AECOM Q3 Earnings Call Highlights

AECOM Q3 Earnings Call Highlights AECOM recorded a $337 million pre-tax charge tied primarily to delays and subcontractor productivity issues on a large Construction Management project, reducing quarterly EPS by $1.99 and consuming $185 million in cash flow. The company expects continued cash-flow pressure through the first half of fiscal 2027, including about $500 million in projected cash impact and $30 million–$35 million of additional 2027 interest expense. Fiscal 2026 free-cash-flow guidance was cut to $300 million from $400 million. Despite the project setback, AECOM reported record wins, a 13% year-over-year backlog increase and a 1.6x book-to-burn ratio. Updated fiscal 2026 guidance calls for approximately $7.3 billion in net service revenue, $950 million in adjusted EBITDA and $4.05 in adjusted EPS, while international growth and demand from U.S. infrastructure and data-center markets remained strong. AECOM NYSE: ACM reported record quarterly wins and a 13% increase in backlog during its fiscal third quarter of 2026, but the infrastructure consulting company also recorded a $337 million pre-tax charge tied primarily to delays on a large Construction Management project. Chief Executive Officer Troy Rudd said the delayed project, bid in 2019, has been affected by several factors, most notably subcontractor productivity during its final phase. AECOM now expects substantial completion near the end of the second quarter of fiscal 2027, rather than in the first quarter. “We are disappointed with this outcome,” Rudd said, adding that the company has changed leadership and tightened risk controls since the project was bid. He said AECOM no longer pursues design-build work for public-private partnership clients in its Construction Management business because of the risks associated with that structure. Construction Management Projects Weigh on Cash Flow The company said the charge affected net service revenue and EBITDA by $337 million and reduced earnings per share by $1.99. Cash flow included a $185 million use during the quarter related to the Construction Management projects. AECOM has two design-build P3 projects in its Construction Management portfolio. The second project remains on track for substantial completion in the first quarter of fiscal 2027, management said. Both projects have claims associated with delays that the company said were not caused by AECOM. Rudd said the company is pursuing “sizable claims” on the first project and cited progress in the dispute-resolution process. Chief Financial and Operations Officer Gaurav Kapoor said claims related to the two projects should remain in a range of roughly $600 million to $650 million through completion, though the amount AECOM is claiming from third parties is higher. Management expects the projects to continue burdening cash flow through the first half of fiscal 2027. Rudd said the overall cash impact in the first two quarters of fiscal 2027 is expected to be about $500 million. Kapoor added that higher average debt balances are expected to raise interest expense by $30 million to $35 million year over year in 2027. The company expects free cash flow of $300 million for fiscal 2026, down from its prior expectation of $400 million. Despite the project-related headwinds, AECOM generated $55 million in positive free cash flow during the third quarter. Backlog Reaches Record High AECOM said quarterly wins drove a 1.6x book-to-burn ratio across the company and a 1.8x ratio in the Americas. Year-to-date book-to-burn was 1.4x. Backlog reached ...