AECOM reports mixed Q4 results; initiates FY26 outlook

AECOM press release (ACM): Q4 Non-GAAP EPS of $1.36 beats by $0.02.
Revenue of $4.18B (+1.7% Y/Y) misses by $130M.
Total backlog⁷ increased by 4% and design backlog increased by 3%.
The Board of Directors approved a 19% increase to the Company’s quarterly dividend to $0.31 per share.
Fiscal 2026 Financial Guidance

AECOM is providing financial guidance for fiscal 2026 both with and without the Construction Management business.
- The Company initiated guidance for the enterprise-wide business for fiscal 2026 with expectations for continued strong performance, including:
  - Adjusted¹ EPS of between $5.65 and $5.85 vs. consensus of $5.72, reflecting a 9% increase at the mid-point over the prior year.
  - Adjusted¹ EBITDA⁴ of between $1,265 million and $1,305 million, reflecting an increase of 7% at the mid-point over the prior year.
  - Free cash flow⁶ of approximately $400 million, which includes expectations for strong underlying cash flow.
    - Cash flow guidance also includes expected investments to execute on the Company’s announced restructuring to deliver key AI initiatives and efficiencies outlined at today’s 2025 Investor Day.
    - These investments are key drivers of the Company’s increased long-term margin and earnings targets, which would substantially lead the industry.
- Beginning with the first quarter of fiscal 2026, the Company expects to report results for its continuing design and consulting business, which excludes the Construction Management business that is expected to be classified as held for sale and reported in discontinued operations. On this basis, the Company initiated the following fiscal 2026 guidance for:
  - Organic NSR² growth of 6% to 8%, which excludes the expected impact of fewer working days in fiscal 2026 than in fiscal 2025.
    - NSR is expected to be between $7.2 and $7.4 billion, or approximately 5% growth at the mid-point.
  - Adjusted¹ EBITDA⁴ of between $1,180 million and $1,220 million.
  - A segment adjusted operating margin³ of 16.6% and an adjusted EBITDA margin⁵ of 16.8%
    - Margins include accelerating investment to enable the continued development and deployment of AI and continue to expand the Company’s Advisory team.
  - Adjusted¹ EPS of between $5.15 and $5.35.
- Other assumptions incorporated into guidance:
- An average fully diluted share count of 133 million, which does not include any potential future benefits from capital allocation actions not yet taken, including potential repurchases.
- G&A of approximately $155 million.
- Depreciation of approximately $160 million.
- An adjusted effective tax rate of approximately 22 – 23% for the full year.
- Adjusted net interest expense of approximately $140 million.
- Raised Long-Term Financial Targets
  
  As separately announced as part of its 2025 Investor Day, AECOM increased its long-term financial targets, highlighted by its expectation to deliver a 20%+ margin exit rate by fiscal 2028 and to grow adjusted EPS at a 15%+ CAGR from fiscal 2026 to fiscal 2029. In addition, the Company expects to deliver from fiscal 2026 to 2029 a 5 – 8% organic NSR CAGR, to convert at least 100% of adjusted net income to free cash flow cumulatively and continue to increase the per share value of its dividend by a double-digit percentage annually over the same period.

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