ACM

Track your investments for FREE with Simply Wall St, the portfolio command center trusted by over 7 million individual investors worldwide. Recent options activity in AECOM (ACM) has drawn fresh attention to the stock after a surprise pre tax loss and earnings miss linked to a US$337 million charge earlier in 2026. The September 18, 2026 US$135 call option is showing some of the highest implied volatility among equity contracts today, which indicates that traders are positioning for a sizeable move in AECOM shares. See our latest analysis for AECOM. AECOM's recent pre tax loss and the US$337 million charge have contributed to short term share price pressure. The stock is down 11.03% on a 30 day share price return and 34.88% year to date, while the 1 year total shareholder return is down 49.33%. This signals fading momentum after a broadly flat 5 year total shareholder return of 0.38%. If you are reassessing your infrastructure exposure after AECOM's move, it can be useful to see what else is trading in the space using our 38 power grid technology and infrastructure stocks AECOM now trades well below recent analyst targets and intrinsic value estimates, yet options pricing points to expectations of a sharp move. Where does a reasonable fair value range sit between those markers after this earnings shock? At a last close of $62.78 versus a narrative fair value of $90.00, AECOM is framed as materially undervalued according to the most followed story around the stock. Read the complete narrative. The fair value hinges on the gap between reported loss and underlying profitability. It leans heavily on backlog strength, high-margin design work and a very specific view on how those earnings compound over time. Result: Fair Value of $90.00 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, AECOM still faces clear risks if further issues emerge on legacy Construction Management work, or if the record backlog proves slower to convert into earnings. Find out about the key risks to this AECOM narrative. With sentiment on AECOM clearly split between concern and optimism, it makes sense to move quickly and test the narrative against the underlying data for yourself using the 4 key rewards and 2 important warning signs. If AECOM has sharpened your focus on risk and reward, do not stop there. Use the Simply Wall Street Screener to uncover fresh, data driven opportunities. Spot potential value plays early by scanning 49 high quality undervalued stocks that align with your preferred balance of price and fundamentals. Strengthen the quality of your watchlist by focusing on companies from the solid balance sheet and fundamentals stocks screener (51 results) that may handle pressure more effectively. Uncover opportunities others might overlook by checking the screener containing 18 high quality undiscovered gems before they show up on everyone's radar. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ACM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

AECOM’s second quarter results were met with a negative market response after the company missed Wall Street’s expectations on both revenue and adjusted earnings. Management attributed the shortfall primarily to a large charge related to delays and cost overruns on a legacy construction management project, which CEO Troy Rudd said was “primarily the result of a delay in delivering a large construction management project due to several factors, the largest of which is overall productivity of subcontractors.” The company also noted that slower-than-expected new project starts and ongoing headwinds in the Middle East weighed on performance. Is now the time to buy ACM? Find out in our full research report (it’s free). Revenue: $3.59 billion vs analyst estimates of $4.31 billion (14.2% year-on-year decline, 16.7% miss) Adjusted EPS: -$0.50 vs analyst estimates of $1.46 (significant miss) Adjusted EBITDA: -$8.2 million vs analyst estimates of $327.5 million (-0.2% margin, significant miss) Management lowered its full-year Adjusted EPS guidance to $4.05 at the midpoint, a 32.5% decrease EBITDA guidance for the full year is $950 million at the midpoint, below analyst estimates of $1.28 billion Operating Margin: -2.1%, down from 7% in the same quarter last year Backlog: $27.82 billion at quarter end, up 13.1% year on year Market Capitalization: $8.11 billion While we enjoy listening to the management’s commentary, our favorite part of earnings calls is the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Sabahat Khan (RBC Capital Markets) asked about the timeline and cost visibility for completing the two troubled construction management projects. CEO Troy Rudd detailed expected completion by mid-2027, while CFO Gaurav Kapoor outlined ongoing cash impacts and noted scenario planning had built in reasonable buffers. Andrew Kaplowitz (Citi) probed the outlook for Americas margins and whether margin normalization would occur next quarter. Kapoor said, “Americas margin, you should expect it to normalize and be a little bit better than last year,” while also highlighting continuing strength in international margins. Andrew J. Wittmann (Baird) inquired about the progress and size of claims related to the troubled projects. Kapoor indicated claims remain around $600 million, with the company confident in its recovery efforts but keeping strategy details confidential. Steven Fisher (UBS) asked about the timing of business development costs translating into new revenue and the competitive environment. President Lara Poloni described healthy win rates, with major project wins achieved without joint ventures, and Kapoor noted immediate ROI from elevated business development efforts. Jamie Cook (Truist Securities) questioned whether legacy project issues and the construction management ramp would weigh on organic growth in early 2027. Rudd explained that CM growth should pick up in the second half of the year, and the business had been fully scrubbed for similar risk exposures. In the coming quarters, the StockStory team will closely watch (1) the pace at which AECOM resolves cash flow and operational challenges tied to legacy construction management projects, (2) how quickly newly awarded contracts in the Americas and international markets begin to contribute meaningfully to revenue and margins, and (3) whether margin normalization and free cash flow recovery materialize as legacy burdens recede. Execution on risk management reforms and conversion of record backlog will be key indicators for sustainable growth. AECOM currently trades at $62.96, down from $73.30 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free for active Edge members). ONE MORE THING: Top 5 Growth Stocks. The biggest stock winners almost always had one thing in common before they ran. Revenue growing like crazy. Meta. CrowdStrike. Broadcom. Our AI flagged all three. They returned 315%, 314%, and 455%, respectively. Find out which 5 stocks it’s flagging this month — FREE. Get Our Top 5 Growth Stocks for Free HERE. Stocks that have made our list include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+214% between June 2020 and June 2025). Find your next big winner with StockStory today.

Image source: The Motley Fool. Aug. 17, 2026 at 8:00 a.m. ET Senior Vice President of Finance and Investor Relations - Will Gabrielski Chief Executive Officer - Troy Rudd President - Lara Poloni Chief Financial and Operations Officer - Gaurav Kapoor Operator: Hello, everyone. Thank you for joining us, and welcome to AECOM's Third Quarter 2026 Earnings Conference Call. [Operator Instructions] I will now hand the conference over to Will Gabrielski, Senior Vice President of Finance and Investor Relations. You may begin. Will Gabrielski: Thank you, operator. I would like to direct your attention to the safe harbor statement on Page 1 of today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. We use certain non-GAAP financial measures in our presentation. The appropriate GAAP reconciliations are incorporated into our materials, which are posted to our website. Growth rates are presented on a year-over-year basis unless otherwise noted. Any references to segment margins or segment adjusted operating margins will reflect the performance for the Americas and International segments. When discussing revenue and revenue growth, we will refer to net service revenue, or NSR, which is defined as revenue excluding pass-through revenue. NSR growth rates are presented on a constant currency basis unless otherwise noted. Today's remarks will focus on continuing operations. On today's call, Troy Rudd, our Chief Executive Officer, will review key developments and accomplishments this quarter as well as our outlook for the business; Lara Poloni, our President, will discuss key trends across our markets; and Gaurav Kapoor, our Chief Financial and Operations Officer, will review our financial performance and outlook in greater detail. We will conclude with a question-and-answer session. With that, I will turn the call over to Troy. Troy? W. Rudd: Thank you, Will, and thank you all for joining us today. We had many accomplishments in the quarter, and I am proud of our teams and the positive impact we are having on our clients' critical infrastructure investments. But before getting into the details of our results, I'd like to address the $337 million pretax charge included in the quarter. The charge is primarily the result of a delay in delivering a large construction management project due to several factors, the largest of which is overall productivity of subcontractors on the last phase of this project. We had expected this project to be substantially completed in the first quarter of fiscal 2027 and now expect this near the end of the second quarter of fiscal 2027. In addition to the financial impacts in this period, we are pursuing sizable claims for this project, and our confidence in recovery has been validated by our success in the dispute resolution process to date. We expect resolution of the remaining claims will take some time, and this will continue to burden our cash flow through the first half of 2027. We are disappointed with this outcome, but I want to add some context. This project was bid in 2019. Since that time, we have changed leadership and tightened our risk controls. We decided many years ago to no longer pursue design-build work for P3 clients in the construction management business due to the inherent challenges this structure can present. As a result, this project would not clear our risk hurdles today. I also want to provide an update on the second design-build P3 project in construction management which was bid around the same time. We are progressing towards the planned substantial completion date of Phase 1 in the first quarter of fiscal 2027, and this remains consistent with our previous forecast. The second CM project also has a significant claim position to recoveries due to delays not caused by us. Finally, notwithstanding these two projects, the construction management business has produced strong cash flow and high returns on capital consistently over time. And based on the composition of our backlog and pipeline today, I expect this trend will continue. Now turning to the details of our results. Our teams are winning work at a