Aecom reports record backlog despite construction project charge
The infrastructure firm lowered its full-year free cash flow guidance to approximately $300 million.
Aecom (ACM), the infrastructure services company, reported a decline in quarterly revenue weighed down by a significant project-related charge.
The company recognized a $337 million pre-tax charge in the third quarter of fiscal 2026 due to higher projected costs to complete a Construction Management project awarded in 2019. This charge contributed to a reversal in growth trends for the company's top line.
Revenue for the third quarter of fiscal 2026 decreased 14% year-over-year to $3.586 billion, compared to a 1% increase in the same period last year. Net Service Revenue (NSR) fell 16% year-over-year to $1.609 billion, a shift from the 6% growth reported in the third quarter of 2025.
Performance diverged by region. The International segment saw its adjusted operating margin on NSR increase 240 basis points year-over-year to 14.3%. Backlog for the International segment grew 28% year-over-year, outpacing the company's total backlog growth. In contrast, the Americas segment adjusted operating margin on NSR, excluding the Construction Management charge, decreased 250 basis points year-over-year to 18.0%.
Despite the quarterly revenue decline, the company's total backlog increased 13% year-over-year to a record $27.816 billion. This growth accelerated from the 8% increase recorded in the second quarter of 2026. The book-to-burn ratio in the design business also rose to 1.6, up from 1.2 in the prior quarter.
Excluding the Construction Management charge, segment adjusted operating margin decreased by 60 basis points year-over-year to 16.5%.
Aecom updated its fiscal 2026 guidance, projecting Adjusted EPS between $3.95 and $4.15 and Adjusted EBITDA between $935 million and $965 million. The company lowered its full-year free cash flow guidance to approximately $300 million to reflect the impact of the Construction Management project.