Company Overview - AECOM was founded in 1980 and is headquartered in Dallas, Texas, operating in the construction consulting and advisory business [1] - The company serves a diverse client base, including large corporations, governments, and organizations in the transportation, energy, and utilities markets [1] - AECOM operates through three segments: the Americas, international divisions, and a third unspecified segment [1] Market Position - AECOM's business model is designed to address complex relationships between value drivers, capital flows, and price action in the financial markets [1] - The company has established partnerships across various financial market participants, including speculators, hedgers, and long-term traders [1] Analyst Insights - The article reflects a beneficial long position in AECOM shares, indicating a positive outlook on the company's stock performance [2] - The opinions expressed in the article are solely those of the author and do not represent any external compensation or business relationships [2]

In this analysis, I reiterate my Strong Buy rating for ACM Research (NASDAQ: ACMR ), even after the 24% decline since my last article on the company—this drop is purely short-term and sentiment-based, with a valuation reratingOliver Rodzianko is an investment analyst specializing in the technology sector, grounded in timeless value principles. His expertise spans AI, semiconductors, software, and renewable energy, with a focus on companies that demonstrate resilient management and lasting competitive advant ...

Jacobs Solutions, Inc.’s (J) joint venture with AECOM (ACM) has been chosen to design a multi-year program to upgrade Metro Vancouver's Iona Island Wastewater Treatment Plant.The design will incorporate advanced solutions for regulatory compliance, climate resilience, water reuse, and renewable energy generation. Jacobs and AECOM bring extensive experience in similar projects, having already delivered a comprehensive Project Definition Report for the upgrades. They are also leading Metro Vancouver's pilot t ...

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Aecom ACM shares are trading up Friday, after gaining around 5% during the week.The company “high-graded its portfolio" by increasingly focusing on larger and more complex design projects, where it has the greatest competitive advantage, and is moving further towards program management and advisory, according to Goldman Sachs.Analyst Adam Bubes initiated coverage of Aecom with a Buy rating and price target of $130.The Aecom Thesis: Engineering News-Record's market data shows that the company has industry-le ...