record rate. Our backlog increased 13% to a new all-time high on record quarterly wins and a 1.6 book-to-burn across the business, including 1.8x in the Americas. Year-to-date, our book-to-burn is 1.4x, providing extraordinary long-term visibility. Adjusted for one less working day in the quarter, NSR in the design business increased by 5%. This was led by 6% growth in the Americas design business as well as a return to growth in the international business which increased 4%, led by the U.K. and Australia. Even so, overall NSR growth in the quarter was below our expectations. The primary drivers are slower-than-anticipated new project starts in the construction management business and the continued impact from the conflict in the Middle East, which we see continuing through the fourth quarter. While both businesses have fallen short of our expectations in the second half of fiscal 2026, they have strong backlogs and are well positioned for return to growth in 2027. Excluding the financial impacts of the construction management project charge, adjusted EBITDA and EPS improved year-over-year by 5% and 11%, benefiting from the return to NSR growth, which resulted in margin expansion in the International segment. We also delivered positive free cash flow of $55 million despite the headwind from the construction management projects mentioned earlier, demonstrating the strength of our historically consistent free cash flow conversion. Turning to financial guidance. Our updated financial guidance captures three main changes from last quarter: The impacts of the construction management project charge, lower-than-expected NSR growth and continued margin outperformance. As a result, we now expect full year NSR of approximately $7.3 billion and adjusted EBITDA and EPS of $950 million and $4.05, respectively, at the midpoint of the ranges. Adjusted for the charge and to help with comparability, we now expect full year NSR of $7.65 billion to $7.7 billion and adjusted EBITDA and EPS consistent with our prior guidance at $1.29 billion and $6 at the midpoint. This includes a raised expectation for adjusted EBITDA margin to 17.4% versus the 17% previously. We also expect to deliver free cash flow of $300 million for the full 2026 fiscal year. With that, I will turn the call over to Lara. Lara Maria Poloni: Thanks, Troy. The strength of our technical expertise and the success we are having in the market are a testament to our teams and the investments we are making to extend our advantages. There are many marquee wins this quarter, but there are two in particular I want to highlight. Included within our record backlog, we won two of our largest recompetes ever. Both are in the environment business, one public and one private. And despite the industry's vast amount of consolidation, our leadership position persists. And more importantly, our scope across these projects has expanded significantly. As I look across our markets, there are several additional positive developments that give us optimism. Starting with the U.S., our state and local clients continue to prioritize infrastructure and water investment. In recent months, several of our largest state clients have announced major multiyear infrastructure plans focused on highways, bridges, transit and rail, all areas where we have the #1 ranked practice. Additionally, growth opportunities are robust in our U.S. water business, where our pipeline expanded by 30%. On the U.S. federal front, rapidly growing investment in national defense remains a key theme and our pipeline with the Department of War, our largest single client, increased by approximately 30% in the quarter. Congress continues to advance fiscal 2027 defense budget legislation, and we expect healthy growth in the key areas we support. This includes significantly increased facilities work where we are a leading provider to the Army and Navy. Additionally, Congress is progressing the next 5-year surface transportation authorization. The House's initial $580 billion proposal includes key funding for all key areas to which we are exposed and gives us further conviction in the continued bipartisan commitment to infrastructure investment. It is worth noting that unlike past reauthorization cycles, today's funding environment is incredibly healthy. Less than half of the IIJA funding in our core markets has been spent, which adds to our visibility and confidence. U.S. private sector investment is also accelerating. This is particularly true in data centers, which remains one of our fastest-growing businesses and where we have been expanding our hyperscaler relationships. In Canada, activity has been very strong and broad-based across all market sectors, driving continued double-digit NSR growth. Notably, after the quarter, we won a 10-year program management role for a highway and bus transit project that represents 1 of our largest wins in Canada to date. Additionally, and underscoring the trend of increased global defense spending, Canadian defense spending reached its highest level in recent years, and the government has committed to more than doubling that share to 5% of GDP by 2035. In step with this, our pipeline is up significantly, tied to the government's efforts to upgrade military bases across its Arctic and Northern regions. Turning to the International segment. In the U.K., NSR growth accelerated to high single digits with ongoing strength in water, environment and energy. Work on the Great Grid upgrade project is progressing well and was a key contributor to growth this quarter. As a reminder, this is one of the most significant electricity infrastructure programs in U.K. history. AMP8 is also accelerating with additional workloads and more opportunities from large frameworks coming through. Even so, while transportation continues to lag, growth is benefiting from our diverse positioning. In Australia, growth accelerated in the quarter, up double digits, and our backlog reached a new multiyear high, up more than 40% year-over-year. Along with continued defense infrastructure wins during the quarter, transportation activity is accelerating, which bodes well for 2027 and beyond. In the Middle East, the ongoing military conflict continues to create near-term uncertainty, specifically in the end markets exposed to tourism and hospitality. Nonetheless, wins remained strong, driven by the infrastructure demand, allowing us to deliver double-digit growth in backlog during the quarter. Further, after the quarter, we were awarded a large rail project in Saudi Arabia, which better positions us in an expanding rail market there. And there is likely to be a significant amount of work needed to repair, fortify and expand U.S. military infrastructure in the region, which presents another long-term growth opportunity for us. Asia remains soft, but backlog grew double digits year-over-year, driven by a large Northern Metropolis highway win, which is the first major transportation project tied to this initiative and a top priority development for the Hong Kong government. This positions us well, including on further opportunities as this mega project continues to advance. To conclude, I am extremely proud of the dedication of our professionals and their unmatched technical expertise that drive our business performance. With that, I'll turn the call over to Gaur. Gaurav Kapoor: Thanks, Lara. I want to start by highlighting several strengths that underpin our convictions in our strategy, the investments we are making to scale our strength and the long-term value of the business. First, winning. Our 1.6x book-to-burn and 13% backlog growth are tremendous accomplishments for a business that expanded. We've spoken for several quarters about the value we are delivering to clients through our differentiated offering. Advisory, program management and early AI wins are transforming client interactions and with it, our ability to bring unrivaled solutions. Not only are we winning more with existing clients, opportunities are now emerging in new markets where our scale and technology are opening new avenues for growth. Second, margins. The return to growth in international, delivering on our continuing improvement promise and early benefits from AI across our cost base are apparent. While performance was masked this quarter by the construction management project, underlying profitability demonstrates the opportunity ahead as we advance towards our 20% margin exit target for FY '28. Finally, our balance sheet and cash flow. We built a resilient balance sheet with no maturities for several years and cost certainty on majority of our debt. We ended the third quarter with $2 billion of undrawn borrowing capacity. And we've delivered positive free cash flow in the fiscal year-to-date period despite cash burn on the two construction management projects referenced earlier. We expect continued cash burn on these projects through the first half of fiscal 2027. Turning to our segments. In the Americas, NSR declined 29%, primarily reflecting the construction management charge. The design business increased 6% when adjusted for one less working day in the period. Beyond the project-related revenue impacts in construction management, NSR lagged our expectations as new construction management wins ramp up slower than we expected. Nonetheless, backlog in the design and construction management businesses continue to be strong and growing high single digits, while the design pipeline has also grown over 20% for 3 straight quarters. The Americas adjusted operating margin was negative 16.1%. Excluding the construction management impact, the margin was 18%, which reflects a few key items. The first factor was slower-than-anticipated start-up of several construction management wins, which affected utilization of resources. Second, we had record business development activities in the period that impacted Americas margin by approximately 140 basis points. Large pursuits in particular, consume a lot of time and resources but provide a high ROI as evidenced by the segment 1.8x book-to-burn we delivered in the quarter. It should be noted that in quarterly periods in prior years, we have experienced similar impact to segment margins due to elevated business development spend. And consistent with those years, we will continue to deliver on the quarterly and annual enterprise margin targets. Accordingly, we expect Americas margins to normalize in the next quarter. Turning to International. NSR increased 4%. Australia and the U.K., in particular, are driving better growth. Our backlog continues to be strong, up 28% versus prior year. The International adjusted operating margin was 14.3%, reflecting much better growth in Australia, which is a higher-margin market, better margins in the U.K. from higher utilization and the initial benefits we are realizing from our proprietary AI strategy while continuing to invest consistent with our earlier guidance. Turning to financial impacts of construction management projects. NSR and EBITDA were impacted by $337 million. EPS was impacted by $1.99. Cash flow included a $185 million use. Because of this expected use and higher average debt balances, we expect our interest expense to be higher in 2027. We are currently estimating $30 million to $35 million