Dive Brief:
- AECOM’s profits dropped 75.9% year over year to $25.5 million in its fiscal fourth quarter ended Sept. 30 on $3.8 billion in revenue, a 12% increase from the year-ago period, according to its fiscal Q4 and full year 2023 earnings report released Monday. The Dallas-based global contractor’s total backlog stood at $41.2 billion, up 2% from the year-ago period.
- Despite headwinds from a strengthening U.S. dollar, CEO Troy Rudd said on an earnings call Tuesday he was feeling confident about the outlook for infrastructure, resiliency and energy transition work, which the firm is well-positioned to take advantage of, in its main markets in the U.S., U.K., Canada and Australia.
- “We’re seeing [Infrastructure Investment and Jobs Act money] come in to fund projects across the business including design, and we actually see that pace picking up as we go through the next few years,” Rudd said. The company released FY 2024 financial guidance with an adjusted EPS of $4.35 to $4.55, or 20% year-over-year growth at the mid-point.
Dive Insight:
While the House avoided a federal shutdown with a short-term funding agreement Tuesday, Rudd said he wasn’t worried about how potential future shutdowns would affect the business.
“The impacts of a typical shutdown are immaterial to us, and we estimate that less than 1% of our business would be impacted,” Rudd said. “Our contracts are well-funded, and all indications [show] that most of our work would continue through a shutdown. In addition, our state and local clients are benefiting from historically strong tax revenues, accelerating IIJA-related grant activity and direct funding from the federal highway trust fund, which is funded through a separate and already-completed authorization process.”
Rudd also highlighted what he called a record safety performance over the past year. AECOM had struggled to find workers fast enough to staff its projects, but now turnover is at a much lower rate and the company is able to hire fast enough to keep up with their growth, he said.
AECOM is growing its program management and advisory expertise — especially its energy advisory and digital practices — which dovetail with its design services, said AECOM President Lara Poloni. The firm’s emphasis on design and technical excellence has paid off in the past year, she said.
“We are ideally suited to deliver as the global infrastructure megatrends accelerate. We are consistently winning our high-priority pursuits at a record rate, and on 90% of our wins, our technical score is essential to our success,” Poloni said.
Infrastructure, resilience outlook
Infrastructure and sustainability continue to be bright spots for the year ahead, as U.S. federal funding flows to projects and clients around the world spend big on these sectors, said Poloni.
This past year, AECOM won a role in overhauling the $3.6 billion Brent Spence Bridge, which spans Cincinnati and Covington, Kentucky. Funded through the IIJA, the project has become a symbol of the country’s infrastructure push.
Increasing demand for projects to address drought, flooding and drinking water scarcity and other resiliency projects plays to AECOM’s strengths, said Poloni. She highlighted two project wins in this sector: a large hydroelectric project in Canada and a conveyance tunnel in NYC to improve the reliability of its water supply. Plus, increased regulation around PFAS, a group of synthetic, potentially harmful chemicals, is significantly catalyzing growth in the water treatment sector, she said.
Transportation is also likely a hot spot in the year ahead: “Our largest state and local clients are predicting double-digit spending growth in Fiscal 2024,” Polani said.
