AECOM

AECOM posted a mixed but fundamentally strong fiscal second quarter, beating profit expectations while falling short on headline revenue as the infrastructure giant demonstrated its margin-first strategy is working. Adjusted EPS climbed 20% year-over-year to $1.25, clearing the $1.19 consensus estimate by 4.84%, even as GAAP revenue slipped 4.4% to $3.77 billion against a $4.17 billion consensus target, a gap the company attributed largely to pass-through subcontractor costs and a roughly 100 basis point headwind from fewer workdays. The more telling metric, net service revenue, grew 4% on a constant-currency basis to $1.87 billion, driven by 6% NSR growth in the Americas, where adjusted operating margins hit a record 19.4%. Free cash flow more than doubled, rising 141% to $178.40 million. Buoyed by record backlogs totaling $24.27 billion and a recent expansion into U.K. water and energy markets through an acquisition, AECOM raised its fiscal 2025 adjusted EPS guidance to $5.10 to $5.20, up 14% at the midpoint, with management projecting 100% or better free cash flow conversion for the full year.