AECOM (NYSE:ACM) executives said the company opened fiscal 2026 with record first-quarter results and raised full-year profit expectations, citing strong demand across key U.S. end markets, expanding margins, and a backlog that reached a new all-time high despite disruption from a prolonged U.S. federal government shutdown.
Management also said it has completed its review of strategic alternatives for the construction management (CM) business and decided to continue owning and operating the unit. In addition, the company increased its share repurchase authorization to $1 billion after returning nearly $350 million to shareholders during the quarter.
Record quarter and backlog growth
Rudd said the company expects U.S. award activity to pick up following the passage of federal funding bills, adding that visibility is high and prompting the company to increase full-year guidance. He also highlighted a 100-basis-point increase in segment-adjusted operating margin to 16.4% and said NSR rose 5% after adjusting for fewer billable days. Adjusted EBITDA was $287 million and adjusted EPS was $1.29, both ahead of management’s expectations.
Rudd said AECOM has now posted a book-to-burn ratio above one for 21 consecutive quarters and noted strength in win rates, particularly on large pursuits.
Notable wins and end-market commentary
Management pointed to several contract wins as examples of the company’s positioning. AECOM was selected as a delivery partner for the 2032 Olympic and Paralympic Games in Brisbane, building on its existing role supporting the LA28 Games. The company also cited its selection to provide engineering services for Scottish Water’s multi-year capital investment program, which executives described as one of the largest capital programs globally.
Rudd said AECOM’s “rapidly expanding technology roadmap” helped in the Scottish Water award, where the company demonstrated a “tangible value opportunity from AI and technology over time.”
On demand conditions, Rudd described the U.S. market as strong and said more than half of Infrastructure Investment and Jobs Act (IIJA) funding remains to be spent. He also said private-sector investment is gaining momentum, pointing to the “booming data center market” and opportunities across water, facilities, energy, and environmental services. Rudd added that incentives in the “One Big Beautiful Deal” and reshoring initiatives are creating multi-year opportunities.
Internationally, executives said near-term trends remain mixed, but long-term infrastructure demand is “undeniable.” Rudd cited the U.K.’s AMP8 water cycle and the Scottish Water win; Middle East wins including a leading design role on the Dubai Metro; and Australia backlog reaching a multi-year high with transportation wins. He said pockets of weakness persist due to geopolitical and funding uncertainty, but repositioning efforts have contributed to 25% backlog growth and a record pipeline, with revenue trends expected to improve as fiscal 2026 progresses and into fiscal 2027.
Rudd also said global defense budgets are rising and that defense represents about 10% of NSR, identifying the U.S. Department of War as the company’s largest client and citing increased spending expectations over several years, alongside investment ramp-ups by the U.S. Coast Guard and the Department of Homeland Security. He added that President Trump reaffirmed the U.S. commitment to the AUKUS defense pact and that AECOM is pursuing a “substantial pipeline.”
Strategy updates: AI, advisory, and construction management
Rudd said AECOM has completed integration of its September AI-related acquisition and that the technology is now live on projects, with initial performance matching expectations. Chief Financial and Operations Officer Gaurav Kapoor later said integration is complete about three months into the roadmap and described progress as ahead of initial expectations, with investments ramping throughout the year. Kapoor said the initial workflow focus is on facilities, while benefits are extending across business lines.
During Q&A, Rudd said he does not view AI as leading to shrinking revenue, arguing that clients pay for added value through fees and additional work. He said the attributes required to win—trusted relationships, technical leadership, and domain expertise—remain unchanged, with AI serving as an extension of prior technology evolution.
President Lara Poloni said AECOM is investing to expand a higher-margin advisory practice targeting what she called a $50 billion annual addressable spend and said the company has made “substantial progress” toward a goal of doubling the business. She cited a U.K. advisory win supporting business plans for the AMP9 water cycle and said advisory work positions AECOM to help private capital invest in infrastructure by accelerating and de-risking projects.
On construction management, Rudd said the strategic review included evaluating a sale but ultimately concluded the CM business is “high-quality,” has strong backlog and cash flow, and offers “substantial opportunities” through tighter alignment with the rest of AECOM. He cited collaboration on LA28 and the Brisbane 2032 Olympics as examples. Later, Rudd said AECOM plans to run CM differently by aligning it more closely with program management to create a stronger value proposition for customers.
Segment performance, capital allocation, and updated guidance
Kapoor said the Americas segment delivered 9% NSR growth, with strength in eastern U.S. states and Canada. Americas adjusted operating margin was 19.9%, up 120 basis points, driven by operating leverage, mix shift to higher-margin services, and efficiencies from technology deployment.
International NSR was essentially flat after adjusting for fewer billable days, which Kapoor said was consistent with expectations given slower activity in areas including U.K., Australia transportation, and Hong Kong. However, he said International backlog increased 25% and that growth is expected to pick up in the second half of the year.
Kapoor said the company raised the midpoint of full-year adjusted EPS guidance to $5.95 from $5.75, attributing the increase to first-quarter outperformance, capital deployment, a lower expected tax rate, and record backlog visibility. He also said second-quarter NSR and adjusted EBITDA are expected to approximate 24% of full-year guidance and that the second-quarter tax rate is expected to be about 12% to 13%.
On capital returns, Kapoor said AECOM returned nearly $350 million to shareholders in the first quarter and more than $3.3 billion over the last several years, and reiterated the increased $1 billion share repurchase authorization. Rudd said the company repurchased more than $300 million of shares in the first quarter and intends to continue using free cash flow to return value to shareholders.
Kapoor also addressed cash flow seasonality, saying first-quarter cash performance was consistent with expectations and that the company typically sees a ramp through the year due to large first-half disbursements, including compensation-related items and vendor software payments.
Looking further out, Rudd said the company reaffirmed its long-term value creation framework, including expectations for 5% to 8% annual revenue growth, a 20% margin exit rate by fiscal 2028, and mid-teens compounded earnings and free cash flow growth per share.
About AECOM (NYSE:ACM)
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.
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