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AECOM (ACM) Q1 Earnings Beat, Design Business Backlog Up 9%
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AECOM (ACM - Free Report) reported results for first-quarter fiscal 2024, where earnings surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased, backed by solid organic net service revenues (“NSR”) growth in its design business.
Shares of the technical and management support services provider jumped 1.6% in the after-hours trading session on Feb 5, post-earnings release.
Delving Deeper
The company reported adjusted earnings per share (EPS) of $1.05, which topped the consensus mark of 92 cents by 14.1% and increased 25% from 84 cents reported in the prior-year quarter. The strong improvement was backed by benefits received from high-returning organic growth initiatives.
Revenues of $3.9 billion rose 15% on a year-over-year basis. Adjusted NSR moved up 7% to $1.71 billion. Organic NSR in the design business recorded year-over-year growth of 8%, led by the water and transportation markets, and 9% growth in the Americas.
Segment Details
Americas’ revenues came in at $3.04 billion during the reported quarter, up 18% from the prior-year quarter’s levels. NSR of $978 billion moved up 6% year over year, backed by 9% growth in the design business, driven by growth in water, transportation and program management.
Adjusted operating income of $179 million was up 6% year over year. Adjusted operating margin (on an NSR basis) also expanded 10 basis points (bps) year over year to 18.3%, indicating the underlying strength of the business, positive impacts of growth and ongoing reinvestment in long-term organic growth initiatives.
The total backlog at the fiscal first-quarter end was $33.4 billion versus $35.1 billion a year ago.
International revenues were up 7% year over year to $861 million. During the quarter, NSR increased 8% year over year to $730 million, suggesting growth across the largest markets.
Adjusted operating income in the segment rose 40% year over year to $77 million. Adjusted operating margin (on an NSR basis) also moved up 230 bps year over year to 10.6%. This sets a new quarterly record for the International segment as the company executes on its continuous improvement initiatives.
The total backlog at the end of the reported fiscal quarter was $6.37 billion versus $5.68 billion from a year ago.
AECOM Capital's quarterly revenues were $0.2 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 100 basis points to 15%, marking a new first-quarter high. The upside was driven by high-returning organic growth.
Adjusted EBITDA also rose 14% year over year to $251.2 million.
Backlog
As of the fiscal first quarter’s end, the total backlog came in at $39.81 billion compared with $40.82 billion reported in the prior-year period. The current backlog level includes 56.5% contracted backlog growth.
A record-high 9% growth in the design business backlog (on a constant currency basis) was driven by a near-record win rate and continued strong end-market trends. The contracted backlog in the design business rose 17%, supported by funding strength across the key markets.
Liquidity & Cash Flow
At the fiscal first quarter-end, AECOM’s cash and cash equivalents totaled $1.19 billion compared with $1.26 billion at the fiscal 2023 end. The total debt (excluding unamortized debt issuance costs) as of Dec 31, 2023, was $2.21 billion, marginally below the fiscal 2023-end level.
At the end of the first fiscal quarter, operating cash flow increased year over year to $143.1 million from $120 million. Adjusted free cash flow also increased to $86.9 million from $83.7 year over year.
Fiscal 2024 Guidance
The company still anticipates to generate 8-10% organic NSR growth in fiscal 2024. It 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 billion, 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%. Also, it projects to deliver a return on invested capital of approximately 20% in fiscal 2024.
Otis Worldwide Corporation (OTIS - Free Report) reported impressive results in fourth-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Its quarterly results indicated 13 consecutive quarters of organic sales growth and the results were marked by mid-teens growth in adjusted EPS, the third consecutive quarter of high-single-digit organic sales growth in the Service segment and a resurgence in New Equipment orders growth.
Full-year 2023 also registered a notable mid-single-digit increase in organic sales, coupled with an expansion in operating profit margin and a robust low-teens growth in adjusted EPS.
Meritage Homes Corporation (MTH - Free Report) reported better-than-expected results for fourth-quarter 2023. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate.
Earnings and total revenues declined on a year-over-year basis. Also, total closing revenues fell due to reduced home prices and volume, along with increased financing incentives and higher lot costs.
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic as the enhanced affordability landscape will continue to attract prospective buyers.
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AECOM (ACM) Q1 Earnings Beat, Design Business Backlog Up 9%
AECOM (ACM - Free Report) reported results for first-quarter fiscal 2024, where earnings surpassed the Zacks Consensus Estimate. On a year-over-year basis, the top and bottom lines increased, backed by solid organic net service revenues (“NSR”) growth in its design business.
Shares of the technical and management support services provider jumped 1.6% in the after-hours trading session on Feb 5, post-earnings release.
