AECOM (ACM) Q4 Earnings Meet, Revenues Beat, NSR Rises Y/Y
AECOM ACM reported decent fourth-quarter fiscal 2023 results, with earnings meeting the Zacks Consensus Estimate and revenues topping the same. On a year-over-year basis, the top and the bottom line increased, backed by double-digit organic net service revenues (NSR) growth in its design business.
Shares of the technical and management support services provider jumped 1.22% in the after-hours trading session on Nov 13, post the earnings release.
Inside the Headline
The company reported adjusted earnings of $1.01 per share, in line with the Zacks Consensus Estimate. In the prior-year quarter, the company reported adjusted earnings per share (EPS) of 83 cents.
AECOM Price, Consensus and EPS Surprise
AECOM price-consensus-eps-surprise-chart | AECOM Quote
Revenues of $3.84 billion beat the consensus mark of $3.58 billion by 7.2% and rose 12% on a year-over-year basis. NSR moved up 8% to $1.73 billion.
Segment Details
Americas’ revenues came in at $2.94 billion during the reported quarter, up 12% from the prior-year quarter’s levels. Our estimate for the metric was $2.74 billion. NSR of $1 billion moved up 6% year over year, backed by 9% growth in the design business. Our estimate for the segment’s NSR was $695.6 million.
Adjusted operating income of $190 million was up 10% year over year. Adjusted operating margin (on an NSR basis) also expanded by 60 basis points (bps) year over year to 19%.
The total backlog at the fiscal fourth-quarter end was $34.9 billion versus $35.11 billion a year ago.
International revenues were up 12% year over year to $905.2 million. Our estimate for the metric was $848.7 million. During the quarter, NSR increased 11% year over year to $722.4 million, reflecting growth in the largest and most profitable markets.
Adjusted operating income in the segment rose 25% year over year to $72 million. Adjusted operating margin (on an NSR basis) also moved up 100 bps year over year to 10%. This marked the company's success in attaining a double-digit margin in the International business, achieving the set target.
The total backlog at the end of the fiscal reported quarter was $6.27 billion versus $5.07 billion from a year ago.
AECOM Capital's quarterly revenues stood at $0.54 million.
Operating Highlights
Adjusted segment operating profit amounted to $225 million, up 15% from the year-ago quarter’s level. The segment’s adjusted operating margin (NSR) improved by 60 basis points to 15.2%. The upside reflects strong execution and ongoing investments in organic growth initiatives. Adjusted EBITDA also rose 10% year over year to $252 million.
Backlogs
As of the fiscal fourth quarter end, the total backlog came in at $41.17 billion compared with $40.18 billion reported in the prior-year period. The current backlog level includes 54.8% contracted backlog growth.
A record-high 12.7% growth in the design business backlog (on a constant currency basis) reflects solid quarterly wins and a pipeline of opportunities.
Liquidity & Cash Flow
At the fiscal fourth quarter’s end, AECOM’s cash and cash equivalents totaled $1.26 billion compared with $1.17 billion at the fiscal 2022 end. The total debt (excluding unamortized debt issuance costs) as of Sep 30, 2023, stood at $2.22 billion, in line with fiscal 2022-end.
At the fiscal fourth quarter’s end, operating cash flow decreased 2% year over year to $696 million. Adjusted free cash flow increased 1% year over year $591 million.
Fiscal 2023 Highlights
AECOM reported adjusted EPS of $3.71, up 9% year over year. Revenues of $14.38 billion were up 9% and NSR rose 8% year over year. Adjusted segment operating margin came in at 14.7%, up 60 bps from fiscal 2022. Adjusted EBITDA also increased 9% year over year to $964 million.
Fiscal 2024 Guidance
For next year, the company anticipates generating 8-10% organic NSR growth.
The company expects adjusted EPS in the range of $4.35-$4.55. This indicates a 20% improvement from the fiscal 2023 levels on a constant-currency basis, considering the mid-point of the guidance.
Also, it projects an adjusted operating margin of 15.6%, suggesting a 90 basis points increase on a year-over-year basis. AECOM expects adjusted EBITDA guidance in the range of $1,065-$1,105 million, indicating 13% year-over-year growth at the midpoint.
The company anticipates more than 100% adjusted net income to free cash flow conversion, an average fully diluted share count of 138 million and an effective tax rate of 24-26%.
Zacks Rank & Some Recent Construction Releases
AECOM currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
D.R. Horton, Inc. DHI reported solid fourth-quarter fiscal 2023 (ended Sep 30, 2023) results as earnings and revenues surpassed their respective Zacks Consensus Estimate.
On a year-over-year basis, the top line increased on the back of the supply of both new and existing homes as affordable price points remain limited and robust housing demand supported by favorable demographics.
Fluor Corporation FLR reported stellar results for third-quarter 2023, wherein earnings and revenues surpassed the Zacks Consensus Estimate and increased from the previous year's levels, given solid demand for its engineering and construction solutions.
Given the company’s positive advances on large Energy Solutions projects and continued progress on projects in our legacy portfolio, Fluor lifted its expectations for 2023.
Quanta Services Inc. PWR reported better-than-expected results for third-quarter 2023, wherein adjusted earnings and revenues surpassed the Zacks Consensus Estimate. Both metrics were up on a year-over-year basis.
The company continues to experience high demand for its infrastructure solutions that support energy transition initiatives and increase reliability, safety and efficiency. Project activity associated with renewable generation has been going strong and is expected to continue throughout the year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Quanta Services, Inc. (PWR) : Free Stock Analysis Report
Fluor Corporation (FLR) : Free Stock Analysis Report
AECOM (ACM) : Free Stock Analysis Report
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
