reached a company record of $1.2 billion, demonstrating strong sales momentum and successful business development execution.
Technical Solutions revenue grew 27% year-over-year (22% organic), Aviation up 20% to $310.8 million, and Manufacturing & Distribution grew 17% to $463.8 million (7% organic +9% from WGNSTAR acquisition), reflecting robust demand in data centers, semiconductors and aviation infrastructure.
Adjusted EBITDA increased by $5.8 million to $131.7 million. Segment operating margin improved sequentially by ~20 basis points to 7.3%, signaling operational execution and early margin recovery.
First-half cash from operations was $128.2 million and free cash flow was $71.2 million versus a use of cash of $73.9 million and negative free cash flow of $107.8 million in the prior year — an ~ $180 million year-over-year improvement driven by working capital management and ERP stabilization.
WGNSTAR acquisition contributed meaningfully to M&D and semiconductor results (about 9% of M&D growth) and expanded ABM's position inside fabs and across ~300 sites with 60+ semiconductor clients, supporting double-digit growth prospects in the segment.
Management is maintaining fiscal 2026 adjusted EPS guidance of $3.85 to $4.15 and expects full-year organic revenue growth of 3%–4% toward the higher end. WGNSTAR is expected to add ~1 point of revenue growth, helping bring company growth toward the high end of the 4%–5% range.
Total indebtedness was $1.9 billion with available liquidity of $614 million (including $95 million cash). Leverage was 3.2x post-WGNSTAR and management expects to reduce leverage to below 3x by fiscal year-end.
Greetings, and welcome to the ABM Industries Second Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the call over to your host Paul Goldberg, Senior Vice President of Investor Relations. Please go ahead.
Good morning, everyone, and welcome to ABM's Second 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 second 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. But before we begin, I would like to remind you that our call and presentation today contain predictions, estimates and other forward-looking statements. Our words of these 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 a 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 reconci...