AECOM ACM reported impressive results for first-quarter fiscal 2025, where earnings surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Revenues also increased from the prior year, backed by solid organic net service revenues (“NSR”) growth in its design business.
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Shares of this global infrastructure leader gained 2.1% in yesterday’s after-hours trading session. Positive investor sentiments were witnessed as the company raised its adjusted EBITDA and adjusted earnings forecast for fiscal 2025.
The company’s Think and Act Globally strategy is driving high win rates and a record backlog. ACM is seeing positive results from its investment in the new Water and Environment Advisory business, having made several key hires. The company aims to double its net service revenues of $200 million from this business in the next three years.
Delving Deeper Into ACM’s Q1 Results
The company reported adjusted earnings per share (EPS) of $1.31, which topped the consensus mark of $1.10 by 19.1% and increased 24.8% from $1.05 reported in the prior-year quarter. The strong improvement was backed by benefits received from high-returning organic growth initiatives.
AECOM Price, Consensus and EPS Surprise
AECOM price-consensus-eps-surprise-chart | AECOM Quote
Revenues of $4.01 billion rose 3% on a year-over-year basis. Adjusted NSR moved up 5.5% to $1.80 billion.
ACM’s Segment Details
Americas’ revenues were $3.11 billion during the reported quarter, up 2% from the prior-year quarter’s levels. NSR of $1.05 billion moved up 8% year over year, backed by 9% growth in the design business. This increase was driven by strong performance in the United States and Canada, supported by long-term investments in infrastructure, sustainability, resilience and energy.
Adjusted operating income of $196.9 million was up 10% year over year. Adjusted operating margin (on an NSR basis) expanded 40 basis points (bps) year over year to 18.7%. This growth was driven by solid organic expansion and effective execution. This rise enables further investments in AI, digital technologies and new platforms, including the Water & Environment Advisory business.
The total backlog at the fiscal first-quarter end was $17.5 billion compared with $17 billion a year ago.
International revenues were up 5% year over year to $902 million. During the quarter, NSR increased 2% year over year to $750.2 million.
Adjusted operating income in the segment rose 5% year over year to $80.8 million. Adjusted operating margin (on an NSR basis) also moved up 20 bps year over year to 10.8%. This was backed by continued strong execution and the benefits of actions to narrow its focus on high-returning opportunities across largest geographies.
The total backlog at the end of fiscal first quarter was flat year over year at $6.37 billion.
AECOM Capital's quarterly revenues were $0.2 million.
Operating Highlights of ACM
Adjusted segment operating profit amounted to $239.6 million, up 7.4% from the year-ago quarter. The segment’s adjusted operating margin (NSR) improved 40 bps to 15.4%. This upside was driven by high-returning organic growth.
Adjusted EBITDA rose 8% year over year to $271 million. Adjusted EBITDA margin of 15.6% also rose 20 bps year over year, backed by the company’s ongoing investments in high-margin organic growth and its continuous improvement initiatives.
ACM’s Backlogs
As of the fiscal first quarter’s end, the total backlog was $23.88 billion compared with $23.32 billion reported in the prior-year period. The current backlog level includes 55.2% contracted backlog growth.
The design business backlog rose 3.5% to $22.61 billion. The metric was driven by a near-record win rate and continued strong end-market trends.
ACM’s pipeline of opportunities increased to a new record, driven by double-digit growth in later-stage opportunities with award decisions expected over the next several quarters.
Liquidity & Cash Flow of ACM
At the end of the fiscal first quarter, AECOM’s cash and cash equivalents totaled $1.58 billion, in-line with the figures of fiscal 2024-end. The total debt (excluding unamortized debt issuance costs) as of Dec. 31, 2024, was $2.55 billion, up from $2.54 billion at fiscal 2024-end.
At the fiscal first quarter’s end, operating cash flow increased 6% year over year to $151 million. Adjusted free cash flow also increased 28% to $111 million year over year.
ACM’s Fiscal 2025 Guidance Updated
The company anticipates to generate 5-8% organic NSR growth in fiscal 2025. It expects adjusted EPS in the range of $5.05-$5.20 compared with the prior estimation of $5-$5.20. This indicates a 13% improvement from fiscal 2024 levels on a constant-currency basis, considering the mid-point of the guidance.
AECOM expects adjusted EBITDA in the range of $1.175-$1.210 billion compared with the prior estimation of $1.17-$1.21 billion. This indicates 9% year-over-year growth at the midpoint.
Adjusted EBITDA margin is expected to be in the range of 16.1-16.3% compared with 16.3% expected earlier, representing a 30 bps increase from fiscal 2024.
The company anticipates more than 100% adjusted net income to free cash flow conversion, an average fully diluted share count of 134 million and an effective tax rate of 24%.
ACM’s Long-Term Views
ACM expects to deliver 5-8% organic NSR growth, at least 20-30 bps adjusted EBITDA margin expansion, double-digit adjusted EPS and free cash flow per share improvement annually. It also expects to achieve at least 17% adjusted EBITDA margin (exiting fiscal 2026) and at least 25% return on invested capital in the long term. ACM anticipates approximately 100% conversion of adjusted net income to free cash flow.
ACM’s Zacks Rank & Recent Construction Releases
AECOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
NVR, Inc. NVR reported impressive fourth-quarter 2024 results, with earnings and Homebuilding revenues surpassing the Zacks Consensus Estimate. Both metrics increased on a year-over-year basis. The quarterly performance showed strong growth in settlements. Although new orders decreased in the quarter, the average selling price increased.
NVR’s new orders decreased 8% from the prior-year quarter’s level to 4,794 units. However, the ASP of new orders increased 4% from the prior-year quarter’s figure to $469,000. On a unit basis, backlog at the end of Dec. 31, 2024, decreased 3% from the prior-year quarter’s figure to 9,953 homes but rose 1% on a dollar basis to $4.79 billion.
PulteGroup Inc. PHM has reported remarkable fourth-quarter 2024 results, wherein adjusted earnings and total revenues handily beat the Zacks Consensus Estimate and grew year over year.
The quarter’s result reflects the company’s success in addressing the affordability issues of the housing market due to a still high mortgage rate. By implementing several operational changes including targeted sales incentives and faster construction cycle times, it was able to drive its home sales and foster new orders. Also, the increase in the average selling price (ASP) of homes closed aided the quarter’s top-line growth.
KB Home KBH reported impressive fourth-quarter fiscal 2024 results, wherein both revenues and earnings surpassed expectations. On a year-over-year basis, both metrics increased, highlighting its resilience in a fluctuating housing market.
KBH’s results underscore the effectiveness of its strategy, driven by faster build times and a strong appetite for homeownership despite mortgage rate pressures. Challenges such as mortgage rate headwinds and potential regulatory shifts could temper the pace of growth. While challenges remain, its strong order book and expanded community count indicate solid growth trajectory for fiscal 2025.
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