Why Is Aecom (ACM) Up 5% Since Last Earnings Report?

Core Viewpoint - AECOM reported mixed Q3 results for fiscal 2025, with earnings exceeding estimates while revenues fell short, driven by organic growth in the Americas and International segments [2][3]. Financial Performance - Adjusted earnings per share were $1.34, surpassing the Zacks Consensus Estimate of $1.25 by 7.2% and improving 16% year over year from $1.16 [3]. - Revenue was $4.18 billion, reflecting a 1% year-over-year growth, while net service revenue (NSR) was $1.94 billion, missing the consensus mark of $1.95 billion but increasing 6% year over year [3]. Margins and Profitability - Adjusted operating income rose 13% to $296 million, with adjusted operating margin expanding 90 basis points to 17.1% [4]. - Adjusted EBITDA reached $313 million, up 10% from the prior year, with an adjusted EBITDA margin of 17.6%, growing 110 basis points year over year, marking a record for the company [4]. Segment Highlights - In the Americas segment, NSR rose 8%, with adjusted operating margin expanding 120 basis points to a quarterly record of 20.5% [5]. - The International segment saw NSR increase by 3%, with adjusted operating margin expanding 20 basis points to 11.9%, driven by strong execution in the UK and Middle East, partially offset by a decline in Australia [5]. Balance Sheet and Capital Allocation - AECOM ended the quarter with a net leverage of 0.6x and no debt maturities until 2029 [6]. - Year-to-date free cash flow rose 27% to $551 million, including $262 million in Q3, with $240 million returned to shareholders through repurchases and dividends [6]. Outlook - The company raised its fiscal 2025 outlook, anticipating 5-8% organic NSR growth and adjusted EPS in the range of $5.20-$5.30, indicating a 16% improvement from fiscal 2024 levels [7][8]. - Adjusted EBITDA is expected to be in the range of $1.19-$1.21 billion, indicating 10% year-over-year growth at the midpoint [8].