A month has passed by because the final earnings report for Aecom Know-how (ACM). Shares have added about 1.4% in that timeframe, underperforming the S&P 500.
Will the current constructive pattern proceed main as much as its subsequent earnings launch, or is Aecom due for a pullback? Earlier than we dive into how buyers and analysts have reacted as of late, let’s take a fast have a look at the newest earnings report with a purpose to get a greater deal with on the necessary drivers.
AECOM This autumn Earnings Beat Estimates, Up Y/Y, Raises Dividend by 18%
AECOM reported spectacular outcomes for fourth-quarter fiscal 2024, the place earnings surpassed the Zacks Consensus Estimate and grew on a year-over-year foundation. Revenues additionally elevated from the prior 12 months, backed by stable natural web service revenues (NSR) development in its design enterprise.
Aside from this, ACM introduced an 18% improve in its quarterly dividend payout to 26 cents, payable on Jan. 17, 2025, to stockholders of file on Jan. 2. Additionally, it elevated its share repurchase authorization to $1 billion. Impressively, AECOM has grown per share dividend at a 20% CAGR since inception.
Delving Deeper
The corporate reported adjusted earnings per share (EPS) of $1.27, which topped the consensus mark of $1.22 by 4.1% and elevated 25.7% from $1.01 reported within the prior-year quarter. The sturdy enchancment was backed by advantages acquired from high-returning natural development initiatives.
Revenues of $4.11 billion rose 7% on a year-over-year foundation. Adjusted NSR moved up 5% to $1.81 billion.
Phase Particulars
Americas’ revenues got here in at $3.16 billion in the course of the reported quarter, up 8% from the prior-year quarter’s ranges. NSR of $1.06 billion moved up 6% 12 months over 12 months, backed by 8% development within the design enterprise, partially offset by impacts from Hurricane Helene in September.
Adjusted working revenue of $207.7 million was up 9% 12 months over 12 months. Adjusted working margin (on an NSR foundation) expanded 70 foundation factors (bps) 12 months over 12 months to 19.6%, indicating the underlying energy of the enterprise, constructive impacts of development and ongoing reinvestment in long-term natural development initiatives, in addition to sturdy execution and development.
The entire backlog on the fiscal 2024-end was $17.4 billion in contrast with $16.9 billion a 12 months in the past.
Worldwide revenues have been up 5% 12 months over 12 months to $948.4 million. Through the quarter, NSR elevated 4% 12 months over 12 months to $754.1 million.
Adjusted working revenue within the phase rose 31% 12 months over 12 months to $94.9 million. Adjusted working margin (on an NSR foundation) additionally moved up 260 bps 12 months over 12 months to 12.6%. This was backed by continued sturdy execution and the advantages of actions to slender its concentrate on high-returning alternatives throughout its largest geographies.
The entire backlog on the finish of fiscal 2024 was $6.43 billion in contrast with $6.27 billion a 12 months in the past.
AECOM Capital‘s quarterly revenues have been $0.5 million.
Working Highlights
Adjusted phase working revenue amounted to $261 million, up 16% from the year-ago quarter. The phase’s adjusted working margin (“NSR”) improved 150 bps to 16.7%. The upside was pushed by high-returning natural development.
Adjusted EBITDA rose 15% 12 months over 12 months to $290 million. Adjusted EBITDA margin of 16.7% additionally rose 140 bps 12 months over 12 months, backed by its ongoing investments in high-margin natural development and its steady enchancment initiatives.
Backlogs
As of the fiscal 2024-end, the whole backlog got here in at $23.86 billion in contrast with $23.16 billion reported within the prior-year interval. The present backlog stage consists of 50.8% contracted backlog development.
A 5% improve within the design enterprise backlog was pushed by a 50%-win fee, an all-time excessive, and continued sturdy end-market tendencies.
ACM’s pipeline of alternatives elevated 10%, which was a brand new excessive, pushed by strong funding throughout all its largest markets.
ACM’s Fiscal 2024 Highlights
For the complete 12 months, the corporate reported revenues of $16.1 billion, which elevated 12% from the earlier 12 months. NSR reached an all-time excessive in fiscal 2024 and included energy throughout the biggest finish markets and geographies. ACM delivered 8% development within the design enterprise in fiscal 2024, pushed by 9% development within the Americas.
Adjusted EPS additionally elevated 22% to $4.52 from fiscal 2023. Adjusted EBITDA margins of 16% additionally rose 100 bps 12 months over 12 months. The phase adjusted working margin was 15.8%, which exceeded the steerage of 15.6% and grew 100 bps 12 months over 12 months.
Liquidity & Money Stream
On the fiscal 2024-end, AECOM’s money and money equivalents totaled $1.58 billion in contrast with $1.26 billion on the fiscal 2023-end. The entire debt (excluding unamortized debt issuance prices) as of Sept. 30, 2024, was $2.54 billion, up from $2.22 billion within the fiscal 2023-end.
In fiscal 2024, adjusted working money stream elevated 19% 12 months over 12 months to $827 million. Adjusted free money stream additionally elevated 20% to $708 million 12 months over 12 months.
Fiscal 2025 Steering
The corporate anticipates to generate 5-8% natural NSR development in fiscal 2025. It expects adjusted EPS within the vary of $5.00-$5.20. This means a 13% enchancment from fiscal 2024 ranges on a constant-currency foundation, contemplating the mid-point of the steerage.
AECOM expects adjusted EBITDA within the vary of $1.17-$1.21 billion, indicating 9% year-over-year development on the midpoint. Adjusted EBITDA margin is anticipated to be 16.3%, representing a 30 bps improve from fiscal 2024.
The corporate anticipates greater than 100% adjusted web revenue to free money stream conversion, a mean totally diluted share rely of 134 million and an efficient tax fee of 24%.
Lengthy-Time period Views
ACM expects to ship 5-8% natural NSR development, not less than 20-30 bps adjusted EBITDA margin growth, double-digit adjusted EPS and free money stream per share enchancment yearly. It additionally expects to realize not less than 17% adjusted EBITDA margin (exiting fiscal 2026) and not less than 25% return on invested capital over the long run. ACM anticipates roughly 100% conversion of adjusted web revenue to free money stream.
How Have Estimates Been Shifting Since Then?
Analysts have been quiet over the last two month interval as none of them issued any earnings estimate revisions.
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The views and opinions expressed herein are the views and opinions of the writer and don’t essentially mirror these of Nasdaq, Inc.
