AECOM Reports Strong First Quarter Fiscal 2026 Results
AECOM (NYSE: ACM), a global leader in infrastructure solutions, today announced its first quarter fiscal 2026 results. The reported financial results include the Construction Management business as a continuing operation, following the Company’s decision to retain the business.
“Our performance in the first quarter exceeded expectations across every key financial metric, and as a result, we have raised our full-year guidance,” said Troy Rudd, AECOM Chairman and Chief Executive Officer. “Backlog increased by 9%, highlighted by a 1.5 book-to-burn ratio that includes some of the largest and most iconic projects worldwide. This performance reflects our top-ranked franchises, technical leadership, deep infrastructure expertise, and trusted client relationships. Strategic investments in Advisory, Program Management, technology, and AI further enhance our ability to scale, expand our addressable market, deliver more value to clients, and strengthen our competitive moat, reinforcing our confidence in achieving financial targets.”
Lara Poloni, AECOM President, added, “Clients are increasingly turning to us for their most complex and critical infrastructure projects. From being selected as a preferred bidder for Scottish Water’s multi-billion-dollar program to becoming the Delivery Partner for the Brisbane 2032 Olympic and Paralympic Games, our competitive advantages and AI-driven solutions consistently help us win key projects. These investments energize our teams and redefine how infrastructure is delivered.”
Gaurav Kapoor, Chief Financial and Operations Officer, stated, “Our record backlog, strong performance, and raised guidance demonstrate our market differentiation. For six consecutive years, we have grown NSR and profit per employee, and our investments create opportunities for continued productivity gains. With a strong balance sheet, no near-term debt maturities, and an attractive cost of capital, we returned over $340 million to shareholders during the quarter.”
First Quarter Financial Highlights
- Revenue: GAAP revenue from continuing operations declined 5% to $3.8 billion.
- Operating Income: Declined 7% to $222 million.
- Net Income: Decreased 21% to $140 million.
- Earnings Per Share (EPS): Diluted EPS declined 20% to $1.06.
- Net Service Revenue (NSR): Increased 2%; adjusted for fewer working days, NSR grew 5%, driven by 9% growth in the Americas segment.
- Segment Adjusted Operating Margin: Increased 100 basis points to 16.4%.
- Adjusted EBITDA: Rose 6%, while adjusted EPS decreased 2%. After accounting for prior year tax adjustments, adjusted EPS increased 8%.
- Backlog: Reached a record high, up 9%, with a 1.5 book-to-burn ratio. This marks the 21st consecutive quarter with a book-to-burn ratio exceeding 1.0.
- Cash Flow: Free cash flow totaled $42 million, with over $340 million returned to shareholders through dividends and share repurchases.
Business Segment Performance
Americas
- Revenue: $3.0 billion, down 4% due to reduced pass-through revenue.
- Net Service Revenue: $1.1 billion, up 9% when adjusted for fewer working days; growth was strong in both the U.S. and Canada.
- Operating Income: Increased 9% to $214 million; adjusted operating income grew 13% to $222 million.
- Margins: Adjusted operating margin rose 120 basis points to 19.9%, a first-quarter record.
- Backlog: Grew 3% to a record high, with a 1.0 book-to-burn ratio, despite a 43-day U.S. federal government shutdown impacting awards.
International
- Revenue: $854 million, down 5% from the prior year.
- Net Service Revenue: $736 million, largely flat after adjusting for fewer working days, or down 3% at constant currency.
- Operating Income: Declined 6% to $76 million; adjusted operating income remained flat at $81 million.
- Margins: Adjusted operating margin rose 20 basis points to 11.0%, reflecting operational efficiencies and focus on high-return clients.
- Backlog: Increased 25% to a new record, supported by a 2.3 book-to-burn ratio and substantial wins across international regions.
Construction Management Strategic Update
AECOM has completed a comprehensive review of strategic alternatives for its Construction Management business. The Company has decided to retain the business, citing its strong backlog, high-quality teams, and leadership position in delivering complex, iconic projects.
Capital Allocation and Shareholder Returns
- Free Cash Flow: $42 million for the quarter.
- Shareholder Returns: Over $340 million returned through dividends and share repurchases.
- Repurchase Authorization: Increased to $1 billion after the quarter.
- Historical Returns: Since September 2020, AECOM has returned nearly $3.4 billion to shareholders.
- Balance Sheet: Net leverage remains low at 1.0x, ensuring financial flexibility.
Fiscal 2026 and Long-Term Guidance
Following the strong first-quarter performance, AECOM raised its fiscal 2026 guidance:
- Adjusted EPS: $5.85–$6.05, up from previous guidance of $5.65–$5.85.
- Adjusted EBITDA: $1,270–$1,305 million, slightly higher than the prior range of $1,265–$1,305 million.
- Organic NSR Growth: 6–8%, excluding an expected 200-basis-point impact from fewer working days.
- Margins: Segment adjusted operating margin of 16.8% and adjusted EBITDA margin of 17.0%.
- Free Cash Flow: Approximately $400 million expected.
- Adjusted Tax Rate: 20–22%, down from prior guidance of 22–23%.
- Long-Term Targets: Aiming for 20%+ margin exit rate by FY2028 and adjusted EPS growth at 15%+ CAGR from FY2026 to FY2029.
Resolution of Legacy Matters
Post-quarter, AECOM agreed in principle to settle a legacy project-related matter acquired through its 2014 URS Corporation acquisition. The Company expects to receive approximately $50 million in cash this fiscal year and recorded a $61.8 million non-cash loss in discontinued operations in Q1.
Tax Rate Overview
- GAAP Effective Tax Rate: 19.7% in Q1 FY2026.
- Adjusted Effective Tax Rate: 21.5%, calculated based on adjusted net income and accounting for adjustments excluded from GAAP earnings.
Conclusion
AECOM’s Q1 FY2026 results reflect strong execution across all business segments, a growing backlog, and continued strategic investments in technology, AI, and Advisory services. The Company remains confident in delivering value to clients, creating competitive differentiation, and returning capital to shareholders. The combination of a strong pipeline, record backlog, and disciplined capital allocation positions AECOM for sustained growth and long-term financial success.
SOURCE LINK : https://www.businesswire.com/
