Dive Brief:
- AECOM’s profits and revenue rose in the first quarter amid strength across its markets, while backlog dipped compared to the same period last year due to the removal of two projects from its construction management pipeline, according to the firm’s Q1 2024 earnings report released Monday.
- The Dallas-based global contractor saw profit rise 7.4% year over year to $94 million in the first quarter on $3.9 billion in revenue, a 15% increase from the year-ago period. AECOM’s backlog stood at $39.8 billion, down 2.5% from Q1 2023.
- “Growth was especially strong in our global water and transportation markets,” CEO Troy Rudd said on an earnings call Tuesday. “Investments in sustainability, resilience and energy transition are expanding rapidly, which is creating new opportunities for which we are ideally suited.”
Dive Insight:
CFO Gaurav Kapoor pegged a decline in the firm’s construction management backlog on AECOM’s decision to remove two projects from its awarded pipeline because the owners of the projects wanted final terms and conditions that were inconsistent with AECOM’s “risk framework.”
“The developers wanted to pass incremental risks to us after the project had been awarded, but before it had been contracted, and we just said no,” said Kapoor. “We're always going to make investments that are towards the highest and best use for our shareholders and to create profitability.”
While publicly funded projects have been flourishing due to legislation aimed at spurring activity in infrastructure, manufacturing and utility projects, private developers have been struggling to make deals pencil out due to higher interest rates.
Water, disaster recovery sectors strong
Rudd noted that the office and tall buildings sector is still weak in the U.S., but federal money is continuing to buoy infrastructure construction across the country.
“IIJA funding is accelerating, as evidenced by another milestone program management win for Amtrak's Susquehanna bridge replacement project, which will improve operations on one of the busiest rail corridors in the U.S. Additionally, state and local budgets remain strong,” Rudd said.
The IIJA is funding lead pipe replacement projects, and this work will likely accelerate if the EPA’s proposed lead and copper rule is passed, President Lara Poloni said on the call. AECOM has also made inroads into the disaster recovery sector as damage from severe weather has become more common.
“We have gained significant market share with FEMA, having won several of their most significant contracts over the past few years,” Poloni said. “[This] positions us for the first time as the leader across critical missions and preparedness, mitigation, response and recovery at a time when the stakes have never been higher.”
The firm reaffirmed its FY 2024 guidance of an adjusted EPS of $4.35 to $4.55, or 20% year-over-year growth at the mid-point.
