Dive Brief:
- Despite peer firms’ struggles and broader economic headwinds, AECOM’s profits jumped and its backlog notched a record high, according to its fiscal second-quarter earnings report released on Monday.
- The Dallas-based global contractor reported Q2 earnings of $76.6 million, or $0.55 per diluted share, up 84% from a year ago. Its revenue stood at $3.49 billion, up 9% year over year.
- AECOM’s total backlog increased to $41.9 billion, up 2.7% from last year, and CEO Troy Rudd said in an earnings call Tuesday that the quality of that backlog has also improved from past years. The firm expects global growth in its key areas of expertise, including transit and green energy.
Dive Insight:
Rudd said federal project funding is continuing to build this year due to the Infrastructure Investment and Jobs Act, the CHIPS Act and the Inflation Reduction Act, and will likely peak in 2027.
Civil work opportunities are neither short-term nor limited to the U.S., Rudd said, but infrastructure, clean energy and resilience spending is expanding and will grow worldwide into the foreseeable future.
“There are these large, long-term transitions going on. The largest one we see is around energy,” Rudd said. “I think we’re talking about a multi-decade investment trend around an energy transition around the world.”
Illustrating these shifts, AECOM President Lara Poloni cited the European Union’s recently passed Green Deal Industrial Plan, Canada’s new clean energy and transit investments, Saudi Arabia’s efforts to diversify its economy and Australia’s transportation projects, such as its Western Harbour Tunnel. Growth in the sustainability, clean energy and transit sectors all play to AECOM’s strengths, she said on the call.
IIJA funding is indeed flowing, according to Poloni, and was a key factor in advancing a major bridge replacement project in the eastern U.S. that the firm won in Q2. It’s also expected to aid the California high-speed rail project, for which the company is providing program management support.
Federal funding for emerging contaminants, clean energy solutions and larger competitive grants is also gaining momentum, and the firm expects a corresponding bump to its backlog later this year and into next year, Poloni said.
AECOM confident on financial guidance
Rudd reiterated the firm’s financial guidance for fiscal year 2023, and said this quarter’s results make the firm even more confident in delivering its long-term goals.
“This success has transformed the composition of our backlog,” Rudd said. “Today, 30% of wins are valued at greater than $25 million, more than double what it was just a few years ago.”
As commercial office and urban center markets slump, Rudd said AECOM has been repositioning its focus to aviation, water, sports convention centers and government building projects. The firm is also buoyed by healthy state and local clients’ budgets, he said.
In other company news, AECOM landed the No. 2 spot on ENR’s Top 500 Design Firms list for 2023 and recently launched a new office in Glasgow, Scotland.
