AECOM (ACM) Q3 2024 earnings summary

Executive summary

• Achieved record third quarter results with revenue up 13% year-over-year to $4.2 billion and net service revenue (NSR) up 8%, driven by infrastructure, sustainability, and energy transition projects.

• Adjusted EBITDA and EPS grew 16% and 23% year-over-year, with adjusted EBITDA margin reaching a record 16.5%.

• Backlog and pipeline are at or near record highs, with a 70% increase in large pursuits expected to be decided in the next 12 months, providing strong visibility for future growth.

• Returned $407 million to shareholders year-to-date, including significant share repurchases, and affirmed a returns-focused capital allocation policy.

• Continued exit from legacy and at-risk construction businesses, with AECOM Capital transitioning to a new platform.

Financial highlights

• Revenue for Q3 FY2024 was $4.2 billion, up 13% year-over-year; NSR rose 8% to $1.83 billion.

• Adjusted EBITDA was $286 million for the quarter, up 16% year-over-year; adjusted EBITDA margin reached 16.5%.

• Adjusted EPS was $1.16 in Q3'24, up 23% year-over-year; diluted EPS from continuing operations was $0.95.

• Free cash flow year-to-date was $434 million, up 32% over prior year; net cash provided by operating activities for nine months was $528.7 million.

• Cash and cash equivalents increased to $1.65 billion as of June 30, 2024.

Outlook and guidance

• FY2024 guidance raised: adjusted EBITDA expected between $1,075–$1,105 million (up 13% YoY), adjusted EPS $4.45–$4.55 (up 21% YoY), and segment adjusted operating margin targeted at 15.6%.

• Long-term targets reaffirmed: 5–8% annual NSR growth, double-digit adjusted EPS and free cash flow per share growth, and 17%+ margin by 2026.

• Management expects $80–$100 million in restructuring costs in fiscal 2024, mainly for office real estate optimization and exiting certain Southeast Asian countries.

• Free cash flow conversion expected above 100%; liquidity expected to remain strong with sufficient cash and borrowing capacity.

• ROIC expected to be approximately 20% for FY2024.