Delving Deeper
The company reported adjusted earnings per share (EPS) of $1.05, which topped the consensus mark of 92 cents by 14.1% and increased 25% from 84 cents reported in the prior-year quarter. The strong improvement was backed by benefits received from high-returning organic growth initiatives.
AECOM Price, Consensus and EPS Surprise
AECOM price-consensus-eps-surprise-chart | AECOM Quote
Revenues of $3.9 billion rose 15% on a year-over-year basis. Adjusted NSR moved up 7% to $1.71 billion. Organic NSR in the design business recorded year-over-year growth of 8%, led by the water and transportation markets, and 9% growth in the Americas.
Segment Details
Americas’ revenues came in at $3.04 billion during the reported quarter, up 18% from the prior-year quarter’s levels. NSR of $978 billion moved up 6% year over year, backed by 9% growth in the design business, driven by growth in water, transportation and program management.
Adjusted operating income of $179 million was up 6% year over year. Adjusted operating margin (on an NSR basis) also expanded 10 basis points (bps) year over year to 18.3%, indicating the underlying strength of the business, positive impacts of growth and ongoing reinvestment in long-term organic growth initiatives.
The total backlog at the fiscal first-quarter end was $33.4 billion versus $35.1 billion a year ago.
International revenues were up 7% year over year to $861 million. During the quarter, NSR increased 8% year over year to $730 million, suggesting growth across the largest markets.
Adjusted operating income in the segment rose 40% year over year to $77 million. Adjusted operating margin (on an NSR basis) also moved up 230 bps year over year to 10.6%. This sets a new quarterly record for the International segment as the company executes on its continuous improvement initiatives.
The total backlog at the end of the reported fiscal quarter was $6.37 billion versus $5.68 billion from a year ago.
AECOM Capital's quarterly revenues were $0.2 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 100 basis points to 15%, marking a new first-quarter high. The upside was driven by high-returning organic growth.
Adjusted EBITDA also rose 14% year over year to $251.2 million.
Backlog
As of the fiscal first quarter’s end, the total backlog came in at $39.81 billion compared with $40.82 billion reported in the prior-year period. The current backlog level includes 56.5% contracted backlog growth.
A record-high 9% growth in the design business backlog (on a constant currency basis) was driven by a near-record win rate and continued strong end-market trends. The contracted backlog in the design business rose 17%, supported by funding strength across the key markets.
Liquidity & Cash Flow
At the fiscal first quarter-end, AECOM’s cash and cash equivalents totaled $1.19 billion compared with $1.26 billion at the fiscal 2023 end. The total debt (excluding unamortized debt issuance costs) as of Dec 31, 2023, was $2.21 billion, marginally below the fiscal 2023-end level.
At the end of the first fiscal quarter, operating cash flow increased year over year to $143.1 million from $120 million. Adjusted free cash flow also increased to $86.9 million from $83.7 year over year.
Fiscal 2024 Guidance
The company still anticipates to generate 8-10% organic NSR growth in fiscal 2024. It 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 billion, 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%. Also, it projects to deliver a return on invested capital of approximately 20% in fiscal 2024.
Zacks Rank & Recent Construction Releases
AECOM currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Otis Worldwide Corporation (OTIS - Free Report) reported impressive results in fourth-quarter 2023. Its earnings and net sales surpassed the Zacks Consensus Estimate and grew on a year-over-year basis. Its quarterly results indicated 13 consecutive quarters of organic sales growth and the results were marked by mid-teens growth in adjusted EPS, the third consecutive quarter of high-single-digit organic sales growth in the Service segment and a resurgence in New Equipment orders growth.
Full-year 2023 also registered a notable mid-single-digit increase in organic sales, coupled with an expansion in operating profit margin and a robust low-teens growth in adjusted EPS.
Meritage Homes Corporation (MTH - Free Report) reported better-than-expected results for fourth-quarter 2023. Both earnings and total closing revenues surpassed the Zacks Consensus Estimate.
Earnings and total revenues declined on a year-over-year basis. Also, total closing revenues fell due to reduced home prices and volume, along with increased financing incentives and higher lot costs.
PulteGroup Inc. (PHM - Free Report) reported mixed results in fourth-quarter 2023, wherein earnings surpassed the Zacks Consensus Estimates, but revenues missed the same. Both metrics decreased year over year.
Nonetheless, during the latter part of the fourth quarter, PulteGroup observed a notable surge in buyer activity, mainly attributed to declining interest rates. December emerged as the quarter's peak sales month. With the anticipation of sustained lower interest rates in 2024, the company remains optimistic as the enhanced affordability landscape will continue to attract prospective buyers.