AECOM (NYSE: ACM) delivered strong first quarter fiscal 2026 results, surpassing expectations across key financial metrics despite a challenging environment marked by a U.S. federal government shutdown.
The company raised its full-year earnings guidance, reported record backlog levels, and opted to retain its Construction Management business after a strategic review. Total shareholder returns exceeded $340 million in the quarter, bolstered by an expanded $1 billion share repurchase authorization.
Financial Performance Overview
First quarter revenue from continuing operations fell 5% to $3.8 billion, reflecting reduced pass-through work, while operating income declined 7% to $222 million. Net income dropped 21% to $140 million, with diluted earnings per share at $1.06, down 20%. However, adjusted metrics highlighted underlying strength: net service revenue (NSR) rose 2% overall and 5% after adjusting for fewer working days, driven by 9% growth in the Americas.
Adjusted EBITDA increased 6%, with margins expanding to 16.4%—up 100 basis points for segment adjusted operating margin and 80 basis points for adjusted EBITDA margin. Adjusted EPS dipped 2% but grew 8% when normalized for a lower prior-year tax rate. Free cash flow stood at $42 million, supporting robust capital returns.
Record Backlog and Win Trends
Total backlog surged 9% year-over-year to a record high, fueled by a 1.5x book-to-burn ratio—the 21st consecutive quarter above 1.0. This resilience persisted despite a 43-day U.S. government shutdown delaying awards in the Americas design business, which still achieved a 1.0 ratio. The opportunity pipeline expanded double-digits across Americas and International segments, with the strongest growth in early-stage prospects signaling sustained demand.
AECOM’s leadership attributed success to top-ranked franchises, technical expertise, and investments in AI, technology, and Advisory/Program Management teams. These enhancements are expanding market reach and competitive advantages, as evidenced by major wins like Scottish Water’s multibillion-dollar program and the Brisbane 2032 Olympic delivery partnership.
Segment Results
In the Americas, revenue dipped 4% to $3.0 billion due to lower pass-throughs, but NSR grew 9% (6% as-reported at constant currency) in both U.S. and Canada markets. Adjusted operating income rose 13% to $222 million, lifting NSR margin to a first-quarter record of 19.9% (up 120 basis points) through efficiencies and growth. Backlog hit a new high, up 3%.
Internationally, revenue declined 5% to $854 million, with NSR flat as-reported (down 3% at constant currency) after working-day adjustments. Adjusted operating income held steady at $81 million, improving NSR margin to 11.0% (up 20 basis points) via execution focus and high-return clients. Backlog jumped 25%, powered by a 2.3 book-to-burn ratio across regions.
Capital Allocation and Strategic Decisions
AECOM returned over $340 million to shareholders via repurchases and dividends, maintaining net leverage at 1.0x with no near-term debt maturities. Since 2020, returns total nearly $3.4 billion. Post-quarter, the Board raised the repurchase authorization to $1 billion.
The company completed its review of the Construction Management business, deciding to retain it as a continuing operation due to its leadership position, strong backlog, and delivery track record on iconic projects. A legacy URS matter settled post-quarter, yielding ~$50 million in expected cash this year, though it incurred a $61.8 million discontinued operations loss.
Updated FY26 Guidance and Long-Term Targets
Reflecting Q1 outperformance, record backlog, and favorable tax dynamics, AECOM lifted FY26 guidance: adjusted EPS to $5.85-$6.05 (from $5.65-$5.85); adjusted EBITDA to $1,270-$1,305 million; organic NSR growth of 6-8% (excluding ~200 basis point working-day drag); margins at 16.8% (operating) and 17.0% (EBITDA); and free cash flow ~$400 million. Adjusted tax rate: 20-22%.
Long-term, AECOM reiterated targets for 20%+ margin exit by FY28 and 15%+ adjusted EPS CAGR through FY29, underpinned by productivity gains (NSR and profit per employee growth over six years) and a returns-focused capital policy.
CEO Troy Rudd emphasized the firm’s moat from domain expertise and client trust, while President Lara Poloni highlighted AI-driven wins. CFO Gaurav Kapoor noted persistent productivity trends and balance sheet strength.