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Why Is Aecom (ACM) Up 1.4% Since Last Earnings Report?
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A month has gone by since the last earnings report for Aecom Technology (ACM - Free Report) . Shares have added about 1.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aecom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AECOM Q4 Earnings Beat Estimates, Up Y/Y, Raises Dividend by 18%
AECOM reported impressive results for fourth-quarter fiscal 2024, where earnings surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Revenues also increased from the prior year, backed by solid organic net service revenues (NSR) growth in its design business.
Apart from this, ACM announced an 18% increase in its quarterly dividend payout to 26 cents, payable on Jan. 17, 2025, to stockholders of record on Jan. 2. Also, it increased its share repurchase authorization to $1 billion. Impressively, AECOM has grown per share dividend at a 20% CAGR since inception.
Delving Deeper
The company reported adjusted earnings per share (EPS) of $1.27, which topped the consensus mark of $1.22 by 4.1% and increased 25.7% from $1.01 reported in the prior-year quarter. The strong improvement was backed by benefits received from high-returning organic growth initiatives.
Revenues of $4.11 billion rose 7% on a year-over-year basis. Adjusted NSR moved up 5% to $1.81 billion.
Segment Details
Americas’ revenues came in at $3.16 billion during the reported quarter, up 8% from the prior-year quarter’s levels. NSR of $1.06 billion moved up 6% year over year, backed by 8% growth in the design business, partially offset by impacts from Hurricane Helene in September.
Adjusted operating income of $207.7 million was up 9% year over year. Adjusted operating margin (on an NSR basis) expanded 70 basis points (bps) year over year to 19.6%, indicating the underlying strength of the business, positive impacts of growth and ongoing reinvestment in long-term organic growth initiatives, as well as strong execution and growth.
The total backlog at the fiscal 2024-end was $17.4 billion compared with $16.9 billion a year ago.
International revenues were up 5% year over year to $948.4 million. During the quarter, NSR increased 4% year over year to $754.1 million.
Adjusted operating income in the segment rose 31% year over year to $94.9 million. Adjusted operating margin (on an NSR basis) also moved up 260 bps year over year to 12.6%. This was backed by continued strong execution and the benefits of actions to narrow its focus on high-returning opportunities across its largest geographies.
The total backlog at the end of fiscal 2024 was $6.43 billion compared with $6.27 billion a year ago.
AECOM Capital's quarterly revenues were $0.5 million.
Operating Highlights
Adjusted segment operating profit amounted to $261 million, up 16% from the year-ago quarter. The segment’s adjusted operating margin (“NSR”) improved 150 bps to 16.7%. The upside was driven by high-returning organic growth.
Adjusted EBITDA rose 15% year over year to $290 million. Adjusted EBITDA margin of 16.7% also rose 140 bps year over year, backed by its ongoing investments in high-margin organic growth and its continuous improvement initiatives.
Backlogs
As of the fiscal 2024-end, the total backlog came in at $23.86 billion compared with $23.16 billion reported in the prior-year period. The current backlog level includes 50.8% contracted backlog growth.
A 5% increase in the design business backlog was driven by a 50%-win rate, an all-time high, and continued strong end-market trends.
ACM’s pipeline of opportunities increased 10%, which was a new high, driven by robust funding across all its largest markets.
ACM’s Fiscal 2024 Highlights
For the full year, the company reported revenues of $16.1 billion, which increased 12% from the previous year. NSR reached an all-time high in fiscal 2024 and included strength across the largest end markets and geographies. ACM delivered 8% growth in the design business in fiscal 2024, driven by 9% growth in the Americas.
Adjusted EPS also increased 22% to $4.52 from fiscal 2023. Adjusted EBITDA margins of 16% also rose 100 bps year over year. The segment adjusted operating margin was 15.8%, which exceeded the guidance of 15.6% and grew 100 bps year over year.
Liquidity & Cash Flow
At the fiscal 2024-end, AECOM’s cash and cash equivalents totaled $1.58 billion compared with $1.26 billion at the fiscal 2023-end. The total debt (excluding unamortized debt issuance costs) as of Sept. 30, 2024, was $2.54 billion, up from $2.22 billion in the fiscal 2023-end.
In fiscal 2024, adjusted operating cash flow increased 19% year over year to $827 million. Adjusted free cash flow also increased 20% to $708 million year over year.
Fiscal 2025 Guidance
The company anticipates to generate 5-8% organic NSR growth in fiscal 2025. It expects adjusted EPS in the range of $5.00-$5.20. This indicates a 13% improvement from fiscal 2024 levels on a constant-currency basis, considering the mid-point of the guidance.
AECOM expects adjusted EBITDA in the range of $1.17-$1.21 billion, indicating 9% year-over-year growth at the midpoint. Adjusted EBITDA margin is expected to be 16.3%, representing a 30 bps increase from fiscal 2024.
The company anticipates more than 100% adjusted net income to free cash flow conversion, an average fully diluted share count of 134 million and an effective tax rate of 24%.
Long-Term Views
ACM expects to deliver 5-8% organic NSR growth, at least 20-30 bps adjusted EBITDA margin expansion, double-digit adjusted EPS and free cash flow per share improvement annually. It also expects to achieve at least 17% adjusted EBITDA margin (exiting fiscal 2026) and at least 25% return on invested capital over the long term. ACM anticipates approximately 100% conversion of adjusted net income to free cash flow.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
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Why Is Aecom (ACM) Up 1.4% Since Last Earnings Report?
