AECOM Slips After Q2 Results, Reaffirms FY22 Guidance

  • AECOM ACM reported a second-quarter revenue decline of 2% year-over-year to $3.21 billion, missing the consensus of $3.43 billion.
  • Net Service Revenue (NSR) increased by 4% Y/Y to $1.61 billion.
  • Gross margin expanded by 55 bps to 6.5%. The operating income declined by 29.3% Y/Y to $111.5 million, and the margin contracted by 140 bps to 3.5%.
  • Adjusted operating margin improved 10% Y/Y to $190 million. Segment adjusted operating margin (NSR) expanded by 70 bps to 13.8%.
  • Adjusted EPS was $0.83, beating the consensus of $0.78.
  • Adjusted EBITDA increased by 10% Y/Y to $223 million.
  • The backlog stood at $40.8 billion, an increase of 4% Y/Y, driven by a 1.6 book-to-burn ratio.
  • In the first half, the company’s operating cash flow was $193 million, and free cash flow was $145 million.
  • Aecom returned nearly $300 million to stockholders through share repurchases and dividends in the first half of the fiscal year.
  • FY22 Outlook: AECOM reiterated its adjusted EPS of $3.30 - $3.50 and adjusted EBITDA guidance of $880 million - $920 million.
  • It expects a segment-adjusted operating margin of at least 14.1% and AECOM Capital earnings in the mid-single-digit millions.
  • The company expects a free cash flow of $450 million - $650 million.
  • AECOM reiterated its long-term financial targets for FY24, anticipates adjusted EPS of $4.75+ and a 15% segment adjusted operating margin, and a long-term segment adjusted operating margin goal of 17%.
  • Price Action: ACM shares are trading lower by 4.00% at $68.32 on the last check Monday.
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