AECOM

Overview

AECOM designs, plans and manages infrastructure for governments and companies. Its FY2025 10-K calls it "a leading global provider of professional infrastructure consulting and advisory services" and names "transportation, facilities, water, environmental, and energy" among its major end markets. It reported $16.14 billion of revenue in the year to September 30, 2025, and employed about 51,000 people, roughly 18,000 of them in the United States.

Energy is an unmeasured part of that. AECOM reports no revenue, backlog or headcount for energy or power. The energy work it has announced in 2025 and 2026 is engineering, design and consenting on other owners' projects: preliminary design for Type One Energy's Infinity Two fusion plant, places in two UK fusion groups, consenting for National Grid's transmission build-out in England and Wales, front-end work on a pumped storage project in Ontario and long-running design support at Sellafield.

AECOM no longer builds power plants or energy facilities at its own risk. It sold its power construction business in 2020 and, by its own account, has "exited substantially all of our self-perform at-risk construction businesses." One construction-related unit remains: Construction Management, which produced the loss behind the August 2026 guidance cut.

AECOM's careers profile dates the company to April 6, 1990, when five entities owned by Ashland merged, and names Richard G. Newman as founder. It completed its acquisition of URS Corporation on October 17, 2014. Headquarters moved from Los Angeles to Dallas effective October 1, 2021. W. Troy Rudd, previously chief financial officer, became chief executive on October 1, 2020 and is now chairman and CEO. Lara Poloni is president and Gaurav Kapoor chief financial and operations officer.

How the business is built

AECOM reports two operating segments and a small investment arm. In FY2025 Americas had $12.53 billion of revenue and $4.55 billion of NSR, with a segment adjusted operating margin of 19.8% of NSR, which AECOM called a record. International had $3.61 billion of revenue, $3.02 billion of NSR and an 11.5% margin. AECOM Capital, which "primarily invests in and develops real estate projects," reported $0.5 million of revenue and a $9.0 million operating loss.

The gap between revenue and NSR matters for reading AECOM's numbers. AECOM defines NSR as "revenue, less pass-through revenue," and states its margins, guidance and long-term targets on NSR. FY2025 NSR of $7.57 billion was 47% of revenue, by Blizzard Power arithmetic. The gap is widest in Americas, which contains the Construction Management business. The filings do not break pass-through revenue down; Blizzard Power reads it as mostly subcontractor and other direct costs billed on to clients, which is an inference.

Governments supplied half of FY2025 revenue. US state and local governments accounted for $3.92 billion (24%), non-US governments $3.02 billion (19%) and the US federal government $1.11 billion (7%). Private clients supplied the other $8.10 billion (50%). These are shares of gross revenue, from the 10-K.

By contract type, FY2025 revenue was 38% cost-reimbursable, 37% guaranteed maximum price (GMP) and 25% fixed-price. Under a GMP or fixed-price contract the contractor generally absorbs costs above the agreed ceiling, so these two categories, 62% of revenue together, are where cost overruns fall most directly on AECOM.

The current shape follows a run of sales. The Management Services segment went to affiliates of American Securities and Lindsay Goldberg in a sale that closed on January 31, 2020. It became Amentum and took with it the Department of Energy cleanup joint ventures AECOM had led at the Hanford tank farms and Savannah River. Trade press reported the sale of the power construction business to CriticalPoint Capital in October 2020; civil construction went to Oroco Capital in January 2021, and in November 2021 AECOM agreed to sell its oil and gas maintenance and turnaround business to Graham Construction.

Those exits still produce charges. Discontinued operations lost $73.0 million in the first nine months of FY2026, mostly a $61.8 million non-cash loss in the first quarter on a legacy Department of Energy deactivation project; a July 2026 settlement pays AECOM $58.5 million.

Energy and power work

The 10-K lists transmission and distribution, alternative and renewable energy (wind, hydro, dams, ethanol plants) and engineering and program management for the Departments of Defense and Energy among AECOM's markets, with no figures attached. The closest thing to a size is a June 11, 2026 release counting "more than 2,000" environment and energy professionals in Europe and India combined, a number that mixes the two fields. The contracts below are the named energy work found for this profile; AECOM has disclosed no value for its share of any of them.

