Dive Brief:

• Dallas-based contractor AECOM reported revenue of $3.4 billion on its fourth quarter 2021 earnings call, a 6% decrease from fourth quarter 2020. However, fourth quarter 2020 included an extra week, so adjusting for that anomaly, the firm's revenue increased by 1%.
• Revenue also increased 1% to $13.3 billion from fiscal year 2020 to fiscal year 2021 but rose 3% when accounting for the additional week in 2020.
• Driven by an 18% growth in contracted backlog, AECOM posted a total backlog of $38.6 billion, down 6.3% from the $41.2 posted in the fourth quarter of 2020. Construction management contracted backlog increased by 21%. 

Dive Insight:

AECOM's results came on the heels of the passage of the $1.2 trillion infrastructure bill, which was signed into law by President Joe Biden on Monday. CEO Troy Rudd said the legislation will provide much-needed, long-term funding certainty across the company's strongest markets, such as transit modernization, electrification, environmental remediation and climate resilience.

"Importantly, we are positioned to benefit from nearly every line item in this bill," Rudd said. "We anticipate this funding will increase our addressable market and our most profitable business by double digits over the coming years, and we expect the most meaningful benefits in fiscal 2023 and beyond."

However, even before the bill, Rudd saw strength in the company’s government work. 

"In addition to the strengthened federal funding environment, all of our state and local clients are on equally strong footing," Rudd said on the earnings call. "Today, state DOT budgets are significantly above prior projections and the fiscal outlooks are stronger."

Financial outlook

Coming into AECOM’s earnings, Krzysztof Smalec, an equity analyst on the industrials team for Morningstar, told Construction Dive that one possible way to drive growth is to continue margin expansion, particularly in the international market. In the fourth quarter, the company said it posted its strongest margin in its history with an adjusted operating margin on a net service revenue basis of 19.8%, which was a 290 basis point increase over the prior year.

"We continue to make progress on our margin improvement initiative and remain confident in our goal of achieving double-digit international margins," said AECOM CFO Gaurav Kapoor on the earnings call.

A key focus for AECOM has been growing its program management business. The company showed progress in that space by winning projects in Saudi Arabia, including a social, economic and sustainability project in Al-'Ula City.

AECOM also tightened its focus on environmental, social and corporate governance objectives by investing at the natural capital laboratory in the U.K.

"We established this project in 2019 to study the environmental change and biodiversity impact with precision by leveraging drones, artificial intelligence, GIS [geographic information system] data and thermal imaging," Rudd said.

With its earnings report, the company also rolled out Digital AECOM, which includes its global digital-focused consulting services, hosted services products and digital tools to enhance its delivery of core engineering and design services.