AECOM (ACM) Q4 Earnings & Revenues Beat Estimates, Shares Up
AECOM ACM reported fourth-quarter fiscal 2021 results, wherein earnings and revenues surpassed the respective Zacks Consensus Estimate. Shares of this technical and management support services provider gained 2.67% on Nov 15 during the trading session post the earnings release.
Troy Rudd, AECOM’s chief executive officer, said, “Demand for our technical, advisory and program management capabilities is increasing against a backdrop of an improving funding environment, highlighted by the recent passing of the federal infrastructure bill in the U.S., and rising demand for ESG-related services, which underpins our expectation for accelerating revenue growth in fiscal 2022 and continued margin, adjusted EBITDA and adjusted EPS growth.”
Delving Deeper
Adjusted earnings per share of 81 cents topped the consensus mark of 80 cents by 1.3% and grew 35% year over year. Revenues of $3,353.8 million beat the Zacks Consensus Estimate by 0.6% but declined 6% year over year. Yet, net service revenues or NSR grew 6% for the quarter. This marks the third consecutive quarter of accelerating organic NSR growth.
AECOM Price, Consensus and EPS Surprise
AECOM price-consensus-eps-surprise-chart | AECOM Quote
Segment Details
Americas revenues of $2,582.2 million were down 5.5% from the year-ago level. Net service revenues or NSR of $919.8 million for the quarter gained 7% year over year (comparisons are adjusted to exclude the benefit of an extra week in the fourth quarter of fiscal 2020), reflecting growth of the Design business and double-digit improvement in the Construction Management business. Adjusted operating income of $183 million was up 16% year over year. Adjusted operating margin (on an NSR basis) also expanded 290 basis points or bps (marking the best quarterly performance). This upside reflected the benefits of the actions taken to boost margins, and investments in technology, shared service centers as well as design centers to improve project delivery efficiencies.
International revenues dropped 7.2% on a year-over-year basis to $771.2 million. On a constant-currency organic basis, NSR increased 6% from a year ago to $619 million for the quarter. Adjusted operating income in the segment rose 12% year on year to $46 million. Adjusted operating margin (on an NSR basis) also jumped 90 bps to 7.4%. Actions taken to improve margins included investments in the business to enable more efficient delivery and strong execution.
Operating Highlights
Adjusted segment operating margin for the quarter amounted to 14.8%, up 210 bps from the year-ago level. Adjusted EBITDA also grew 10% year over year to $225 million.
At fiscal 2021-end, the company’s total backlog was $38.6 billion, down from the prior-year figure of $41.2 billion. The backlog level included 18% contracted backlog growth, with increases in both Design and Construction Management businesses.
Fiscal 2021 Highlights
Adjusted earnings per share of $2.82 grew 31% year over year. Revenues of $13,341 million also increased 1% year over year. NSR grew 1% for the quarter. Adjusted segment operating margin for the year amounted to 13.8%, up 150 bps from the year-ago level. Adjusted EBITDA also grew 11% year over year to $830 million.
Liquidity & Cash Flow
As of Sep 30, 2021, AECOM’s cash and cash equivalents totaled $1,229.2 million, down from $1,708.3 million at fiscal 2020-end.
As of fiscal 2021-end, total debt (excluding unamortized debt issuance cost) was $2,235.7 million, up from $2,085 million at fiscal 2020-end. The company had $1.145 billion in unused capacity under the revolving credit facility.
Fiscal 2022 Guidance
Adjusted EPS is expected in the range of $3.20-$3.40. This indicates a 17% adjusted EPS improvement at the mid-point of the guided range. The Zacks Consensus Estimate for fiscal 2022 earnings is currently pegged at $3.20 per share.
AECOM also expects adjusted EBITDA guidance in the range of $880-$920 million, indicating 8% year-over-year growth at midpoint. The company anticipates free cash flow in the range of $450-$650 million.
Zacks Rank
AECOM currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Recent Performance of Some Other Engineering – R&D Services Companies
Quanta Services Inc. PWR reported third-quarter 2021 results, wherein adjusted earnings not only surpassed the Zacks Consensus Estimate by 0.7% but also grew 5.7% on a year-over-year basis. Revenues also improved 10.9% from a year ago but missed the consensus mark by 2.2%.
Quanta currently carries a Zacks Rank #3 (Hold). The stock has gained 64.8% year to date compared with a 36.5% rise of the Zacks Engineering - R and D Services industry it belongs to.
KBR, Inc. KBR reported third-quarter 2021 results, wherein earnings and revenues topped the Zacks Consensus Estimate by 12.3% and 18.8%, respectively. The company also raised its full-year view. Earnings and revenues grew 45.5% and 33.6% year over year, respectively. The company benefited from solid Government Solutions organic growth and strong execution across the business.
KBR currently carries a Zacks Rank #3. The stock has gained 45.5% year to date.
Fluor Corporation FLR reported impressive third-quarter 2021 results, wherein earnings surpassed the Zacks Consensus Estimate by 43.8% but revenues missed the same by 6.3%. The company made significant progress toward strategic goals that comprised reducing outstanding debt by 30% and identified ways for more than $150 million in annual cost savings.
Fluor currently carries a Zacks Rank #3. The stock has gained 47.9% year to date.
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