The Construction Management charge

AECOM's third-quarter FY2026 results, released on August 10, 2026, included "a $337 million pre-tax loss related to the delayed completion of a Construction Management project." The 10-Q puts the aggregate loss at $336.8 million. The project was awarded in 2019. Neither document names it or gives its location. Rudd said that "lower subcontractor productivity is driving a delayed completion and a higher estimated cost to complete."

The charge turned the quarter to a loss. AECOM reported a GAAP operating loss of $76 million, diluted EPS of -$0.67 (-$0.65 from continuing operations) and adjusted EPS of -$0.50, which the release puts at about $1.49 excluding the charge. Revenue fell 14% to $3.59 billion, and NSR fell 16% in constant currency to $1.61 billion. Americas NSR dropped 29% while International NSR rose 4%. The release does not say which segment booked the loss. The 10-Q attributes $473.0 million of the quarter's decline in Americas revenue to "a Construction Management project," without saying whether it is the charged one.

On the call the next day, management described the job as a design-build project for a public-private partnership (P3) client. "We decided many years ago to no longer pursue design-build work for P3 clients in the construction management business," Rudd said, and Kapoor said that "outside of these projects, we don't have any design build P3 in our portfolio in our CM business." Rudd said the cash needed to fund the delayed projects through completion would fall mostly in the first half of fiscal 2027 and that "the overall impact will be about $0.5 billion." These quotes come from a third-party transcript published by Motley Fool.

The release expects substantial completion in the second quarter of fiscal 2027, which is January to March 2027, and says the related claims "will likely take several years and litigation to fully resolve." The 10-Q says the business has "two projects that have experienced delays and have significant claims." Significant claims recorded in contract assets were about $620 million at June 30, 2026, up from about $400 million at September 30, 2025; the note does not tie that amount to any one project.

The charge came after AECOM had considered selling the business. With its FY2025 results on November 18, 2025, AECOM said its board had approved a review of strategic alternatives for Construction Management, including a possible sale, with Goldman Sachs and Wachtell Lipton advising. AECOM's first-quarter FY2026 release on February 9, 2026 said the company had "concluded that it will continue to own and operate the business". The third-quarter 10-Q does not mention a review or a sale.

Financial performance

FY2025 revenue was $16.14 billion, up 0.2%, and NSR rose 6% to $7.57 billion. Operating income was $1.03 billion. Net income attributable to AECOM was $638.3 million from continuing operations and $561.8 million in total, or $4.79 per diluted share from continuing operations. On AECOM's non-GAAP measures, adjusted EPS rose 16% to $5.26, adjusted EBITDA was $1.20 billion (16.8% of NSR) and the segment adjusted operating margin was 16.5%. Operating cash flow was $821.6 million and free cash flow $685.2 million.

Adjusted EPS was $1.29 in the first quarter of FY2026, down 2%, and $1.59 in the second, up 27%. In the third quarter, operating cash flow fell 66% to $95 million and free cash flow 79% to $55 million.

On May 11, 2026 AECOM had raised its FY2026 adjusted EPS range to $5.90 to $6.10. On August 10 it cut the range to $3.95 to $4.15, adjusted EBITDA to $935 million to $965 million from $1.275 billion to $1.305 billion, and free cash flow to about $300 million from about $400 million, and set NSR guidance at $7.30 billion to $7.35 billion. GAAP EPS guidance is $2.37 to $2.87. The midpoint of the adjusted EPS range fell $1.95, or about a third, by Blizzard Power arithmetic. Excluding the charge, AECOM kept adjusted EPS at $5.90 to $6.10. It attributed lower NSR growth to delayed starts in Construction Management "and ongoing conflict in the Middle East."

Backlog kept growing through the loss. AECOM's third-quarter release reports a record $27.82 billion at June 30, 2026, up 13% from a year earlier: $13.73 billion contracted and $14.09 billion awarded but not yet contracted. Design-only backlog was $26.14 billion. The release put third-quarter wins at a record $4.2 billion and the design book-to-burn ratio at 1.6, excluding the charge. These backlog figures are the earnings-release series; see the sourcing note below on a conflicting figure in the 10-K.

Capital allocation and debt

Buybacks stopped after the second quarter. AECOM spent $388.4 million repurchasing stock in FY2025 and $441.9 million in the first half of FY2026, then essentially nothing in the third quarter, according to its XBRL filings. The board had raised the repurchase authorization to $1 billion after the first quarter. The third-quarter release says capital allocation "in the near-term will be prioritized towards its organic growth investments and its quarterly dividend program." On the call, per the transcript, Rudd said he expected leverage to fall to "a very low number" after the second quarter of fiscal 2027, and that AECOM would then, "I think, be back to returning capital to shareholders."

