AECOM (NYSE: ACM) has recently reported its fourth-quarter and full-year fiscal 2025 results, showcasing a solid performance with record margins and a robust backlog. The company also provided guidance for fiscal 2026, indicating continued strong performance and strategic initiatives in key areas.
Q4 Delivered Higher Margins Despite Revenue Miss
The fourth quarter of fiscal 2025 was a period of notable achievement for AECOM, marked by a record operating margin and robust backlog growth. The company reported a revenue of $4.18 billion, which was a 2% increase from the previous year, but slightly below the expected $4.32 billion. Despite this, AECOM exceeded the earnings per share (EPS) expectations, achieving an adjusted EPS of $1.36, surpassing the anticipated $1.34. This EPS beat reflects the company’s strong operational efficiencies and strategic focus.
The full year saw AECOM maintaining steady revenue at $16.1 billion, while operating income rose by 24% to $1.0 billion. The company’s adjusted EPS for the year reached $5.26, a 16% increase from the prior year, indicating substantial growth in profitability. The Americas segment contributed significantly to this performance, with a 13% increase in net service revenue for the quarter, driven by the design business.
Backlog growth was another highlight, with a total backlog increase of 4% to reach a record high. This growth was fueled by a strong pipeline of opportunities, particularly in the design business, which saw a 13% year-over-year increase. The consistent backlog expansion over consecutive quarters underscores AECOM’s ability to secure new projects and maintain a steady flow of work.
AI Investments, Advisory Expansion, and Capital Returns Shape FY26 Strategy
Looking ahead, AECOM has set optimistic guidance for fiscal 2026. The company anticipates adjusted EPS to range between $5.65 and $5.85, reflecting a 9% increase at the midpoint compared to the previous year. Additionally, adjusted EBITDA is expected to be between $1,265 million and $1,305 million, indicating a 7% growth at the midpoint. These projections demonstrate AECOM’s confidence in its strategic initiatives and operational capabilities.
The company plans to focus on enhancing its AI capabilities and expanding its higher-margin advisory business, which are expected to be key drivers of future growth. AECOM aims to achieve a 20%+ margin run-rate by the end of fiscal 2028, leveraging its proprietary technologies and expertise in critical infrastructure markets. The strategic evaluation of the Construction Management business, including a potential sale, aligns with AECOM’s commitment to concentrating resources on high-return areas.
Moreover, AECOM’s capital allocation strategy includes a significant increase in shareholder returns. The board has approved a 19% increase in the quarterly dividend, continuing the trend of double-digit annual growth in dividend value. The company also plans to maintain strong free cash flow, projected at approximately $400 million, supporting investments in strategic initiatives and shareholder returns. Overall, AECOM’s guidance reflects a well-rounded approach to growth, profitability, and shareholder value.