A month has gone by since the last earnings report for Aecom Technology (ACM - Free Report) . Shares have added about 1.4% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Aecom due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AECOM Q4 Earnings Beat Estimates, Up Y/Y, Raises Dividend by 18%
AECOM reported impressive results for fourth-quarter fiscal 2024, where earnings surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Revenues also increased from the prior year, backed by solid organic net service revenues (NSR) growth in its design business.
Apart from this, ACM announced an 18% increase in its quarterly dividend payout to 26 cents, payable on Jan. 17, 2025, to stockholders of record on Jan. 2. Also, it increased its share repurchase authorization to $1 billion. Impressively, AECOM has grown per share dividend at a 20% CAGR since inception.
Delving Deeper
The company reported adjusted earnings per share (EPS) of $1.27, which topped the consensus mark of $1.22 by 4.1% and increased 25.7% from $1.01 reported in the prior-year quarter. The strong improvement was backed by benefits received from high-returning organic growth initiatives.
Revenues of $4.11 billion rose 7% on a year-over-year basis. Adjusted NSR moved up 5% to $1.81 billion.
Segment Details
Americas’ revenues came in at $3.16 billion during the reported quarter, up 8% from the prior-year quarter’s levels. NSR of $1.06 billion moved up 6% year over year, backed by 8% growth in the design business, partially offset by impacts from Hurricane Helene in September.
Adjusted operating income of $207.7 million was up 9% year over year. Adjusted operating margin (on an NSR basis) expanded 70 basis points (bps) year over year to 19.6%, indicating the underlying strength of the business, positive impacts of growth and ongoing reinvestment in long-term organic growth initiatives, as well as strong execution and growth.
The total backlog at the fiscal 2024-end was $17.4 billion compared with $16.9 billion a year ago.
International revenues were up 5% year over year to $948.4 million. During the quarter, NSR increased 4% year over year to $754.1 million.
Adjusted operating income in the segment rose 31% year over year to $94.9 million. Adjusted operating margin (on an NSR basis) also moved up 260 bps year over year to 12.6%. This was backed by continued strong execution and the benefits of actions to narrow its focus on high-returning opportunities across its largest geographies.
The total backlog at the end of fiscal 2024 was $6.43 billion compared with $6.27 billion a year ago.
AECOM Capital's quarterly revenues were $0.5 million.
Operating Highlights
Adjusted segment operating profit amounted to $261 million, up 16% from the year-ago quarter. The segment’s adjusted operating margin (“NSR”) improved 150 bps to 16.7%. The upside was driven by high-returning organic growth.
Adjusted EBITDA rose 15% year over year to $290 million. Adjusted EBITDA margin of 16.7% also rose 140 bps year over year, backed by its ongoing investments in high-margin organic growth and its continuous improvement initiatives.
Backlogs
As of the fiscal 2024-end, the total backlog came in at $23.86 billion compared with $23.16 billion reported in the prior-year period. The current backlog level includes 50.8% contracted backlog growth.
A 5% increase in the design business backlog was driven by a 50%-win rate, an all-time high, and continued strong end-market trends.
ACM’s pipeline of opportunities increased 10%, which was a new high, driven by robust funding across all its largest markets.
ACM’s Fiscal 2024 Highlights
For the full year, the company reported revenues of $16.1 billion, which increased 12% from the previous year. NSR reached an all-time high in fiscal 2024 and included strength across the largest end markets and geographies. ACM delivered 8% growth in the design business in fiscal 2024, driven by 9% growth in the Americas.
Adjusted EPS also increased 22% to $4.52 from fiscal 2023. Adjusted EBITDA margins of 16% also rose 100 bps year over year. The segment adjusted operating margin was 15.8%, which exceeded the guidance of 15.6% and grew 100 bps year over year.
Liquidity & Cash Flow
At the fiscal 2024-end, AECOM’s cash and cash equivalents totaled $1.58 billion compared with $1.26 billion at the fiscal 2023-end. The total debt (excluding unamortized debt issuance costs) as of Sept. 30, 2024, was $2.54 billion, up from $2.22 billion in the fiscal 2023-end.
In fiscal 2024, adjusted operating cash flow increased 19% year over year to $827 million. Adjusted free cash flow also increased 20% to $708 million year over year.
Fiscal 2025 Guidance
The company anticipates to generate 5-8% organic NSR growth in fiscal 2025. It expects adjusted EPS in the range of $5.00-$5.20. This indicates a 13% improvement from fiscal 2024 levels on a constant-currency basis, considering the mid-point of the guidance.
AECOM expects adjusted EBITDA in the range of $1.17-$1.21 billion, indicating 9% year-over-year growth at the midpoint. Adjusted EBITDA margin is expected to be 16.3%, representing a 30 bps increase from fiscal 2024.
The company anticipates more than 100% adjusted net income to free cash flow conversion, an average fully diluted share count of 134 million and an effective tax rate of 24%.
Long-Term Views
ACM expects to deliver 5-8% organic NSR growth, at least 20-30 bps adjusted EBITDA margin expansion, double-digit adjusted EPS and free cash flow per share improvement annually. It also expects to achieve at least 17% adjusted EBITDA margin (exiting fiscal 2026) and at least 25% return on invested capital over the long term. ACM anticipates approximately 100% conversion of adjusted net income to free cash flow.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.