The dividend continues. AECOM raised its quarterly dividend 19% to $0.31 a share in November 2025 and declared the same amount on September 17, 2026, payable October 30. At its November 2025 investor day it committed to "annual double-digit percentage increases in the per share value of its dividend." As of its May 2026 results, AECOM said it had returned more than $3.5 billion to shareholders through repurchases and dividends since starting its buyback program in September 2020.

Net leverage, as AECOM reports it, rose to 1.5 times at June 30, 2026 from 0.8 times at September 30, 2025. Total debt was $2.75 billion against cash of $1.01 billion, of which $250.9 million sat in consolidated joint ventures. The debt includes $1.2 billion of 6.000% senior notes due 2033. AECOM refinanced its bank facilities on March 10, 2026 with revolving credit and term loans maturing in 2031, and in June 2026 added a $500 million revolver maturing in June 2028.

Strategy and targets

AECOM set targets for FY2026 to FY2029 at its November 18, 2025 investor day, all on non-GAAP measures and excluding Construction Management, which was then under review. They are a "20%+ exit rate by FY'28" for both segment adjusted operating margin and adjusted EBITDA margin, against 16.5% and 16.8% in FY2025; a "15%+ CAGR" in adjusted EPS and in free cash flow per share; organic NSR growth of "+5 - 8% CAGR"; and "the expected doubling to $400 million of annual NSR in its higher-margin Advisory business over the next three years." The third-quarter release reaffirmed the margin and EPS targets on a basis that excludes the charge. These are company targets, not results.

Management ties demand to public infrastructure funding. On the August 2026 call Poloni said, per the Motley Fool transcript, that "Less than half of the IIJA funding in our core markets has been spent, which adds to our visibility and confidence," referring to the 2021 Infrastructure Investment and Jobs Act. In the UK she said NSR growth "accelerated to high single digits with ongoing strength in water, environment and energy." AECOM has not quantified its exposure to IIJA spending.

Peers

On ENR's 2026 Top 500 Design Firms list, which ranks firms on 2025 design revenue, AECOM is second behind Jacobs Solutions, having ranked first in 2025.

Jacobs' fiscal year ends four days before AECOM's, which makes it the easiest comparison. For its fiscal year ended September 26, 2025, Jacobs reported gross revenue of $12.03 billion, adjusted net revenue of $8.69 billion and adjusted EBITDA of $1.207 billion (13.9% of adjusted net revenue). AECOM's FY2025 adjusted EBITDA was almost identical at $1.203 billion, on a 16.8% margin of NSR. The margins are not strictly comparable: each company divides by its own non-GAAP revenue measure, and the two are not defined identically.

Key considerations

The Construction Management project is the near-term variable. Management expects about $0.5 billion of cash outflow in the first half of fiscal 2027 to finish the two delayed projects. Further cost growth before completion, or claims settled below the amounts AECOM has recorded, would reach results; the filings do not say how much of the $620 million in significant claims relates to these projects.

Management says it stopped pursuing design-build P3 work in Construction Management years ago; the charged project was awarded in 2019. With 62% of FY2025 revenue on GMP or fixed-price terms, cost-overrun risk extends beyond this one job.

Capital returns now depend on deleveraging. AECOM bought back essentially no stock in the third quarter and says near-term capital goes to organic growth and the dividend; Rudd said AECOM would be back to returning capital to shareholders once leverage, now 1.5 times, falls after the second quarter of fiscal 2027. FY2026 free cash flow guidance is about $300 million, against $685.2 million in FY2025.

Half of revenue comes from governments, and the 10-K warns that "We depend on long-term government contracts, some of which are only funded on an annual basis." The third-quarter release lists "changes in administration or other funding directives" among its forward-looking risks, without a quantified exposure.

Energy demand cannot be read through to AECOM's numbers. The company discloses no energy revenue, and its named energy work is design and consenting on projects owned by others, with AECOM's fee undisclosed. Higher spending on grids, data centers or new nuclear may help AECOM; the filings give no way to measure how much. The next data point is the FY2026 10-K and fourth-quarter results, which last year came in mid-November.

Sources