of year-on-year impact. With respect to capital allocation, our returns-based discipline remains intact. There are no impacts to any ongoing or planned organic growth investments. With that, let's turn to Q&A. Operator? Operator: [Operator Instructions] Your first question comes from the line of Sabahat Khan with RBC Capital Markets. Sabahat Khan: Great. I appreciate the color sort of you shared on the charges. I think sort of between Troy and Gaur, I think you guys outlined the projects are on the way to getting completed. Maybe if you can just detail out. It looks like about $100 million drawdown in the previous free cash guide for this year, and you mentioned more cash to sort of finish these. Maybe if you can just detail out sort of the time line from here to complete these projects and any metrics that you can maybe share around the cost to sort of complete these sort of through late this year and into next year? W. Rudd: Sure. Thank you, Saba. So just in terms of the time line on the two projects you're referring to, just to be clear, with our construction management business, there are two P3 design builds. They are the only ones that exist in that business. And the first project, which we did take the charge on during the quarter, we now expect to be complete in the second quarter of fiscal '27. And the second project, which we also went through the same forecasting process, and there is no change to its delivery date, that will be in the first quarter of fiscal '27. In terms of cash, the impact in the fourth quarter resulted in our overall free cash flow moving from $400 million for the full year down to $300 million for the full year. And as we go into '27, we actually see this having a significant cash impact for the first two quarters of fiscal '27 and the overall impact will be about $0.5 billion. Sabahat Khan: Great. And then maybe just on the sort of the base business guide, maybe you can just detail out, I think you mentioned some delays sort of in getting some projects going. Maybe you can detail out the base business sort of guidance revision and what's impacted there? And just sort of between this and the first item, just any early thoughts you can share on how maybe how fiscal '27 is shaping up maybe on the base business with and without these projects? W. Rudd: Yes. Sure. Let me sort of cover this at a high level. And then for some of the details, I'll pass it over to Gaur. First of all, with respect to sort of the base business, which is our design business and, of course, our construction management business, we've actually had a very good year in terms of winning work and building visibility into the future. So we said in our results that our book-to-burn for the quarter was 1.6x, and that was across the entire business. And year-to-date, that's 1.4x. And so that does give us good visibility. And within that backlog, we have focused on very large awards and programs. And so they actually extend and provide us good visibility for multiyears. As we look forward, maybe the best way to describe it is we have confidence because of that visibility in our long-term growth algorithm, which we said is organic growth for the business between 5% and 8%. And so maybe that's the best way to sort of think about the entire business moving forward. And I'll pass it over to Gaur to give you some of the detail. Gaurav Kapoor: In terms of the base business, echo Troy's point. The base business continues to be very healthy, excluding the project charges we reported. And that is evidenced by -- if you exclude the project charge, there's no change in our earnings metrics. EPS and EBITDA for the year, we continue to expect to deliver what we had raised our guidance to previous quarter. When we look at from an NSR standpoint, looking forward, there is an impact on NSR that is coming from our CM business and our international business compared to plan. And specifically, what we mean by that is we had expected our CM business to contract because there were large projects, as we've talked about in previous quarters, in prior year that were coming down. Our backlog has -- was building up, but there is a cadence when large projects drop off and new projects come online, there's a little time lag coming through. For one of those projects, specifically a convention center in Texas, that has been delayed for a few months. That impacted us in the current quarter for the CM business and will impact us in next quarter as well. But as importantly, as you can imagine, a lot of our resources in that business are right now focused on delivering these two projects. So that's taking them away from the normal backlog that exists, which is quite healthy, including 1.9 book-to-burn in the current quarter. Moving to the design business, Americas design continues to be strong. Year-to-date, almost 7% organic growth adjusted for workdays. We expect that to continue into Q4 at that healthy run rate. And when you step back and look at the backlog that we have and the visibility, it continues to provide that tailwind, including a very strong and healthy pipeline in our Americas business that we'll continue to capture and monetize. On the international side, in the Middle East, where it has gotten better compared to the second quarter. One of the things that has become very clear to us is hospitality, tourism, any developer-related end markets. Those are very tough right now for obvious reasons. But at the same time, the wins we've had over the last 9 months in Middle East are very focused on transportation, infrastructure and rail. So that portends really well for us in FY '27 going forward. Some of the other guidance impacts that we've already shared in our release comments include interest expense will be impacted due to the cash burn on the terminal projects, as Troy highlighted. And share count will also be impacted because our focus is going to be on delivering these projects as we move forward. And we're still in the early phases of the overall planning for FY '27, and I think that's about the right color we have as of this point in time. Sabahat Khan: Great. And if I could just squeeze in a quick one. I guess, just sort of on the earlier question around the projects and the cadence to wrap these up. Assuming you've done some level of sensitivity analysis on getting these done. Just maybe if you can share the level of confidence in getting these projects that have caused the charges wrapped up in the next fiscal year and sort of your sensitivity analysis around sort of the time line. W. Rudd: Yes. Sure, Saba. So let me start with the first project and where we took the charge. Again, that project is in the phase where I'm going to call it the physical completion of the building is on track to original deadline. Really what's impacting this is it's basically systems testing, integration and commissioning work is what's drawing that out. And so -- as we look at completing that project, at this point in time, we have reforecasted. And based on the last 6 weeks of work, we do have that project being a little bit ahead of the schedule that we had anticipated. So think about that as 20% of the completion. And we forecasted it out based on the existing production rates that we had been experiencing in the few months prior to that. So that does give us confidence. And of course, in that schedule, we've also built some slack into that. So in terms of you describe our scenario planning, we're comfortable that we've included the reasonable scenarios in that time line to complete in the second quarter. On the other project, again, we have reforecast that, and it has held. The difference in that project is it is further along, effectively two months from completion. And so we're through the -- almost the physical completion of the work and the systems testing has been going underway. And so we forecasted out based on our historical subcontractor productivity rates. So again, on both of those at this point in time, we have a degree of confidence in delivering within those time frames. Operator: Your next question comes from the line of Andy Kaplowitz with Citi. Andrew Kaplowitz: Troy, Gaur, margin was down, as you know, year-over-year in the Americas in Q3 ex the CM charge, which you said was a result of the higher BD costs and timing of CM, yet you raised your overall margin forecast for '26. Obviously, it looks like you raised your forecast because of the strong international margin. But how should we think about Americas margin moving forward? I think you mentioned Americas margin will normalize in Q4, Gaur. Does that mean up year-over-year? And do we still expect to see a bigger increase in margin in FY '27? Gaurav Kapoor: Andy, this is Gaur. I'll take that question. So you're right. The margin costs in the current quarter were impacted by business development efforts. Every few years, we seem to have this quarter where large pursuits seem to converge. If you would recall, we kind of experienced that -- the similar type of trend in FY '22 as well and in FY '24 as well. And similar to those trends, our full expectation is, we'll have the normal cadence of margin consistent with what we have delivered, including the great tailwind we're seeing on all the efforts. So absolutely, Americas margin, you should expect it to normalize and be a little bit better than -- consistent or a little bit better than last year. And the international margins have been a very good story in the current quarter, and I expect those to continue in Q4 as well. And that international margins is a large step-up due to a few key factors. One is the international business has now pivoted to growth. That's consistent with the backlog that we had been winning in that business over the last 4 quarters. And our biggest growth market was Australia. Australia also is our biggest margin business. Our second biggest margin business in the International segment is U.K. So combined with those efforts, and you put forth the technology efficiency tools that we've been rolling out across the globe that are a great multiplier while at the same time, investing consistent with our plan, it's driven really healthy margins, and that also gives us a lot of confidence that the margins will continue to grow consistent with the expectations we had laid out where we will be exiting FY '28 at 20-plus percent -- 20% plus. Andrew Kaplowitz: That's helpful, Gaur. And then, Troy, maybe you could give us more color into how or what changes you've made or will make to construction management to make sure that what you're facing now doesn't happen again. And then you talked about the double-digit backlog growth in CM and the record pipeline, but -- you also mentioned the delays you're seeing. So do you think CM can grow in line with your algorithm, that 5% to 8% next year in '27? Or could it be a drag? W. Rudd: Yes. Let me take those in reverse order. First of all, with respect to CM, when I referred to the 5% to 8% growth algorithm, I'm referring to the entire business, which includes construction management. If we were to look at that separately, I would say that the growth in construction management will come in the second half of next year, not in the first half of next year. And again, that gets to as you build. As you