AECOM (NYSE:ACM) reported mixed fourth-quarter fiscal 2025 results on Tuesday and launched a strategic review of its Construction Management unit.
This potential divestiture marks a decisive shift toward higher-margin, AI-driven businesses and accelerated long-term earnings growth.
The company reported revenue growth of 2% year over year (Y/Y) to $4.175 billion, missing the consensus of $4.315 billion.
Adjusted Net Service Revenue (NSR) rose 8% Y/Y to $1.97 billion in the quarter, led by 9% Y/Y growth in the Americas design business.
Details
Adjusted EBITDA increased 13% Y/Y to $329 million, with margins expanding 80 bps Y/Y to 17.5%.
Operating cash flow came in at $196 million, with adjusted free cash flow stood at $134 million in the quarter.
Adjusted EPS of $1.36 (+7% Y/Y) beat the consensus of $1.34.
Other Key Metrics
By segment, Americas revenue rose 2% Y/Y to $3.2 billion, while International revenue fell 1% Y/Y to $935 million in the quarter.
Total backlog rose 4% Y/Y to $24.8 billion in the quarter.
The company achieved new all-time highs for both total backlog and design backlog, increasing quarter-over-quarter by 4% and 3%, respectively.
Backlog grew across both the Americas and International design segments.
As of September 30, AECOM had cash and cash equivalents of $1.6 billion.
Shareholders Appreciation
In the fiscal year, the company returned nearly $500 million to shareholders via stock repurchases and dividends.
The company has $645 million of capacity under its existing share repurchase authorization.
Furthermore, the Board of Directors approved a 19% increase to the quarterly dividend, raising it to 31 cents per share.
This increased dividend is payable on January 23, 2026, to stockholders of record as of January 7, 2026.
Evaluate Strategic Alternatives
The company has initiated a review of strategic alternatives for its Construction Management business, including a potential sale.
Starting in the first quarter, the Construction Management business is expected to be classified as held for sale and will be reported in discontinued operations.
This action is intended to prioritize investments in the highest-returning and fastest-growing markets and segments, specifically citing its investments in AI and the expansion of its Advisory business.
AECOM also disclosed a significant increase in its operating leverage, driven by proprietary AECOM AI solutions and the expected doubling of annual NSR in its higher-margin Advisory business to $400 million within three years.
Management Commentary
Lara Poloni, AECOM’s president, said, “The secular megatrends of global investments in infrastructure, in sustainability and resilience, and in meeting growing energy demand have accelerated. Amid this backdrop, our advantages of deep technical expertise, trusted client relationships, and a capacity and willingness to invest to advance our proprietary AECOM AI and Advisory capabilities separate us from the competition – both in our core industry and beyond.”
FY26 Outlook
AECOM expects fiscal 2026 adjusted EPS of $5.65 and $5.85 (versus consensus of $5.24), adjusted EBITDA of $1.265 billion-$1.305 billion and, free cash flow of around $400 million.
In a separate announcement tied to its 2025 Investor Day, AECOM raised its long-term financial targets, noting that it aims to achieve a margin exit rate above 20% by fiscal 2028 and deliver adjusted EPS growth of more than 15% annually from fiscal 2026 through fiscal 2029.
The company also expects organic NSR to grow at a 5% to 8% CAGR over that same period.
Also, AECOM aims to generate cumulative free cash flow equal to at least 100% of adjusted net income, and continue raising the per-share dividend value by a double-digit percentage each year.
Price Action: ACM shares were trading lower by 1.99% to $129.30 at last check Tuesday.
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