AECOM
Q3 2026 Earnings
Includes a $337 million pre-tax charge on a Construction Management project related to higher projected cost to complete, which reduced adjusted EPS by approximately $1.99 per share
Market Reaction
Did ACM Beat Earnings? Q3 2026 Results
A $337 million pre-tax charge on a legacy Construction Management project turned what had been five consecutive quarters of consensus EPS beats into a sharp miss for AECOM in fiscal Q3 2026, with adjusted EPS landing at negative $0.50 against a $1.46 consensus estimate, a gap of 134.17%, while revenue fell 14.2% year over year to $3.59 billion, well short of the $4.36 billion analysts had anticipated. The charge, tied to a Construction Management contract awarded in 2019 under risk terms management says it would no longer accept, drove a GAAP net loss of $84 million and pushed adjusted EBITDA into negative territory at negative $8.20 million for the quarter. Beneath the project-specific damage, however, the underlying design business continued to grow, with record quarterly wins of $4.20 billion and total backlog climbing 13% to $27.82 billion, including a recent selection to lead preliminary design for the New Lisbon Airport. Looking ahead, AECOM set full-year fiscal 2026 guidance at adjusted EPS of $3.95 to $4.15 and free cash flow of approximately $300 million, while reaffirming its long-term targets of a 20%-plus margin exit rate by fiscal 2028.
- $337 million pre-tax charge on a legacy Construction Management project due to lower subcontractor productivity and delayed completion
- Record wins of $4.2 billion driving 1.6 book-to-burn ratio
- Design business NSR grew 4% (5% adjusted for one fewer working day)
- International segment operating income grew 21% with 240 bps margin expansion
- Americas adjusted operating margin declined 250 bps to 18.0% excluding the charge, driven by record business development activity
- Strong growth in U.K. and Australian markets
“We are disappointed by the loss we took this quarter on the Construction Management project. 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.”
AECOM CEO, on the earnings call
Forward Guidance & Outlook
AECOM updated fiscal 2026 guidance to reflect the Construction Management project charge: adjusted EPS of $3.95–$4.15, adjusted EBITDA of $935–$965 million, total NSR of $7.30–$7.35 billion, and free cash flow of approximately $300 million with an average diluted share count of 130 million and adjusted effective tax rate of approximately 19%. Excluding the Construction Management charge, guidance would be adjusted EPS of $5.90–$6.10 and adjusted EBITDA of $1,275–$1,305 million, consistent with prior guidance. The company reaffirmed long-term targets including a 20%+ margin exit rate by fiscal 2028 and 15%+ adjusted EPS CAGR from fiscal 2026 to fiscal 2029, excluding the Construction Management charge. Lower NSR growth expectations are attributed to delayed Construction Management project starts and ongoing conflict in the Middle East.
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Figures from SEC filings and company reports. Not investment advice.