build backlog in that business, it does take a while for that business or that backlog to ramp up and usually takes 12 to 18 months. So the things that we're seeing that impact the business this year in terms of awards and wins, we will start to see that next year. And then the other thing will happen is as we complete these projects in the second quarter, we will have people that will be also available to be redeployed onto these other projects as they ramp up. Gaurav Kapoor: And Andy, the other part of your question related to the CM changes, the first project where we've taken a charge, this was bid in December of 2018. The second project Troy highlighted earlier, which is on schedule, as we had previously communicated, that was bid in March 2020. And since that time, over the last 5.5 to 6 years, call it, we have not only revised our risk matrices, changed leadership in that business. Simply put, these type of projects will never even qualify to be approved in our current structure, commercial structure, what we are willing to do for our clients. We just -- outside of these projects, we don't have any design build P3 in our portfolio in our CM business. It just doesn't exist. So this is something we just have to deliver in the current projected time line. Operator: Your next question comes from the line of Andrew Wittmann with Baird. Andrew J. Wittmann: I wanted to just get, I guess, an accounting on kind of where the claims stand here. So I think in the 10-Q last quarter, we don't have it for this quarter yet, but it was $650 million. So where does it stand at the end of the quarter? And then Gaur, is it kind of the way of thinking about it by the time you're done here with -- I guess, you talked about the fourth quarter cash burn and $500 million cash. Do we just tack like -- should we be thinking of the total claim is like whatever it is here at the quarter plus $500 million and change to get the total size of the claim. Is that the right way to think about it? And if you could just talk about how you're going to approach that and try to recover as much of that as you can? I know you heard -- you said it's going to take a while. It's obviously a complicated project. But any detail, I think that would be helpful. Gaurav Kapoor: No, absolutely, Andy. In terms of claims, if you baseline to prior quarter, you shouldn't expect a material change in the current quarter. It will be within that $600 million range. And also by the time these projects are both completed and the time line Troy articulated earlier, there's not going to be a material change. It will be somewhere in that $600 million to $650 million just based on percentage of completion because these projects complete at very high percentages. In terms of the second part of your question as to how we will go about it. As you can imagine, we're going to keep that quite confidential because we want to be very tactical. There have been significant scope changes that we've had to fund the working capital for. That working capital is far in excess of the claims on our books. So we believe we've been very prudent in reviewing all different aspects of the claims from operational, financial, legal rights and responsibilities, obligations to put a number that we feel pretty confident in recovering. And it is what we have for these two projects is a fraction of the total amounts that we're claiming against third parties. Andrew J. Wittmann: Okay. The next thing I wanted to ask about was your planned kind of restructuring here for fiscal '26. I think earlier in the year, and I guess your guidance reiterated today that you're expecting $150 million to $200 million of restructuring costs. You've only had $54 million booked year for -- through the first three quarters. And so I was just wondering if that guidance range still holds or what -- how the rest of the year unfolds on that? And is this one of the reasons why the fourth quarter margin is getting some focus here today by being up a lot sequentially and maybe year-over-year? Gaurav Kapoor: Sure. Andy, in terms of our overall guidance, there is no change, as you've noted. And there's no change in our strategy as well. If you recall, what's really underlying driving it is how we approach our clients, how we operate internally to create value for our clients. And the demand adoption for that change has been very high. And we're very thoughtful about how we go about change management impacts internally and making sure our clients are seeing the value proposition. Some of this, we're seeing in our backlog growth, not only in the current quarter, but like we said, you go year-to-date, you go trailing 12 months, our backlog growth has been very strong, which provides us a lot of good, strong visibility in the long term for our growth algorithm to be supported. So we're going to continue to be very, very thoughtful in how we roll out and deliver that value for our clients, how we revise their processes. And so nothing has changed from that standpoint. In terms of the margin impact, the margin impact is going to be very consistent with some of the previous restructuring programs we've taken. We review it and underwrite everything, implement everything depending on the ROI. It has to clear our ROI hurdles, and it has to be sustainable. So the margin impacts that you will see coming through for the restructuring are not really reflected in Q4 because that's when most of the restructuring will take place. It really will be going forward as we have pivoted as an organization to how we approach differentiated offerings in the marketplace to our clients. Operator: Your next question comes from the line of Steven Fisher with UBS. Steven Fisher: I wonder if you could give us a sense of the timing of when those extra business development costs could translate into bookings and revenues? And what's the competitive environment looking like for these large pursuits at the moment? W. Rudd: Yes. I'll let Lara take that question. Lara Maria Poloni: The competitive environment remains consistent, but we've got a lot of confidence, particularly based on the tremendous amount of work that we've been winning and the growing pipeline of opportunities ahead of us. And those win rates, particularly for our most substantial projects in excess of $50 million, we're maintaining a healthy win rate there with those. And this quarter, in particular, what was most pleasing were the record wins over $4 billion included a couple of marquee wins in the environment business that we mentioned in our earlier remarks. So in particular, the federal program, which was a recompete, which gives us a lot of visibility and confidence over multiple years. And also a significant private client environment win as well. Just to give a bit more color on that, Steve, they were bid and won against the usual competitor set. And the other thing that stood out was, we weren't in a joint venture for any of those. We won those in our own right, and the competitive landscape included several multi-header sort of combinations from some of our peers. But I'll hand over to Gaur to sort of provide some additional color on that. Gaurav Kapoor: Yes, Steve, thank you for that question and noticing the great book-to-burn. Similar to your question, I guess the answer is ROI is immediate, as you saw in the quarter. We invested the margins in the incremental BD time. And we will do -- we continue to do it every chance we get because the BD on it is immediate, 1.8% for our Americas design business, 1.9 for our CM business and 1.4 in the quarter for our international business. In terms of contracting and revenue flow-through, the good news is these are with high-quality clients of ours that we have a long-standing history. And the revenue stream has been very consistent, solid irregardless of what the political gyrations may be. So it gives us a lot of confidence in that long-term algorithm, even more visibility with these long-standing wins that we have. And on top of that, another data point we've shared with the analyst and investor community on our ROI or cadence is looking at our ECP, which our win rates continue to be at 80% plus including the results from a book-to-burn and backlog growth we posted in the current quarter. Steven Fisher: That's helpful. And then would love to get a sense of the outlook for the international growth from here or maybe how to model it. I mean, should we be assuming some acceleration from here? Or is the mid-single digits kind of a steady pace? And if you could, as long as we're talking about modeling things, just fourth quarter on the Americas design, I thought I heard you say, Gaur, that you thought we could continue something like a 7% adjusted for days. Is that what you have embedded in the model for the fourth quarter there? Lara Maria Poloni: Steve, I'll start, and then I'll hand to Gaur just in terms of the overall color in terms of the outlook. Starting with international, the design business, as we noted earlier, it's got a healthy book-to-burn of 1.8x. And the outlook is broad in terms of the healthy pipeline and the win rate across all of the key dimensions of the business. We mentioned environment. There's a very strong federal outlook tied to the defense sector. Our data center work and outlook continues to be very strong and fast growing. And then when we look to the other parts of the business, as Troy noted, the international outlook is strong. We've seen that rebound. The ANZ business returning to double-digit revenue growth. The backlog is up more than 40% year-on-year. U.K. and Europe, obviously, we have long-term visibility and work continuing on projects like Great Grid upgrade. We're seeing now some real momentum in our wins and outlook associated with the AMP8 program. We've got some good wins and visibility in the advisory business, which is growing in line with expectations. And even in the Middle East, as we said, there's a strong infrastructure outlook, and we are winning at that more than 80% capture rate on the most significant elements of that pipeline. But Gaur will touch on some of the more detail. Gaurav Kapoor: Yes. I'll take the Q4 first. You're right, Steve. You heard me on design for Americas, we do expect 7% adjusted for workdays, 7% plus in Q4. And specific to looking at FY '27, it's -- as Troy has already discussed, we think our long-term growth algorithm will continue to hold for the overall business. As to the different pieces of it, International versus other segments, right now, we're in the throes of -- early on of the throes of our planning process, so we'll provide more details next time around. Operator: Your next question comes from the line of Sangita Jain with KeyBanc. Sangita Jain: So if I can go back to the NSR growth algorithm. I appreciate the discussion on fiscal '27. But I kind of just want to understand the long-term growth algorith, as I think during the Analyst Day, the target excluded construction management from this equation. So I just want to know on an apples-to-apples basis, if we do keep CM in the model the whole time, how should we think about that revenue algorithm? W. Rudd: Yes. Sangita, I would think about it as applying to the entire business. I think when we -- again, not revisiting what we said in our