ABM Industries reported second-quarter revenue of $2.2 billion, beating consensus estimates and marking the company's fastest growth rate in four years. The New York-based facility services contractor reaffirmed full-year fiscal 2026 adjusted earnings guidance, citing sustained demand from AI data center buildouts across North America.
Shares rose 6.2% in Friday trading after the company disclosed that its Technical Solutions segment—which handles HVAC, electrical, and mechanical systems for large-scale commercial properties—grew 18% year-over-year. Management attributed the expansion to contracts with hyperscale cloud providers building out GPU clusters and cooling infrastructure. ABM operates maintenance and engineering services at roughly 400 data center facilities, a figure that has doubled since early 2022. The company declined to name clients but noted that three of its ten largest contracts now involve AI-related compute infrastructure.
The earnings beat matters because ABM sits at the intersection of two converging trends: the physical buildout of AI compute capacity and the shortage of skilled labor to maintain it. Hyperscalers are commissioning facilities faster than internal teams can staff them, creating a structural tailwind for third-party operators who can deploy technicians at scale. ABM's Technical Solutions backlog now stands at $1.8 billion, up 22% sequentially, with average contract duration extending from 2.3 years to 3.1 years. That lengthening signals that clients are locking in capacity rather than negotiating spot deals, a dynamic that typically precedes margin expansion.
The company also disclosed that its Energy segment—solar panel cleaning, building automation, and efficiency retrofits—saw 11% growth, driven by co-location deals where data centers are built adjacent to renewable generation assets. This is worth noting because it suggests ABM is not just servicing existing facilities but participating in greenfield construction cycles, which carry higher per-square-foot revenue and longer contract tails. Management guided to full-year adjusted EPS of $3.85 to $4.05, unchanged from prior guidance, but raised the midpoint of its revenue range to $8.7 billion, implying 9% organic growth for the back half of the fiscal year.
Operators should watch for ABM's contract win announcements over the next 90 days, particularly any deals involving liquid cooling systems or modular data center deployments, both of which command premium pricing. The company is scheduled to present at a Baird infrastructure conference in late June, where management typically discloses pipeline composition. Additionally, monitor capital allocation: ABM has $420 million in net debt and recently amended its credit facility to increase acquisition capacity by $300 million, signaling potential inorganic expansion into adjacencies like commissioning or digital twins.
The stock trades at 14.2x forward earnings, a 20% discount to peers like CBRE and JLL, despite growing twice as fast. That gap will likely compress if the Technical Solutions margin—currently 8.1%—reaches management's 10% target by fiscal 2027, which now appears achievable given contract mix shift toward higher-complexity mechanical work.