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Revenue and Profit Growth - Revenue for fiscal 2024 increased to $16.105 billion, up from $14.378 billion in fiscal 2023, representing a growth of approximately 12%[260] - Gross profit for fiscal 2024 was $1.084 billion, compared to $945 million in fiscal 2023, reflecting a 14.7% increase[260] - Revenue increased by $1,727.0 million (12.0%) to $16,105.5 million in fiscal year 2024 compared to $14,378.5 million in fiscal year 2023[300] - Gross profit rose by $138.8 million (14.7%) to $1,084.3 million in fiscal year 2024 from $945.5 million in fiscal year 2023[300] - Income from operations surged by $503.3 million (155.3%) to $827.4 million in fiscal year 2024 compared to $324.1 million in fiscal year 2023[300] - Net income attributable to AECOM increased by $347.0 million (627.5%) to $402.3 million in fiscal year 2024 from $55.3 million in fiscal year 2023[300] Segment Operations - The Americas segment provides services in transportation, water, government, facilities, environmental, and energy markets, generating significant revenue from public and private clients[250] - The International segment operates in Europe, the Middle East, India, Africa, and the Asia-Australia-Pacific regions, focusing on similar end markets as the Americas[251] Capital and Investments - The company completed a transaction transitioning the AECOM Capital team to a new third-party platform in Q3 of fiscal 2024[257] - AECOM Capital (ACAP) primarily invests in and develops real estate projects, contributing to the company's diversified income streams[252] - At September 30, 2024, the company had approximately $560.5 million remaining in its stock repurchase authorization, with an increase to $1.0 billion approved on November 13, 2024[255] - The company has capital commitments of $5.9 million to the AECOM-Canyon Equity Fund over the next 4 years[392] Operational Efficiency and Restructuring - The company exited substantially all of its former self-perform at-risk construction businesses to improve profitability and reduce risk[256] - Restructuring costs for fiscal 2024 decreased to $99 million from $188 million in fiscal 2023, reflecting ongoing efforts to enhance operational efficiency[260] - Restructuring costs decreased by $89.5 million (47.5%) to $98.9 million in fiscal year 2024 from $188.4 million in fiscal year 2023[300] Expenses and Taxes - General and administrative expenses for fiscal 2024 were $160 million, slightly higher than the $154 million recorded in fiscal 2023[260] - Income tax expense from continuing operations increased by $96.9 million (172.7%) to $153.0 million in fiscal year 2024 from $56.1 million in fiscal year 2023[300] - No deferred taxes have been provided on the undistributed gross book-tax basis differences of non-U.S. operations of approximately $1.2 billion[286] Pension and Employee Benefits - The company expects to contribute $24.2 million to international pension plans and $11.2 million to U.S. plans in fiscal 2025[294] - The aggregate worldwide pension deficit decreased from $165.3 million to $134.0 million between September 30, 2023, and September 30, 2024[297] - The company's defined benefit pension plans had an aggregate deficit of approximately $134.0 million as of September 30, 2024[379] Debt and Credit Facilities - Borrowings under the New Revolving Credit Facility and New Term A Facility bear interest at a rate per annum equal to Term SOFR rate plus 1.225% or base rate plus 0.25%[361] - Borrowings under the New Term B Facility bear interest at a rate per annum equal to Term SOFR rate plus 1.75% or base rate plus 0.75%[362] - As of September 30, 2024, letters of credit totaled $4.4 million under the New Revolving Credit Facility[366] - As of September 30, 2024, the company had $1,495.6 million available under the New Revolving Credit Facility[366] - The estimated fair value of the 2027 Senior Notes was approximately $997.3 million as of September 30, 2024[369] - The average effective interest rate on total debt was 5.6% for the year ended September 30, 2024[374] - At September 30, 2024, the company had $389.8 million available under unsecured credit facilities[373] - The company's outstanding borrowings under term credit agreements and revolving credit facility were $1,446.6 million as of September 30, 2024, with a weighted average floating rate of $1,662.9 million[412] Legal and Contractual Obligations - The Former Affiliate submitted claims against the DOE seeking recovery of $103 million in 2014 and an additional $60.4 million in 2019, with potential recovery ranging from $148.5 million to $329.4 million[398] - The Company completed the sale of its Management Services business, including the Former Affiliate, with future DOE project claim recoveries and costs split 10% to the MS Purchaser and 90% to the Company[399] - The Company's Former Affiliate performed additional work outside of the original contract over $90 million and is entitled to payment of approximately $144 million for the Refinery Turnaround Project[401] - The Company retained the Refinery Turnaround Project, including related claims and liabilities, with trial expected to begin in the second quarter of fiscal year 2025[402] - The Company's total contractual obligations and commitments as of September 30, 2024, amounted to $4,132.7 million, including debt, interest, operating leases, and pension funding obligations[405] Financial Reporting and Compliance - The Company is evaluating the impact of new FASB guidance on segment reporting and income tax disclosures, effective for interim periods ending December 31, 2025, and annual periods beginning October 1, 2025, respectively[406][407] Equity and Joint Ventures - Equity in earnings of joint ventures improved by $281.5 million (100.8%) to $2.1 million in fiscal year 2024 from a loss of $279.4 million in fiscal year 2023[300] Contract Revenues - The Company recognized $16.1 billion in contract revenues for the year ended September 30, 2024, including $3.7 billion from fixed price contracts and $6.0 billion from guaranteed maximum price contracts[424]