Investor Day last year, where we sit today, the entire business including construction management, we capture that in our growth algorithm and our long-term guidance of 5% to 8%. Sangita Jain: Got it. And then on free cash flow and uses of free cash flow once the cash outflow on the legacy PM projects conclude. With leverage having picked up a little bit, I just want to understand how you're thinking about the use of free cash flow between, let's say, deleveraging and buybacks. W. Rudd: I would think about it this way is, first of all, as we said, we're always going to be focused on what's the highest returning opportunity. And for us, that is organic growth. So we will continue to invest at the same pace in organic growth. We obviously are going to continue to return capital to shareholders certainly through the dividend. And as we move forward and we get past the second quarter of next year, I think that you'll see our leverage ratio on a net and gross basis return to a very low number. And we would then, I think, be back to returning capital to shareholders, certainly at our stock price where it is today. Operator: Your next question comes from the line of Jamie Cook with Truist Securities. Jamie Cook: I guess two questions. One, I appreciate the color that you guys have given on 2027, so early on. But just like on the organic growth of 5% to 8%. I know you said CM will grow in that -- like at that rate in the second half of 2027. But I'm just wondering, as we think about 2027, do these problem projects, the ramp of the CM business, like does that weigh on the first half 2027 organic growth? So maybe we return to normalized organic growth of 5% in the second half of the year versus the first half? And then, I guess, Troy, a separate question for you. Understanding the problems are related to two projects, but CM was for strategic review just 6 months ago. Just have you scrubbed the other CM projects that you have within your backlog? And like why is this a good business to be in? W. Rudd: Sure. So first of all, if you think about '27, it's a little premature for us to sort of give guidance for the year. But I think your comment is fair, is that if we see CM contributing to growth in the second half of the year, that you would see a ramp-up in growth during the course of the year. I will say that, again, remembering that construction -- that business in terms of representation of NSR represents about 6% or 7% of the NSR of the business in a given year. So again, I think that it's premature for us to give guidance, but I would suggest that's the way to sort of think about it for models. In terms of the construction management business, the answer is yes. We obviously have scrubbed the backlog in the pipeline to make sure that we make the statement that these are the two projects that have this profile, the design build for P3. The rest of that backlog in that business is of a very different risk profile. Think about it as predominantly a [ for fee ] or as we see guaranteed max price backlog. And as we move forward, again, we made changes many years ago to the projects we take on in that business. And so I think that is already culturally ingrained in the business in terms of what we accept. So we feel rather good about that business going forward. And if you take out those two projects and you look at the margins and the return that we see in that construction management work in the past, it is very high returning ROI, and it has margins that are consistent with the margins of our entire Americas business. So we do view that construction management business as having healthy backlog and a healthy pipeline and a very high returning investment -- return on investment profile, absent these two projects as we put them behind us. Operator: Your next question comes from the line of Adam Bubes with Goldman Sachs. Adam Bubes: Just as we think about the $500 million of costs in 2027 related to the two projects that you outlined, how much of those costs do you have visibility on being reimbursed for? I guess, specifically, what I'm asking is, are you pursuing revenue on the cost or the actual cost as well? And just maybe help us a little bit with the accounting on those projects from here. I think those costs flow through with 0 margin. So should we expect a margin headwind next year from construction management? What's sort of the net revenue associated with those projects? Gaurav Kapoor: Adam, this is Gaur. I'll take that question. In terms of the margin impact, you're right, especially the one that we've taken the project hit on, it comes with no margin at all. The second project, it has very little margin related to it. Not by any measure, I would even forget material, I wouldn't even call it significant. And when you look at our go-forward NSR related to these two projects, the cash is not consistent with the NSR to be booked. There's very little NSR remaining on these projects. Just to put it into context, in our construction management business, when you look at the total project value, our share or NSR is generally less than 5%. And we're on both of the projects, more than 80% to 85% complete as we sit right now. So there's very little NSR that's related to them. What's really impacting it is the focus we have on completing these projects and putting it behind us, is taking up a lot of our resources and tying them up that normally would be used on other projects and backlog that exist. W. Rudd: Adam, maybe I just sort of think about this as for the accounting as a result of recording the impairment in the quarter, that is the impact that we expect on the financial statements through the delivery of those projects. And think about that differently at cash flow because as a result of impairing that project, we still have to fund the delivery of those projects through the next three quarters. And so -- and the $500 million relates to the first two quarters of fiscal '27. So the financial statements have the -- reflect the impact of those projects to their completion. And then the cash flow is just what we're going to need to spend to fund those through completion. Adam Bubes: Great. Okay. I appreciate all the color there. And then you've talked about some of the risk evaluation changes and leadership changes in construction management, the absence of design-build projects, P3 projects beyond these two. But can you just help us understand like exactly how your bidding procedures and risk controls work at a little -- another layer of detail on construction management. I'm just trying to understand what level of risk you still underwrite in the portfolio today. W. Rudd: Sure. Gaur will take that. Gaurav Kapoor: Yes. Predominantly, in that portfolio, we take on what's called GMP guaranteed max price commercial terms. And the big difference on this is when we go enter into a contract, for the first 12 to 18 months, we work on a T&M agency basis with the client, with the developer to ensure their designs are essentially complete, 70% to 95% complete. All the sub costs have been forecasted out, scheduled out, subbed out in conjunction support with the client. And once all that risk has flowed out of the design, the build-out, construction documents are complete, at that point, we enter into the GMP commercial terms. And the biggest difference is not only we have the client and us, we have flowed the risk down to the subcontractors and other parties that perform the construction work. Our risk is generally limited to our fee on those jobs. W. Rudd: So just -- I'll just add two points to that. One is if you sort of think about the work that we take on in that business, it is a similar risk profile as to the rest of our design business the way it sits today. And in terms of the decision-making, we changed that years ago so that effectively, material projects in that business. They come through a process of review, a very detailed review to make decisions on whether to bid them or not. And as part of that process, we have a prohibition on taking on any design build for P3, and that was put in place many years ago. Operator: [Operator Instructions] Your next question comes from the line of Michael Dudas with Vertical Research. Michael Dudas: Troy, maybe you can characterize so the new business growth over the first three quarters of, I guess, 29%, 30%. Can you characterize on existing versus new clients, scope expansion versus new projects? What areas benefited when you saw the most activity on? And Gaur mentioned in his prepared remarks about new avenues, new markets. Are there some areas that some of the investment organically is going to be placed to drive added growth in either existing or a different area of your practice? W. Rudd: Yes, sure. So first of all, in terms of the work that we've won across the business in the first three quarters of the year and of course, in this third quarter, it has been distributed across the entire business. We have been successful in all of our major markets. But I will highlight that in the Americas, we were particularly successful. The other thing that I think we've been acknowledging is that we have been pursuing and for years, been pursuing very large programs and projects because, frankly, that's a place we think we're very well suited to differentiate ourselves because of the depth and breadth of the experience that we have and the global teams that we bring to those projects. And so our win rates are very high on those programs. Again, Gaur referred to that, that our win rate has been on those programs for a while over 80%, and that also brings very good visibility to long-term growth to the business. In terms of Gaur's comments on kind of new markets and new activity, what we are finding is a number of the investments that we have been making and change the way we deliver outcomes for our customers. It is actually opening up new markets for us, which we had not previously had a strong or dominant position. And so those investments are giving us the opportunity to have very different conversations with new customers and groups of customers that we haven't had in the past, which is also very encouraging as we look forward. Michael Dudas: What type of new customers or what type of areas? W. Rudd: We're looking at, really, I'll call it, in the buildings and buildings and places market within our business and within program management. And so it's enabling us to move into more commercial markets, more hospital health care markets and into data centers in a more robust way. Operator: There are no further questions at this time. I will now turn the call back to Troy Rudd for closing remarks. W. Rudd: Again, thank you, everybody, for joining us today. And again, I want to thank our employees and our folks here at AECOM for their diligence in delivering projects and infrastructure for the customers. Thank you. Operator: This concludes today's call. Thank you for attending. You may now disconnect. Before you buy stock in Aecom, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Aecom wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $421,511!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,381,960!* Now, it’s worth noting Stock Advisor’s total average return is 981% — a market-crushing outperformance compared to 216% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors. See the 10 stocks » *Stock Advisor returns as of August 17, 2026. This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability. The Motley Fool has positions in and recommends Aecom. The Motley Fool has a disclosure policy. AECOM (ACM) Q3 2026 Earnings Call Transcript was originally published by The Motley Fool

