Financial Data and Key Metrics Changes - In Q4 2025, global sales from continuing operations totaled $3 billion, representing an 8% increase on a reported basis and a 3% increase on an operational basis [8][18] - Adjusted earnings from continuing operations were $0.44 per diluted share, which fell short of expectations despite exceeding top-line forecasts [8][18] - Adjusted gross margins from continuing operations were 35.5%, a decrease of 900 basis points compared to the prior year [26] - Adjusted operating margin was 11.8%, a decrease of 340 basis points compared to the prior year [27] Business Line Data and Key Metrics Changes - Medical Products and Therapies (MPT) segment sales were $1.4 billion, increasing 4% in the quarter, driven by growth in Infusion Therapies and Technologies [18][19] - Advanced Surgery sales totaled $328 million, growing 11% due to strong demand for hemostats and sealants [20] - Healthcare Systems and Technologies (HST) sales were $827 million, increasing 4%, with Care and Connectivity Solutions growing 4% globally [21] - Pharmaceuticals segment sales totaled $668 million, increasing 2%, but the Injectables and Anesthesia division saw a decline of 9% [23][24] Market Data and Key Metrics Changes - Total U.S. capital orders for Care and Connectivity Solutions increased nearly 30% compared to the prior year, indicating strong demand [22] - The company has not observed a slowdown in U.S. hospital capital spending, although macroeconomic uncertainty is being monitored closely [22] Company Strategy and Development Direction - The company is focused on three main priorities: stabilizing business areas, strengthening the balance sheet, and driving a culture of continuous improvement [11][12] - A new operating model has been announced to simplify the organization, accelerate innovation, and improve performance by delayering leadership and embedding critical functional roles [12][62] - Continuous investment in R&D is expected to remain at or above historical levels to drive innovation [10][11] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in Q4 2025 and emphasized the need for improvement in performance and execution [9][10] - The outlook for 2026 anticipates total sales growth to be flat to 1% on a reported basis, with organic sales growth expected to be approximately flat [30][32] - The first quarter of 2026 is expected to be the most challenging, with improvements anticipated in the second half of the year [35][36] Other Important Information - Free cash flow generation exceeded $450 million in Q4 2025, with full-year free cash flow reaching $438 million [29] - The company plans to deploy cash towards reducing leverage in line with its capital allocation framework [29] Q&A Session Summary Question: Strategic review and sustainability of the business - Management emphasized the importance of accountability at lower levels and the need for continuous improvement to enhance customer support and performance [41][42] Question: Progress on reducing G&A and support costs - Management confirmed that they are on track with cost takeout and streamlining operations, with a commitment to eliminate stranded costs by the end of 2027 [46][48] Question: Earnings growth as TSAs roll off - Management indicated that while they anticipate growth in 2027, specific guidance is not being provided at this time [51][52] Question: Q4 gross margin decline factors - Management identified unfavorable sales mix, higher manufacturing costs, and non-recurring items as key contributors to the gross margin decline [70][71] Question: Improving margins in the Pharmaceuticals business - Management expressed confidence in the fundamentals of the Pharmaceuticals business and outlined ongoing efforts to improve operational execution and address supplier challenges [76][78]

Core Insights - AECOM is focused on continuous improvement to establish itself as an industry leader in infrastructure [2] Group 1 - The company has been working for the past two years to enhance its position in the market [2] - AECOM's leadership team, including the CEO, President, and CFO, is actively engaged in driving the company's strategic initiatives [1] - The emphasis on continuous improvement has been a guiding principle for the organization over the last six years [2]