Dive Brief:

• Los Angeles-based contractor AECOM reported second-quarter revenue Tuesday of $3.3 billion, a 1% year-over-year gain. Total backlog decreased 5% to $39.4 billion.
• Despite the drop, new projects are on the horizon, CEO Troy Rudd said during an earnings call Tuesday, noting that the company's construction management division won about $900 million of new work in the quarter, ahead of company expectations.
• He noted that federal COVID-19 relief legislation and improving global economic conditions have resulted in faster client decisionmaking. "We are now seeing the recovery in the construction management pipeline, particularly as our clients plan with greater certainty against a better economic backdrop," he said. "We're pursuing several meaningful award opportunities with decisions expected in the second half of the year."

Dive Insight: 

Rudd said that AECOM's government clients are on strong financial ground, thanks to money from the $350 billion American Rescue Plan. In fact, he said, the company's largest state and local government clients are funded at higher levels now than before the pandemic.

"That money is just getting distributed to state and local governments, so it will find its way into budgets," he said. "We have an expectation that we're going to be bidding that work, we will get awarded during the second half of this year, leading to an expectation of an inflection point in growth in fiscal 2022."

As the company prepares to take on more civil work, it is addressing the need to hire new technical and professional staff among a tight labor market, Rudd said. AECOM's flexible work initiative, called Freedom to Grow, is one way the firm is attracting and retaining workers.

"What we've learned from the pandemic, is that people really can be productive remotely, and they can be working virtually, we've learned that our clients are very accepting of it," Rudd said. "We've also found that having everybody having to commute into a major city to do all the work together, maybe isn't the right answer every day."

He said that the company "wants to make sure that our people are able to be home on Wednesday afternoon at three o'clock to go to their daughter's soccer game, and so we're going to create an environment where that exists.

"We believe that's a competitive advantage to attract talent to AECOM. So we are absolutely focused on that as we move forward."

Company leaders also highlighted AECOM's newly announced environmental, social and governance initiative and said it will help leverage new work from clients that have similar objectives. Major tenets of the initiative include goals toward net-zero carbon emissions, increasing the amount of women in leadership roles and partnering with small and medium-size firms.

"Importantly, market conditions are improving, and our Think and Act Globally strategy is resulting in improved margin performance and earnings growth, and inspires confidence in our increased guidance for this year," said Rudd.