Never miss an important update on your stock portfolio and cut through the noise. Over 7 million investors trust Simply Wall St to stay informed where it matters for FREE. AECOM (ACM) is back on investors' radar after reporting a quarterly loss and revenue that came in below expectations for the period ended June 2026. The company posted third quarter sales of US$3.59b, compared with US$4.18b a year earlier. It reported a net loss of US$86.71m, versus net income of US$130.97m in the same quarter last year. Basic and diluted loss per share from continuing operations were both US$0.65 for the quarter. This compared with basic earnings per share from continuing operations of US$1.32 and diluted earnings per share of US$1.31 a year ago. See our latest analysis for AECOM. The earnings miss has fed into AECOM's share price, which closed at US$73.30 on 10 August, with the stock down 3.35% on the day and down 23.96% on a year to date share price return. Over a longer horizon, total shareholder return declined 37.71% over the past year and 15.74% over three years. However, the five year total shareholder return remains positive at 21.39%, suggesting recent momentum has faded compared with earlier gains. If this earnings setback has you reassessing infrastructure exposure, it can be useful to widen your search to other power and grid related opportunities through our 37 power grid technology and infrastructure stocks AECOM appears to be a substantial infrastructure consulting business, yet the share price has already given up a lot of ground after this quarter. The key tension now is between the strength of the underlying franchise and the price investors are being asked to pay today. At a last close of US$73.30 versus a narrative fair value of US$99.21, AECOM is framed as materially undervalued by the most widely followed storyline. Read the complete narrative. Want to see what is baked into that valuation gap? The narrative leans on steady revenue compounding, thicker margins, and a future earnings multiple that undercuts sector averages. Result: Fair Value of US$99.21 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, investors should keep in mind that AECOM's reliance on government funded projects and rising operational costs could pressure margins and challenge the view that the stock is undervalued. Find out about the key risks to this AECOM narrative. If this AECOM story feels finely balanced between concerns and optimism, take a moment to look through the full data and decide quickly where you stand. To help frame both sides of the argument, review the 5 key rewards and 1 important warning sign If AECOM's latest results have you thinking more broadly about your portfolio, consider using this moment to actively refresh your watchlist with focused stock ideas across quality, value, and resilience. Target resilient compounding potential by scanning companies with strong cash positions and low debt using the solid balance sheet and fundamentals stocks screener (48 results). Look for value opportunities that line up with your risk limits by reviewing the 51 high quality undervalued stocks. Strengthen your income stream by checking out companies that feature in the 9 dividend fortresses. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ACM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

AECOM recently reported third-quarter 2026 results showing sales of US$3,586.07 million versus US$4,178.44 million a year earlier and swinging from a US$130.97 million net profit to an US$86.71 million net loss. Alongside weaker nine‑month earnings, management cut full‑year 2026 guidance to reflect a significant Construction Management charge and delayed project starts, particularly in the Middle East. We’ll now examine how this weaker quarter and lowered 2026 guidance reshape AECOM’s investment narrative built around infrastructure and consulting growth. The future of work is here. Discover the 37 top robotics and automation stocks leading the charge in AI-driven automation and industrial transformation. To stay invested in AECOM, you need to believe its infrastructure and consulting focus can support earnings through cycles, even when individual quarters disappoint. The latest results and guidance cut make the near term picture more about executing through Construction Management charges and project delays than about pure growth, with the key catalyst now being how quickly delayed work, especially in the Middle East, converts to Net Service Revenue. The biggest risk is that project timing and cost issues keep weighing on margins longer than investors expect. The updated 2026 guidance is the most relevant announcement here, because it ties the weak quarter directly to a reset in expectations. Management is now framing the year around US$7.30 billion to US$7.35 billion of NSR, with better margins excluding the Construction Management charge but slower NSR growth due to delayed project starts. For anyone focused on the consulting and advisory growth story, this shift in mix and timing is central to how you think about upcoming catalysts. Yet behind the infrastructure opportunity, investors should be aware that persistent project delays and cost charges could... Read the full narrative on AECOM (it's free!) AECOM’s narrative projects $18.4 billion revenue and $1.0 billion earnings by 2029. This requires 4.8% yearly revenue growth and an earnings increase of roughly $370 million from $631.3 million today. Uncover how AECOM's forecasts yield a $99.21 fair value, a 35% upside to its current price. Before this setback, the most pessimistic analysts still assumed revenue could reach about US$18.6 billion and earnings around US$947 million, but after a loss making quarter you can see how their caution about backlog converting cleanly into cash may feel more relevant, and why your own view on these risks could end up very different from theirs. Explore 4 other fair value estimates on AECOM - why the stock might be worth as much as 35% more than the current price! Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts. A great starting point for your AECOM research is our analysis highlighting 5 key rewards and 1 important warning sign that could impact your investment decision. Our free AECOM research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate AECOM's overall financial health at a glance. Our top stock finds are flying under the radar-for now. Get in early: Capitalize on the AI infrastructure supercycle with our selection of the 56 best 'picks and shovels' of the AI gold rush converting record-breaking demand into massive cash flow. Uncover the next big thing with 20 elite penny stocks that balance risk and reward. Find 51 companies with promising cash flow potential yet trading below their fair value. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Companies discussed in this article include ACM. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected]

Our analysts just identified a stock with the potential to be the next Nvidia. Tell us how you invest and we'll show you why it's our #1 pick. Tap here. Performance was impacted by a $337 million pretax charge stemming from a legacy design-build P3 construction management project bid in 2019, primarily due to subcontractor productivity issues during the final phase. Management emphasized that the two remaining P3 projects in the portfolio no longer meet current risk hurdles, as the company pivoted away from this contract structure years ago to focus on lower-risk 'for fee' or guaranteed maximum price models. Record quarterly wins led to a 1.6x book-to-burn ratio and an all-time high backlog, providing extraordinary long-term visibility across the Americas and International segments. NSR growth in the quarter was tempered by slower-than-anticipated new project starts in construction management and ongoing geopolitical conflict in the Middle East affecting tourism and hospitality sectors. Underlying profitability improved, with adjusted EBITDA margins rising to 17.4% (excluding the charge) driven by a return to growth in high-margin markets like Australia and the U.K. The company is aggressively pursuing sizable claims for the delayed projects, noting that their confidence in recovery is validated by success in the dispute resolution process to date. Full-year fiscal 2026 guidance was updated to reflect the construction management project charge, lower-than-expected NSR growth, and continued margin outperformance, though underlying adjusted EBITDA and EPS expectations remain consistent with prior raised guidance. Management expects the two legacy construction projects to reach substantial completion in the first and second quarters of fiscal 2027, respectively. Free cash flow for fiscal 2026 is now expected to be $300 million, with an additional $0.5 billion cash impact anticipated through the first half of fiscal 2027 due to project completion costs. The long-term organic growth algorithm of 5% to 8% remains intact, supported by a design pipeline that has grown over 20% for three consecutive quarters. Strategic investments in AI and proprietary technology are expected to be key drivers in reaching the 20% margin exit target for fiscal 2028. The $337 million charge significantly impacted reported Americas segment margins, which were negative 16.1% for the quarter. Interest expense is projected to increase by $30 million to $35 million in fiscal 2027 due to higher average debt balances required to fund the legacy project completions. Elevated business development spend on large-scale pursuits impacted Americas margins by 140 basis points, though management views this as a high-ROI investment evidenced by record wins. Share repurchases may be moderated in the near term as the company prioritizes funding project completions and maintaining a resilient balance sheet through the first half of 2027. One stock. Nvidia-level potential. 30M+ investors trust Moby to find it first. Get the pick. Tap here. Management clarified that the $500 million cash impact in early fiscal 2027 is for funding completion, while the $600 million to $650 million in claims represents potential future recoveries. The first project's delay is specifically tied to systems testing and commissioning rather than physical building construction. The margin step-up is attributed to a mix shift toward higher-margin regions like Australia and the U.K., combined with early efficiency gains from AI tools. Management expects these gains to be sustainable as the International segment has successfully pivoted back to growth. Management confirmed that outside of the two legacy projects, there are no other design-build P3 contracts in the construction management portfolio. Current bidding procedures involve a 12-to-18-month 'agency' phase to finalize design and costs before committing to a guaranteed maximum price, significantly limiting AECOM's risk exposure.

