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AECOM (ACM) Wins Design Contract for Sydney Gateway Road Project

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AECOM (ACM - Free Report) has clinched a contract to provide civil engineering design for Sydney’s $2.6-billion Gateway Road Project. This new 5-kilometer, above ground, toll-free connection will run from St Peters Interchange to Sydney airport, Port Botany and beyond. Maintainable transport solutions will be part of the design.

In words of AECOM’s president, Lara Poloni, "The Sydney Gateway is the kind of large, complex and transformational project that suits AECOM and our ability to leverage the specialist technical skills from our global transportation business."

AECOM and Arcadis will undertake the design work, alongside the construction of a joint venture comprising John Holland and Seymour Whyte. Together with Arcadis, AECOM will support the John Holland/Seymour Whyte design and build partnership, which was recently announced as the delivery partner by Transport for NSW.

Favorable Infrastructure Spending Trend Beyond the Border

AECOM’s diversified portfolio, which comprises designing and construction services, is spread across a number of key markets. It is witnessing robust prospects in all segments. The company’s net service revenues or NSR — defined as revenues excluding subcontractor and other direct costs — have been benefiting from strength across core transportation, water, as well as environment markets.

In September, AECOM clinched a contract to serve NEOM, a new model for urbanization and sustainability located in the northwest region of Saudi Arabia. Per the contract, the company will design the transport and utilities backbone infrastructure for NEOM. Additionally, its scope will include environmental and geotechnical support.

AECOM’s shares have outperformed the industry year to date. The company has been benefiting from strong backlog, encouraging infrastructure spending by the federal government (domestic and internal), as well as cost-reduction efforts. Near-record level backlog of $41.2 billion for fiscal 2020 provides strong visibility. Moreover, solid fiscal 2021 guidance indicates 9% adjusted EBITDA growth, 23% adjusted EPS improvement and 90 basis points of segmental margin expansion.

Its backlog of $41.2 billion at fiscal 2020-end was up 13% from the prior-year period. New order wins during the year were recorded at $18.2 billion. The company’s solid backlog levels, which are a key indicator of future revenue growth, indicate significant opportunities in the forthcoming quarters.

AECOM — which shares space with Gates Industrial Corporation plc (GTES - Free Report) , Quanta Services, Inc. (PWR - Free Report) and Jacobs Engineering Group Inc. (J - Free Report) in the industry — currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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