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Infrastructure consulting service company AECOM (NYSE:ACM) missed Wall Street’s revenue expectations in Q1 CY2025, with sales falling 4.4% year on year to $3.77 billion. Its non-GAAP profit of $1.25 per share was 4.8% above analysts’ consensus estimates.

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AECOM (ACM) Q1 CY2025 Highlights:

• Revenue: $3.77 billion vs analyst estimates of $4.17 billion (4.4% year-on-year decline, 9.5% miss)

• Adjusted EPS: $1.25 vs analyst estimates of $1.19 (4.8% beat)

• Adjusted EBITDA: $289.7 million vs analyst estimates of $287.2 million (7.7% margin, 0.9% beat)

• Management slightly raised its full-year Adjusted EPS guidance to $5.15 at the midpoint

• EBITDA guidance for the full year is $1.2 billion at the midpoint, in line with analyst expectations

• Operating Margin: 6.8%, up from 5.1% in the same quarter last year

• Free Cash Flow Margin: 4.7%, up from 1.9% in the same quarter last year

• Backlog: $24.27 billion at quarter end, up 2.2% year on year

• Market Capitalization: $14.44 billion

StockStory’s Take

AECOM’s first quarter results reflected management’s emphasis on margin expansion and strategic focus within higher-value advisory and program management services. CEO Troy Rudd acknowledged that isolated project delays and fewer workdays weighed on sales, but pointed to ongoing investments in technical expertise, business development, and operational efficiencies as key contributors to improved profitability. Rudd highlighted that “our margins were strong in the quarter and have increased by 70 basis points year-to-date,” attributing the gains to a growing share of higher-margin work and benefits from previous restructuring initiatives.

Looking ahead, management raised its full-year non-GAAP EPS guidance, citing confidence in backlog growth and visibility into future project pipelines. Rudd expressed that the company’s backlog reached a record high and that “we expect our revenue would ramp over the year” as delayed projects resume and new wins flow through. While acknowledging some macroeconomic uncertainty, management emphasized that the pipeline of early-stage opportunities and the company’s ability to shift resources position AECOM for further growth.

Key Insights from Management’s Remarks

AECOM’s management discussed several underlying factors shaping Q1 performance and their outlook for the remainder of the year, emphasizing margin improvements, strategic investments, and differentiated market positioning.

• Margin Expansion Initiatives: The quarter’s operating margin improvement was attributed to higher contributions from advisory and program management offerings, alongside efficiency gains from enterprise capability centers and ongoing digital and AI initiatives.

• Project Delays and Pipeline Health: Management cited isolated project delays and deferred client decisions, particularly following U.S. federal agency reviews and administrative changes, as short-term revenue headwinds. However, they stressed that these delays were limited in scope and did not materially impact the overall backlog.

• Backlog and Book-to-Burn Ratio: The company achieved a record backlog with a book-to-burn ratio above 1.1, reflecting continued success in winning new contracts. Management noted that win rates on large pursuits remained above 80%, and early-stage pipeline activity accelerated, supporting future growth.

• Geographic and Segment Trends: The Americas region drove most of the margin improvement, while international results were mixed—U.K. water sector investment and Canadian infrastructure spending were bright spots, but transportation project delays persisted in some markets.

• Strategic Acquisitions and Market Entry: The acquisition of Allen Gordon, a U.K.-based water and energy consultancy, was highlighted as a move to strengthen the company’s position in energy and water markets, particularly within the U.K. and Ireland, and to support targeted revenue doubling goals in global water services.