Financial Performance and Key Metrics - The company reported strong financial performance in fiscal 2024, achieving records in net service revenue, margins, earnings, and cash flow, with adjusted EPS and adjusted EBITDA growth of 22% and 14% respectively [16][37] - Adjusted EBITDA margin increased by 140 basis points to 16.7% in Q4, while the full-year adjusted EBITDA margin rose by 100 basis points to 16% [36][37] - Free cash flow exceeded $700 million for the first time, representing 10% of net service revenue, with a free cash flow margin of 10% [47][102] Business Line Performance - In the Americas, net service revenue in the Design business increased by 9% in Q4, with an adjusted operating margin reaching a new high of 18.8% [42][43] - The International segment saw a 6% increase in net service revenue for the year, with a 12.6% adjusted operating margin in Q4, up 260 basis points from the prior year [44][45] Market Data and Key Indicators - The company achieved a 1.2 book-to-burn ratio in the design business in Q4, maintaining a record backlog and a strong pipeline that increased by 10% [17][42] - The UK autumn budget provided key funding for infrastructure, including GBP100 billion for various sectors, which is expected to drive growth [45] Company Strategy and Industry Competition - The company is focused on high-growth markets, with the top four geographies (US, Canada, UK, Australia) accounting for approximately 90% of profits [27] - AECOM aims to double its water practice over the next five years and has established a new Water and Environment Advisory business to leverage existing strengths [18][29] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in the infrastructure investment landscape, citing bipartisan support and the need for modernization [11][21] - The company anticipates NSR growth of 5% to 8% in 2025, with expectations for adjusted EBITDA to increase to $1.19 billion and adjusted EPS to $5.10 [51][25] Other Important Information - The company announced an increase in its share repurchase authorization to $1 billion and an 18% increase in its quarterly dividend [19][49] - The company has resolved legacy project disputes, resulting in a cash infusion of approximately $130 million [50] Q&A Session Summary Question: Clarification on adjusted EBITDA guidance and restructuring costs - Management confirmed no new restructuring costs are anticipated for FY 2025, indicating clean results moving forward [56] Question: International segment backlog strength - Management highlighted continued strength across key markets, particularly in the UK and Australia, with significant infrastructure investment opportunities [66][68] Question: Organic NSR growth expectations for 2025 - Management expects the Americas to lead organic growth, with international growth anticipated to ramp up in the second half of the year [77][78] Question: Margin expansion expectations - Management indicated that while they expect 30 basis points of margin expansion in 2025, ongoing investments in the business will support future growth beyond current targets [83][87] Question: Impact of new administration on federal funding - Management noted that while there is some uncertainty, the need for infrastructure investment remains strong, and they expect continued support from federal funding [95][96] Question: Pipeline growth rate and private vs public sector outlook - Management reported a 10% increase in the pipeline year-over-year, with optimism for both public and private sector investments in infrastructure [108][111]

Core Insights - AECOM reported strong fourth-quarter fiscal 2024 results, with earnings exceeding estimates and showing year-over-year growth, driven by solid organic net service revenue growth in its design business [1][4][5] Financial Performance - Adjusted earnings per share (EPS) reached $1.27, surpassing the consensus estimate of $1.22 by 4.1% and increasing 25.7% from $1.01 in the prior-year quarter [4] - Revenues totaled $4.11 billion, reflecting a 7% year-over-year increase, while adjusted net service revenues (NSR) rose 5% to $1.81 billion [5] - Adjusted operating income was $207.7 million, up 9% year over year, with an adjusted operating margin expanding 70 basis points to 19.6% [7] Segment Performance - Americas' revenues were $3.16 billion, an 8% increase from the prior year, with NSR growing 6% to $1.06 billion, supported by an 8% growth in the design business [6] - International revenues increased 5% year over year to $948.4 million, with NSR rising 4% to $754.1 million [8] Dividend and Share Repurchase - AECOM announced an 18% increase in its quarterly dividend payout to 26 cents, payable on January 17, 2025, to stockholders of record on January 2 [3] - The company increased its share repurchase authorization to $1 billion [3] Backlog and Opportunities - Total backlog at the end of fiscal 2024 was $23.86 billion, up from $23.16 billion a year ago, with a 5% increase in the design business backlog [13] - The pipeline of opportunities grew by 10%, driven by robust funding across major markets [13] Fiscal 2024 Highlights - For the full year, AECOM reported revenues of $16.1 billion, a 12% increase from the previous year, with NSR reaching an all-time high [14] - Adjusted EPS increased 22% to $4.52, with adjusted EBITDA margins rising 100 basis points to 16% [15] Liquidity and Cash Flow - Cash and cash equivalents at fiscal 2024-end totaled $1.58 billion, up from $1.26 billion a year earlier, while total debt increased to $2.54 billion [16] - Adjusted operating cash flow rose 19% year over year to $827 million, and adjusted free cash flow increased 20% to $708 million [16] Fiscal 2025 Guidance - AECOM anticipates 5-8% organic NSR growth in fiscal 2025, with adjusted EPS expected in the range of $5.00-$5.20, indicating a 13% improvement from fiscal 2024 [17] - Adjusted EBITDA is projected to be between $1.17 billion and $1.21 billion, reflecting a 9% year-over-year growth at the midpoint [17] Long-Term Outlook - The company expects to achieve 5-8% organic NSR growth, at least 20-30 basis points adjusted EBITDA margin expansion, and double-digit adjusted EPS growth annually [19] - AECOM aims for at least 17% adjusted EBITDA margin by the end of fiscal 2026 and approximately 100% conversion of adjusted net income to free cash flow [19]