Interested in AECOM? Here are five stocks we like better. AECOM recorded a $337 million pre-tax charge tied primarily to delays and subcontractor productivity issues on a large Construction Management project, reducing quarterly EPS by $1.99 and consuming $185 million in cash flow. The company expects continued cash-flow pressure through the first half of fiscal 2027, including about $500 million in projected cash impact and $30 million–$35 million of additional 2027 interest expense. Fiscal 2026 free-cash-flow guidance was cut to $300 million from $400 million. Despite the project setback, AECOM reported record wins, a 13% year-over-year backlog increase and a 1.6x book-to-burn ratio. Updated fiscal 2026 guidance calls for approximately $7.3 billion in net service revenue, $950 million in adjusted EBITDA and $4.05 in adjusted EPS, while international growth and demand from U.S. infrastructure and data-center markets remained strong. 3 Energy Stocks to Buy and 2 to Avoid as AI Power Demand Explodes AECOM (NYSE:ACM) reported record quarterly wins and a 13% increase in backlog during its fiscal third quarter of 2026, but the infrastructure consulting company also recorded a $337 million pre-tax charge tied primarily to delays on a large Construction Management project. Chief Executive Officer Troy Rudd said the delayed project, bid in 2019, has been affected by several factors, most notably subcontractor productivity during its final phase. AECOM now expects substantial completion near the end of the second quarter of fiscal 2027, rather than in the first quarter. → SoundHound AI Sends a Loud Signal After Its Q2 Earnings Beat 3 Hot Buyback Announcements That Will Drive Value in 2025 “We are disappointed with this outcome,” Rudd said, adding that the company has changed leadership and tightened risk controls since the project was bid. He said AECOM no longer pursues design-build work for public-private partnership clients in its Construction Management business because of the risks associated with that structure. The company said the charge affected net service revenue and EBITDA by $337 million and reduced earnings per share by $1.99. Cash flow included a $185 million use during the quarter related to the Construction Management projects. → 3 Dividend Champion Utilities for a Market That Can't Sit Still Why Wall Street Is Still So Constructive on Aecom Stock AECOM has two design-build P3 projects in its Construction Management portfolio. The second project remains on track for substantial completion in the first quarter of fiscal 2027, management said. Both projects have claims associated with delays that the company said were not caused by AECOM. Rudd said the company is pursuing “sizable claims” on the first project and cited progress in the dispute-resolution process. Chief Financial and Operations Officer Gaurav Kapoor said claims related to the two projects should remain in a range of roughly $600 million to $650 million through completion, though the amount AECOM is claiming from third parties is higher. → Is Wingstop's Growth Story Losing Steam? Management expects the projects to continue burdening cash flow through the first half of fiscal 2027. Rudd said the overall cash impact in the first two quarters of fiscal 2027 is expected to be about $500 million. Kapoor added that higher average debt balances are expected to raise interest expense by $30 million to $35 million year over year in 2027. The company expects free cash flow of $300 million for fiscal 2026, down from its prior expectation of $400 million. Despite the project-related headwinds, AECOM generated $55 million in positive free cash flow during the third quarter. AECOM said quarterly wins drove a 1.6x book-to-burn ratio across the company and a 1.8x ratio in the Americas. Year-to-date book-to-burn was 1.4x. Backlog reached a new record, rising 13% from a year earlier. Adjusted for one fewer working day, net service revenue in the design business increased 5%, led by 6% growth in the Americas design business and 4% growth in International. Rudd said total growth fell short of expectations because of slower-than-anticipated project starts in Construction Management and the continuing effect of conflict in the Middle East. President Lara Poloni highlighted two large environment-business recompetes, one involving a public-sector client and one a private-sector client. She said the scope of work on both projects expanded significantly. In the United States, Poloni said state and local clients continue to prioritize highways, bridges, transit, rail and water projects. AECOM’s U.S. water pipeline grew 30% during the quarter, while its Department of Defense pipeline also increased by about 30%. Poloni also cited private-sector demand, particularly from data centers and hyperscale customers. In Canada, activity remained broad-based across markets and contributed to continued double-digit net service revenue growth. After quarter-end, the company won a 10-year program management role on a highway and bus-transit project, one of its largest Canadian wins to date. International net service revenue increased 4%, with growth led by the United Kingdom and Australia. The International segment’s backlog rose 28% year over year, while adjusted operating margin was 14.3%. Kapoor attributed the margin improvement to stronger growth in Australia, which he described as a higher-margin market; better utilization in the United Kingdom; and initial benefits from the company’s proprietary artificial intelligence strategy. In the U.K., net service revenue growth accelerated to the high single digits, supported by water, environment and energy work, including the Great Grid Upgrade program. Australia posted double-digit growth, and its backlog rose more than 40% year over year. The Middle East remained affected by uncertainty in tourism- and hospitality-related markets, although backlog there grew at a double-digit rate and AECOM won a large Saudi Arabian rail project after the quarter ended. AECOM updated its outlook to reflect the Construction Management charge, lower-than-expected net service revenue growth and margin performance. The company now expects fiscal 2026 net service revenue of approximately $7.3 billion, adjusted EBITDA of $950 million and adjusted EPS of $4.05 at the midpoint of its guidance ranges. Excluding the impact of the charge for comparability, AECOM said it expects net service revenue of $7.65 billion to $7.7 billion, adjusted EBITDA of $1.29 billion and adjusted EPS of $6 at the midpoints. The company raised its expected adjusted EBITDA margin to 17.4%, from 17% previously. Kapoor said the Americas adjusted operating margin was negative 16.1% because of the Construction Management impact. Excluding that impact, the margin was 18%, though it was affected by slower Construction Management project starts and elevated business-development spending. He said Americas margins are expected to normalize in the fourth quarter. Looking toward fiscal 2027, Rudd said AECOM continues to expect its long-term organic growth algorithm of 5% to 8% to apply to the entire business, including Construction Management. He said Construction Management growth is expected to contribute more meaningfully in the second half of fiscal 2027 as newer awards ramp up and employees are redeployed from the two legacy projects. AECOM is a multinational infrastructure consulting firm that provides a broad range of professional technical and management services. Its core offerings include architecture and engineering design, program and construction management, environmental remediation and consulting, and operations and maintenance support. The company works across the full project lifecycle from planning and design through construction and long‑term asset management. AECOM serves public- and private-sector clients in major built-environment markets, including transportation (roads, bridges, rail, airports), water and wastewater systems, buildings and places, energy and power, and environmental services. This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected]. The article "AECOM Q3 Earnings Call Highlights" was originally published by MarketBeat. View MarketBeat's top stocks for August 2026.

Engineering firm Aecom (NYSE: ACM) stock tumbled 5.5% through 10:25 a.m. ET Tuesday after missing badly on earnings last night. Heading into the report, analysts forecast Aecom would earn $1.51 per share in its fiscal Q3 2026. Instead, Aecom reported a $0.50 per share loss. Crazily, this came in a quarter when Aecom's revenue -- $3.6 billion -- was 80% more than the $2 billion Wall Street expected! Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a "Double Down" signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same "Total Conviction" signal is flashing for a company 1/100th the size of Nvidia. Continue » Even $3.6 billion represented a 14% decline in revenue for Aecom year over year. Worse, the work Aecom did was unprofitable. Operating earnings ran negative, non-GAAP earnings were the $0.50 loss noted above, and GAAP results showed an even bigger net loss: $0.65 per share. Even the good news at Aecom was kind of bad. Aecom generated positive free cash flow of $55 million in the quarter. However, this was 79% less free cash flow than the company generated a year ago. Aecom management blamed these results on "a $337 million pre-tax charge resulting from a higher projected cost to complete a Construction Management project." Now, the good news is that the charge related to a contract signed in 2019 "under terms and conditions that would not be acceptable after the substantial changes the Company implemented to its risk policies several years ago." So it's not likely to repeat. The bad news is the damage is done -- and it was bad enough to turn what should have been a profitable quarter into a loss. Going forward, management will try to recover from that seven-year-old mistake, and thinks $300 million in free cash flow this year is achievable. That still values the stock at a rich 32x price-to-free cash flow ratio, though. For now, Aecom stock looks expensive to me. Before you buy stock in Aecom, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Aecom wasn’t one of them. The 10 stocks that made the cut are built for long-term growth and could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $411,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,335,252!* That performance is why people listen. With a track record of beating the S&P 500 by 4x, Stock Advisor offers a distinct advantage. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built for the long haul. See the 10 stocks » *Stock Advisor returns as of August 11, 2026. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Aecom. The Motley Fool has a disclosure policy. Why Aecom Group Earnings Made the Stock Drop was originally published by The Motley Fool

