Aecom (ACM) | The Buildout — AI Infrastructure
The Verdict
AECOM is a global provider of professional infrastructure consulting and advisory services. It helps governments and private clients plan, permit, design, and manage large transportation, water, environmental, energy, and high-tech facilities. In the AI buildout, that means site selection, environmental permitting, electrical engineering, and program management for data centers; the company also embeds AI tools into its own design workflow to improve win rates and margins.
| Market Cap | — |
| Revenue (TTM) | $16.0B |
| Revenue Growth | −0.4% |
| EBITDA Margin (TTM) | 7.6% |
| Net Debt | $2.3B |
| Earnings Beats | 6 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Record total backlog of $26.2B in Q2 FY2026, up 8% year over year; International backlog rose 25% to a record.
- Americas design NSR grew 8% in Q2 FY2026; Americas adjusted operating margin reached 20%, up 60 bps year over year.
- Department of War pipeline increased 50%; AUKUS-related wins support a $3B partnership.
- Two AI-linked wins worth almost $1B, one not yet in backlog; contracts include value-share mechanisms.
- Management expects nuclear fusion to deliver 9 figures of NSR in the coming years from Type One/TVA and U.K. STEP.
What We’re Watching
- August Q3 FY2026 press release: revenue -14%, NSR -16%, segment margin -1.0%, adjusted EPS -$0.50 — unexplained.
- Middle East conflict created ~100 bps NSR headwind in Q2; recovery timing uncertain.
- Claims resolution 'very slow and dragged out'; cash fell from $1,585.7M to $1,034.3M in six months.
- June 11, 2026 8-K disclosed a new material agreement and debt/obligation with no project detail.
Through Q2 FY2026, the thesis appeared intact: record backlog, expanding Americas margins, and concrete AI-linked wins. The August Q3 FY2026 press release — NSR down 16% and segment margin of -1.0% — breaks that trajectory with no explanation in the source material. The thesis is therefore weakening pending the Q3 driver. The open question is whether Q3 is a discrete item or an operating break.
Earnings Beat
In Q2 FY2026 (ended March 31, 2026), AECOM reported revenue of $3,801.1M, up 0.8% year over year, and consolidated net service revenue of $1,948.4M, which management said grew 2% constant currency. Gross profit was $296.5M, or 7.8% of revenue. Segment adjusted operating margin reached 16.5%, up 50 bps, and adjusted EPS was $1.59, up from $1.25.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $3.8B | $3.8B | $3.8B | +0.8% |
| Gross margin | 7.8% | 7.3% | 7.7% | +10bps |
| EBITDA | $298M | $291M | $299M | −0.2% |
| EPS | $1.39 | $0.56 | $1.07 | +29.5% |
| Design book-to-burn | 1.2x | 1.5x | n/a | — |
the aggregate value of those wins is almost $1 billion, one of which came after the end of the quarter, so it’s not currently in our backlog.— Troy Rudd, Chief Executive Officer, 2026-05-12
Management tone: On the Q2 FY2026 call (May 12, 2026), management was confident and quantification-heavy — using 'record' and 'increased confidence' repeatedly, and raising profit guidance for the second time. No Q3 FY2026 earnings call was available in the source material.
Management Guidance
Q2 FY2026 guidance (raised May 12, 2026): adjusted EPS growth of +14% at midpoint, adjusted EBITDA growth of +7% at midpoint, reported NSR growth of 4% to 6% (6% to 8% excluding the Q4 workday impact), long-term 20%+ segment margin exit rate by fiscal 2028, free cash flow guidance reaffirmed, average diluted share count of 130 million, and an adjusted effective tax rate of approximately 20–22%. The Q3 FY2026 press-release digest contained no guidance update.
Trajectory
Through Q2 FY2026, revenue was roughly flat year over year (up 0.8%), but net service revenue and margins strengthened — Americas design NSR grew 8% and Americas adjusted operating margin hit 20%. The August Q3 FY2026 release then showed revenue down 14% and NSR down 16%, with segment operating margin at -1.0%, a break from the May guidance path. The driver of that break is not explained in the available source material.
The Model
The model projects FY+1 revenue of $7,674M with EBITDA of $1,297M (16.9% margin), and FY+2 revenue of $8,258M with EBITDA of $1,486M (18.0% margin). The near term is anchored by record backlog and Americas design strength; the FY+2 step-up assumes the construction-management revenue ramp beginning in FY2027 and international growth recovery.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $16.1B | $7.7B | $8.3B |
| YoY Growth | — | −52.5% | +7.6% |
| EBITDA | $1.2B | $1.3B | $1.5B |
| EBITDA Margin | 7.4% | 16.9% | 18.0% |
Projections are the median of 5 independent model runs. The model’s revenue sits 1.3% below analyst consensus.
Q2 FY2026 guidance (raised May 12, 2026): adjusted EPS growth of +14% at midpoint, adjusted EBITDA growth of +7% at midpoint, reported NSR growth of 4% to 6% (6% to 8% excluding the Q4 workday impact), long-term 20%+ segment margin exit rate by fiscal 2028, free cash flow guidance reaffirmed, average diluted share count of 130 million, and an adjusted effective tax rate of approximately 20–22%. The Q3 FY2026 press-release digest contained no guidance update.
