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Why Is Aecom (ACM) Down 0% Since Last Earnings Report?
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It has been about a month since the last earnings report for Aecom Technology (ACM - Free Report) . Shares have lost about 0% in that time frame, underperforming the S&P 500.
Will the recent trend continue leading up to its next earnings release, or is Aecom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AECOM Q1 Earnings Beat, Design Business Backlog Up 9%
AECOM 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.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Aecom has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Aecom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Why Is Aecom (ACM) Down 0% Since Last Earnings Report?
It has been about a month since the last earnings report for Aecom Technology (ACM - Free Report) . Shares have lost about 0% in that time frame, underperforming the S&P 500.
Will the recent trend continue leading up to its next earnings release, or is Aecom due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AECOM Q1 Earnings Beat, Design Business Backlog Up 9%
AECOM 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.
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.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last two month period as none of them issued any earnings estimate revisions.
VGM Scores
At this time, Aecom has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Aecom has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.