Results included a $337 million pre-tax loss related to the delayed completion of a Construction Management project Excluding this project’s impacts, margins, earnings and cash flow were strong Backlog increased 13% to a new record driven by a 1.6 book-to-burn ratio Updated fiscal 2026 financial guidance to reflect the financial impacts from the Construction Management project charge, including impacts to cash flow, and lower fiscal 2026 NSR growth expectations DALLAS, August 10, 2026--(BUSINESS WIRE)--AECOM (NYSE:ACM), the trusted global infrastructure leader, today reported third quarter fiscal 2026 results. Construction Management Project Impact Included in AECOM’s third quarter results is a $337 million pre-tax charge resulting from a higher projected cost to complete a Construction Management project. The project was awarded in 2019 under terms and conditions that would not be acceptable after the substantial changes the Company implemented to its risk policies several years ago. The project is expected to achieve substantial completion during the second quarter of fiscal 2027. The Company is pursuing claims related to its work on the project and confidence in recovery has been validated by successes on initial matters that have been ruled upon to date; however, it will likely take several years and litigation to fully resolve all matters. As a result, the Company is now projecting full year free cash flow of approximately $300 million. "We are disappointed by the loss we took this quarter on the Construction Management project," said Troy Rudd, AECOM’s chairman and chief executive officer. "The project is nearing completion, but lower subcontractor productivity is driving a delayed completion and a higher estimated cost to complete. This project was bid in 2019 under terms and conditions that would not clear our substantially transformed risk processes today. Beyond this, the quarter included several key highlights, including record wins and an all-time high backlog, which make us very confident in the health of the business." "Our momentum continues to build, as we win work at a record pace and gain further share in the marketplace," said Lara Poloni, AECOM’s president. "In fact, our backlog increased by 13% and we were successful in capturing two of the largest recompetes in our Company’s history that also include significantly expanded scope. We are well positioned to capitalize on growing demand in our markets with our strengthened value proposition for clients, which is supported by our number one rankings across our key markets, as well as our expanding addressable market through our Advisory capabilities." "We have a strong balance sheet and healthy underlying cash flow," said Gaurav Kapoor, AECOM’s chief financial and operations officer. "As a result, we are able to operate with certainty while continuing to invest in organic growth initiatives that underpin the expanding value we deliver to clients. Against the current backdrop, our positive free cash flow and expectation for the full year demonstrates the resilience of our business and strength of our markets." Third Quarter Summary: Reflecting as reported GAAP performance from continuing operations, third quarter revenue of $3.6 billion reflected a 14% decrease over the prior year; the Company also reported an operating loss of $76 million, net loss of $84 million and diluted loss per share of $0.65. Net service revenue1 increased by 4% in the design business and increased 5% when adjusted for a fewer working day compared to the prior year period, driven by 6% and 4% growth in the Americas and International, respectively. Excluding the Construction Management charge, both the segment adjusted2 operating margin3 and the adjusted2 EBITDA margin4 would have decreased by 60 basis points to 16.5% and 17.0%, respectively. Adjusted2 EBITDA5 and adjusted2 EPS after excluding the Construction Management charge would have increased by 5% and 11% to $329 million and $1.49, respectively. Total backlog6 increased by 13% to a record high, driven by a record $4.2 billion in wins that resulted in a 1.6 book-to-burn7 ratio. Cash Flow and Capital Allocation Cash flow excluding the impact of the Construction Management project remains strong and AECOM expects to deliver on its long-term 100%+ free cash flow conversion target once the Construction Management project headwinds subside. The Company remains committed to its returns-based capital allocation policy, which in the near-term will be prioritized towards its organic growth investments and its quarterly dividend program. The Company maintains a strong balance sheet with net leverage9 of 1.5x. Fiscal 2026 and Long-Term Financial Guidance AECOM updated its fiscal 2026 earnings guidance to reflect the impacts of the Construction Management charge. The Company’s guidance also contemplates higher than expected margin performance excluding the Construction Management charge, offset by lower expected NSR growth primarily attributable to delayed project starts in the Construction Management business and ongoing conflict in the Middle East. As a result, the Company’s fiscal 2026 guidance now includes expectations for: Excluding the Construction Management charge, the Company’s guidance contemplates the following: In addition, the Company reaffirmed its long-term financial targets, which includes its expectation to deliver a 20%+ margin exit rate by fiscal 2028 and to grow adjusted2 EPS at a 15%+ CAGR from fiscal 2026 to fiscal 2029, excluding the Construction Management charge. 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 third quarter was $2.6 billion, a 20% decrease from the prior year. Net service revenue1 in the third quarter was $808 million, a 29% decrease from the prior year, which included 6% growth in the Americas design business after adjusting for one fewer working day in the period compared to the prior year. Operating loss was $139 million and on an adjusted2 basis was a loss of $130 million. Excluding the Construction Management charge, the adjusted operating margin on net service revenue decreased by 250 basis points over the prior year to 18.0%. This decline is primarily driven by record amounts of business development activity and the timing of Construction Management project starts, which was partially offset by benefits from a continued focus on driving operating efficiencies across the business. Backlog in the Americas segment grew by 8% to a new record high, driven by a 1.8 book-to-burn ratio7. The Americas design business book-to-burn ratio was driven by strong wins across each of the Company’s transportation, water, environment and facilities markets. International Revenue in the third quarter was $953 million, a 6% increase from the prior year. Net service revenue1 was $800 million, a 4% increase from the prior year, driven by strong growth in the U.K and Australian markets. Operating income increased by 21% over the prior year to $109 million and on an adjusted2 basis increased 26% to $114 million. The adjusted operating margin on net service revenue was 14.3%, an increase of 240 basis points, which included the benefits from improved growth and from restructuring actions taken within the last year. Backlog in the International segment grew 28% over the prior year to a new record high, driven by a 1.4 book-to-burn ratio7 and strong wins in the U.K. and Middle East markets. Tax Rate The effective tax rate was 24.9% in the third quarter. On an adjusted2 basis, the effective tax rate was 24.8%. 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. About AECOM AECOM (NYSE: ACM) is the global infrastructure leader, committed to delivering a better world. As a trusted professional services firm powered by deep technical abilities, we solve our clients’ complex challenges in water, environment, energy, transportation and buildings. Our teams partner with public- and private-sector clients to create innovative, sustainable and resilient solutions throughout the project lifecycle – from advisory, planning, design and engineering to program and construction management. AECOM is a Fortune 500 firm that had revenue of $16.1 billion in fiscal year 2025. Learn more at aecom.com. Forward-Looking Statements All statements in this communication other than statements of historical fact are "forward-looking statements" for purposes of federal and state securities laws, including any statements that relate to our future revenues, expenditures and business trends; future reduction of our self-perform at-risk construction exposure; future accounting estimates; future contractual performance obligations; future conversions of backlog; future capital allocation priorities, including common stock repurchases, future trade receivables, future debt pay downs; future tax benefits and expenses, and the impact of future tax laws; future legal claims and insurance coverage; future costs savings; and other future economic and industry conditions. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, but are not limited to, the following: our business is cyclical and vulnerable to economic downturns and client spending reductions; government shutdowns; changes in administration or other funding directives and circumstances that cause governmental agencies to modify, curtail or terminate our contracts; government contracts are subject to audits and adjustments of contractual terms; long-term government contracts are subject to uncertainties related to government contract appropriations; losses under fixed-price contracts; our ability to successfully and timely perform our contractual obligations and to recover claims for additional contract costs; potential liquidated damages under our contracts; limited control over operations run through our joint venture entities; liability for misconduct by our employees or consultants; changes in government laws, regulations and policies, including failure to comply with laws or regulations applicable to our business; maintaining adequate surety and financial capacity; potential high leverage and inability to service our debt and guarantees; our capital allocation strategy, including our ability to continue payment of dividends and repurchase stock; exposure to political and economic risks in different countries, including tariffs and trade policies, geopolitical events, and conflicts; inflation, currency exchange rates and interest rate fluctuations; changes in capital markets and stock market volatility; retaining and recruiting key technical and management personnel; legal claims and litigation; inadequate insurance coverage; environmental law compliance and inadequate nuclear indemnification; unexpected adjustments and cancellations related to our backlog; partners and third parties who may fail to satisfy their legal obligations; managing pension costs; AECOM Capital’s real estate development; cybersecurity issues, IT outages and data privacy; risks associated with the benefits and costs of the sale of our Management Services and self-perform at-risk civil infrastructure, power construction and oil and gas construction businesses, including the risk that any purchase adjustments from those transactions could be unfavorable and any future proceeds owed to us as part of the transactions could be lower than we expect; risks associated with our strategic initiatives, including AI investments and potential acquisitions and divestitures; as well as other additional risks and factors that could cause actual results to differ materially from our forward-looking statements set forth in our reports filed with the Securities and Exchange Commission. Any forward-looking statements are made as of the date hereof. We do not intend, and undertake no obligation, to update any forward-looking statement. Non-GAAP Financial Information This communication contains financial information calculated other than in accordance with U.S. generally accepted accounting principles ("GAAP"). The Company believes that non-GAAP financial measures such as adjusted EPS, adjusted EBITDA, adjusted EBITDA margin, adjusted net/operating income, segment adjusted operating margin, adjusted tax rate, net service revenue and free cash flow provide a meaningful perspective on its business results as the Company utilizes this information to evaluate and manage the business. We use adjusted operating income, adjusted net income, adjusted EBITDA, adjusted EBITDA margin, and adjusted EPS to exclude the impact of certain items, such as amortization expense and taxes to aid investors in better understanding our core performance results. We use free cash flow to present the cash generated from operations after capital expenditures to maintain our business. We present net service revenue (NSR) to exclude pass-through subcontractor costs from revenue to provide investors with a better understanding of our operational performance. We present segment adjusted operating margin to reflect segment operating performance of our Americas and International segments, excluding AECOM Capital. We present adjusted tax rate to reflect the tax rate on adjusted earnings. We also use constant-currency growth rates where appropriate, which are calculated by conforming the current period results to the comparable period exchange rates. Our non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of these non-GAAP measures is found in the Regulation G Information tables at the back of this communication. The Company is unable to reconcile certain of its non-GAAP financial guidance and long-term financial targets due to uncertainties in these non-operating items as well as other adjustments to net income. The Company is unable to provide a reconciliation of its guidance for NSR to GAAP revenue because it is unable to predict with reasonable certainty its pass-through revenue. In addition, the Company is unable to provide a reconciliation of its guidance for financial metrics excluding the Construction Management business due to uncertainties in these non-operating items as well as other adjustments to these measures. Note: Variances in tables are due to rounding. View source version on businesswire.com: https://www.businesswire.com/news/home/20260810069088/en/ Contacts Investor Contact:Will GabrielskiSenior Vice President, Finance, [email protected] Media Contact:Brendan Ranson-WalshSenior Vice President, Global [email protected]