What Could Go Right — and Wrong
- Q3 loss proves discrete or non-operating, preserving the backlog-driven growth path.
- AI wins convert to backlog and margin uplift; the unnamed hyperscaler relationship expands.
- Department of War pipeline +50% converts to awards; AUKUS and fusion programs scale.
- Claims and Middle East cash resolve, restoring free cash flow.
- Construction-management book-to-burn inflects in Q3/Q4 FY2026, revenue ramp begins Q2 FY2027.
- Q3 is operational, not discrete: core NSR demand or margin structure breaks.
- AI wins fail to convert to profit; value-share economics disappoint.
- New debt/obligation is tied to a troubled project, guarantee, or liquidity pressure.
- Middle East conflict persists; claims remain slow; cash conversion weakens.
- Peer state/local funding caution spreads; Tetra Tech's cut to growth outlook is a read-through.
Looking Ahead
The next 12 months are about explaining the Q3 FY2026 break and testing FY2026 guidance. Management had set construction-management book-to-burn improvement for Q3/Q4 FY2026, revenue ramp from Q2 FY2027, and an international growth inflection in the second half of FY2026. The post-quarter AI win is expected to enter backlog, and nuclear fusion is expected to deliver 9 figures of NSR over the coming years. The Q3 release casts doubt on all of these unless the driver is discrete.
- Q4 FY2026Q4 earnings test — Tests the twice-raised FY2026 profit guidance and reaffirmed free cash flow guidance.
- Q3/Q4 FY2026Construction-management book-to-burn — Expected NSR book-to-burn inflection from agency-to-GMP conversion.
- Q2 FY2027CM revenue ramp begins — Sports and convention-center GMP conversion starts revenue burn.
- Fiscal 202820%+ segment margin target — Long-term margin exit-rate commitment.
- FY2026–FY202915%+ adjusted EPS CAGR — Long-term earnings growth target from Q2 press release.
- In the coming yearsFusion NSR ramp — Management expects 9 figures of NSR from Type One/TVA and U.K. STEP.
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $16.1B | $16.1B | $16.0B | +0.2% |
| Gross Margin | 6.8% | 7.5% | 7.7% | +78bps |
| EBITDA | $1.0B | $1.2B | $7.6B | +19.5% |
| EBITDA Margin | 6.2% | 7.4% | 7.6% | +120bps |
| Net Income | $402M | $562M | $506M | +39.7% |
| Free Cash Flow | $708M | $685M | $5.1B | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)7.7%
- EBITDA Margin (TTM)7.6%
- Net Margin (TTM)3.2%
- ROIC17.6%
- FCF Conversion36.1%
- SBC / Revenue0.4%
The Company
AECOM is a global provider of professional infrastructure consulting and advisory services for governments and private clients, spanning transportation, facilities, water, environmental, and energy end markets. In the AI buildout, it supplies site selection, environmental permitting, design, electrical engineering, and program management for data-center and high-tech projects; management says the global data-center practice grew 50% in FY2025. The company also embeds proprietary AI tools into its own engineering and design workflow to improve win rates and margins.
AECOM operates through Americas, International, and AECOM Capital segments, reporting net service revenue (NSR) to exclude pass-through revenue. It is not a balance-sheet-heavy contractor; its disclosed physical footprint is limited to a Dallas corporate office of approximately 9,000 square feet. The company relies on backlog, headcount, and technology investment as capacity, with construction-management agency work converting to guaranteed maximum price contracts over 10–20 months.
Business Segments
Competitive Landscape
AECOM competes in a fragmented engineering and consulting market against firms like Fluor, Jacobs, Parsons, and Tetra Tech. Management describes AECOM as the #1 ENR firm in transportation, facilities, and water, and cites a re-compete win rate above 90% and a 100% win rate on Middle East enterprise-critical pursuits. The source material names these competitors and provides peer signals but does not assess relative positioning beyond management's claims.
- FluorNamed competitor; executing front-end work representing over $60B revenue on potential backlog, prospect pipeline +50% in 12 months.
- JacobsNamed competitor; data center business grew >100% YoY, AI-infrastructure pipeline +400% YoY, ENR #1 design firm.
- ParsonsNamed competitor; record $2B awards in a quarter, 1.4x book-to-bill in both segments, Middle East book-to-bill 1.5x.
- Tetra TechNamed competitor; backlog +8% sequentially to $4.28B, added $650M U.S. defense contract capacity, cut state/local growth outlook from 10–15% to 5–10%.
- MontroseNamed competitor; organic revenue +12.7% FY25, noted growth in environmental work for data centers and AI.
Supply Chain
AECOM sits between government and private infrastructure owners and the contractors that execute projects. Its suppliers are mostly inferred software, materials, and equipment providers; no sole-source or disclosed direct supply dependencies appear in the source set.
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