“The benefits of our Think and Act Globally strategy are evident in our high win rates and record backlog,” said Lara Poloni, AECOM’s president. “We are seeing positive proof points that reinforce our investment in our new Water and Environment Advisory business. We have already made several key hires, and as the number one water, environment, facilities and transportation firm as ranked by ENR, we are confident that we will achieve our goal of doubling the $200 million of net service revenue in this business over the next three years.”

“We are off to a strong start in fiscal 2025 with first quarter results that exceeded our expectations,” said Gaurav Kapoor, AECOM’s chief financial and operations officer. “This includes accelerating NSR growth, record first quarter margins and double-digit adjusted EPS growth. As we look ahead, continued expected growth and the high return on our strategic investments underpin our confidence in delivering a 17% margin exit rate by the end of fiscal 2026 and even higher margins over time. Importantly, our balance sheet remains strong and we delivered a 28% increase in free cash flow, which supported continued returns of capital to our shareholders under our returns-based capital allocation policy.”

First Quarter Highlights

• Revenue increased by 3%; net service revenue² increased by 5.5%, highlighted by 9% growth in the Americas design business.
• Operating income increased by 46%; the segment adjusted¹ operating margin³ increased by 40 basis points to 15.4% and the adjusted¹ EBITDA margin⁵ increased by 20 basis points to 15.6%, both of which set first quarter records.
• Net income increased by 83%; adjusted¹ EBITDA⁴ increased by 8% and adjusted¹ EPS increased by 25%.
• Free cash flow increased by 28%, and the Company returned $55 million to shareholders through repurchases and dividends in the quarter.
• Total backlog⁷ increased by 4% to a record high, driven by a 1.2x book-to-burn⁸ ratio in each of the Americas and International design businesses, contributing to a 1.1x book-to-burn ratio enterprise wide.
  • The Company’s pipeline of opportunities increased to a new record and included double-digit growth in later stage opportunities with award decisions over the next several quarters.
  • Americas design backlog increased by 7% and is also at a record high.

Financial Guidance

• AECOM raised its adjusted EBITDA and adjusted EPS guidance for fiscal 2025, which includes expectations to deliver record net service revenue and profitability, margins and continued strong cash flow conversion in fiscal 2025; the Company expects:
  • Organic NSR² growth of 5% to 8%.
  • Adjusted¹ EBITDA⁴ of between $1,175 million and $1,210 million, up 9% at the mid-point.
  • Adjusted¹ EPS of between $5.05 and $5.20, up 13% at the mid-point.
  • 30 basis points of both segment adjusted¹ operating margin³ and adjusted EBITDA margin⁵ expansion to 16.1% and 16.3%, respectively.
  • 100%+ free cash flow⁶ conversion.
• Other assumptions incorporated into fiscal 2025 guidance:
  • An average fully diluted share count of 134 million, which reflects only shares repurchased to-date.
  • An adjusted effective tax rate of approximately 24% for the full year.
• See the Regulation G Information tables at the end of this release for a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Business Segments

Americas

Revenue in the first quarter was $3.1 billion, a 2% increase from the prior year. Net service revenue² was $1.1 billion, an 8% increase from the prior year. This performance was driven by 9% growth in the design business and reflected strong growth in both the U.S. and Canada, resulting from the ongoing multi-decade secular growth drivers of investments in infrastructure, sustainability, resilience and energy.

Operating income increased by 12% to $196 million and on an adjusted¹ basis increased by 10% to $197 million. The adjusted operating margin on net service revenue increased by 40 basis points over the prior year to 18.7%, a new first quarter high, reflecting high-returning organic growth initiatives and strong execution. Expanding margins continue to enable growing investments in AI, digital and new growth platforms, including the Water & Environment Advisory business.

Backlog in the Americas segment is at a record high, driven by strong wins in the quarter that resulted in a 1.1x book-to-burn ratio⁸, including a 1.2x book-to-burn ratio in the design business.

International

Revenue in the first quarter was $902 million, a 5% increase from the prior year. Net service revenue² was $750 million, a 2% increase from the prior year. Growth was driven by the U.K. and Middle East markets, supported by a strong backlog and leading positions on key frameworks. However, this growth was partially offset by a decline in Australia.

Both operating income and adjusted¹ operating income increased by 5% to $81 million. The adjusted operating margin on net service revenue increased by 20 basis points over the prior year to 10.8%, which reflected strong execution and the Company’s focus on high-returning markets and opportunities across its largest geographies.

Backlog in the International segment remains near a record high, reflecting a 1.2x book-to-burn ratio⁸ in the quarter.

Balance Sheet and Capital Allocation Update

The Company ended the quarter with a strong balance sheet, including net leverage⁹ of 0.8x. During the quarter, the Company returned $55 million to shareholders through stock repurchases and dividend payments. Since the initiation of its repurchase program in September 2020, the Company has repurchased more than $2.2 billion of stock, which represents approximately one-third of the Company’s market capitalization at the time it began repurchases.

Tax Rate

The effective tax rate was 13.4% in the first quarter. On an adjusted¹ basis, the effective tax rate was 14.3%. The lower tax rate primarily related to the timing of the realization of deferred tax assets in the first quarter. The Company continues to expect a full year adjusted tax rate of approximately 24%. The adjusted tax rate was derived by re-computing the quarterly effective tax rate on adjusted net income¹⁰. The adjusted tax expense differs from the GAAP tax expense based on the taxability or deductibility and tax rate applied to each of the adjustments.

Conference Call

AECOM is hosting a conference call tomorrow at 8 a.m. Eastern Time, during which management will make a brief presentation focusing on the Company's results, strategy and operating trends, and outlook. Interested parties can listen to the conference call and view accompanying slides via webcast at https://investors.aecom.com. The webcast will be available for replay following the call.

¹ Excludes the impact of certain items, such as restructuring costs, amortization of intangible assets, non-core AECOM Capital and other items. See Regulation G Information for a reconciliation of non-GAAP measures to the comparable GAAP measures.
² Revenue, less pass-through revenue; growth rates are presented on a constant-currency basis.
³ Reflects segment operating performance, excluding AECOM Capital and G&A, and margins are presented on a net service revenue basis.
⁴ Net income before interest expense, tax expense, depreciation and amortization.
⁵ Adjusted EBITDA margin includes non-controlling interests in EBITDA and is on a net service revenue basis.
⁶ Free cash flow is defined as cash flow from operations less capital expenditures, net of proceeds from disposals of property and equipment; free cash flow conversion is defined as free cash flow divided by adjusted net income attributable to AECOM.
⁷ Backlog represents the total value of work for which AECOM has been selected that is expected to be completed by consolidated subsidiaries; growth rates are presented on a constant-currency basis.