We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
AECOM (ACM) Beats on Q2 Earnings, Reiterates FY22 Views
Read MoreHide Full Article
AECOM (ACM - Free Report) reported mixed second-quarter fiscal 2022 results. Its earnings surpassed the Zacks Consensus Estimate, but revenues missed the same. On a year-over-year basis, earnings improved impressively despite a marginal fall in revenues.
Post the results, shares of the technical and management support services provider declined 7.6% on May 9.
Troy Rudd, AECOM’s CEO, stated, “We are uniquely well suited to lead as three mega trends take hold, including a global infrastructure investment renaissance, our clients’ increasingly ambitious ESG priorities, and infrastructure adaptation to a post-COVID new normal. As we look ahead, our strong backlog and pipeline, top rankings in key market sectors, and the expansion of our addressable market with advisory, program management, and digital capabilities support our expectation for accelerating NSR growth and for an at least 19% adjusted EPS CAGR through fiscal 2024 from fiscal 2021.
Delving Deeper
During the fiscal second quarter, the company reported adjusted earnings per share of 83 cents, which topped the consensus mark of 78 cents by 6.4%. The bottom line also improved 23.9% from 67 cents reported in the prior-year quarter. The upside can be attributed to strong NSR growth, higher margins and stock repurchases under its capital allocation policy.
Revenues of $3,214 million missed the consensus mark of $3,356 million by 4.3% and declined 2% on a year-over-year basis. Meanwhile, adjusted net service revenues or NSR moved up 4% for the quarter, of which the design business contributed 5% year over year growth.
Segment Details
During the reported quarter, Americas’ revenues came in at $2,399.9 million, down 2.8% from the prior-year quarter’s levels. Net service revenues or NSR of $950 million in the quarter moved up 3% year over year, backed by 4% growth in the design business. The uptick was led by a high win rate, strength in market conditions, client budgets and the successful execution of backlogs and pursuits.
Adjusted operating income of $168 million was up 6% year over year. Adjusted operating margin (on an NSR basis) also expanded 50 basis points or bps year over year to 17.7%. The upside reflected the benefits of the actions undertaken to boost margins, featuring investments in technology.
International revenues increased 2.1% year over year to $813.3 million. During the quarter, NSR increased 6% year over year to $664 million, reflecting growth in the company’s largest and most profitable geographies.
Adjusted operating income in the segment rose 18% year on year to $55 million. Adjusted operating margin (on an NSR basis) also increased 100 bps year over year to 8.3%. This marks the seventh consecutive quarter of sequential margin improvement and reflects continued progress toward achieving a double-digit margin in the International segment.
Operating Highlights
Adjusted segment operating profit for the quarter amounted to $223.2 million, up 8.4% from the year-ago quarter’s level. The segment adjusted operating margin increased 70 basis points to 13.8%, marking a record high fiscal second-quarter margin. Adjusted EBITDA also rose 10.3% year over year to $223.3million.
As of March-end, the company’s total backlog came in at $40.8 billion compared with $39.43 billion reported in the prior-year quarter. The current backlog level includes 19.3% contracted backlog growth. The book-to-burn ratio of 1.6 reflects 1.6 in the Americas and 1.5 in the International segment.
Liquidity & Cash Flow
As of Mar 31, 2022, AECOM’s cash and cash equivalents totaled $965.1 million compared with $1,299.2 million at the fiscal 2021 end.
Total debt (excluding unamortized debt issuance cost) as of Mar 31, 2022, stood at $2,230.9 million, compared with $2,235.7 million as of Sep 30, 2021. Free cash flow for the quarter was negative $17.4 million versus $3.3 million reported a year ago.
Fiscal 2022 Guidance
For fiscal 2022, the company expects adjusted earnings per share (EPS) in the range of $3.30-$3.50, up from the prior estimate of $3.20-$3.40. This indicates a 21% adjusted EPS improvement at the mid-point of the guidance from fiscal 2021 levels.
AECOM expects adjusted EBITDA guidance in the range of $880-$920 million, indicating 8% year-over-year growth at the midpoint. The company anticipates generating 6% organic NSR growth, underpinned by robust pipeline and backlog momentum and strengthening market conditions across the company’s largest markets. Also, it projects segment adjusted operating margin of 14.1%, reflecting a 30 basis points increase on a year-over-year basis.
The company anticipates free cash flow in the range of $450-$650 million.
AECOM has also reiterated its long-term financial targets (through fiscal 2024). For the long term, it expects adjusted EPS of more than $4.75 and segment adjusted operating margin of 15%.
KBR, Inc. (KBR - Free Report) reported mixed results for first-quarter 2022, with earnings topping the Zacks Consensus Estimate and revenues missing the same.
On a year-over-year basis, the metrics increased strongly. The company benefited from solid Government Solutions growth and strong execution across the business.
Jacobs Engineering Group Inc. (J - Free Report) reported second-quarter fiscal 2021 (ended Apr 1, 2022) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate and rising year over year.
J’s earnings topped analysts’ expectations in three of the trailing four quarters, with an average of 3.9%.
Quanta Services Inc. (PWR - Free Report) reported impressive results for first-quarter 2022. Adjusted earnings and revenues surpassed the Zacks Consensus Estimate and increased impressively on a year-over-year basis.
Earnings beat the consensus mark in the trailing eight quarters, whereas revenues surpassed the same in five out of eight consecutive quarters.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
AECOM (ACM) Beats on Q2 Earnings, Reiterates FY22 Views
AECOM (ACM - Free Report) reported mixed second-quarter fiscal 2022 results. Its earnings surpassed the Zacks Consensus Estimate, but revenues missed the same. On a year-over-year basis, earnings improved impressively despite a marginal fall in revenues.
Post the results, shares of the technical and management support services provider declined 7.6% on May 9.
Troy Rudd, AECOM’s CEO, stated, “We are uniquely well suited to lead as three mega trends take hold, including a global infrastructure investment renaissance, our clients’ increasingly ambitious ESG priorities, and infrastructure adaptation to a post-COVID new normal. As we look ahead, our strong backlog and pipeline, top rankings in key market sectors, and the expansion of our addressable market with advisory, program management, and digital capabilities support our expectation for accelerating NSR growth and for an at least 19% adjusted EPS CAGR through fiscal 2024 from fiscal 2021.
Delving Deeper
During the fiscal second quarter, the company reported adjusted earnings per share of 83 cents, which topped the consensus mark of 78 cents by 6.4%. The bottom line also improved 23.9% from 67 cents reported in the prior-year quarter. The upside can be attributed to strong NSR growth, higher margins and stock repurchases under its capital allocation policy.
AECOM Price, Consensus and EPS Surprise
AECOM price-consensus-eps-surprise-chart | AECOM Quote
Revenues of $3,214 million missed the consensus mark of $3,356 million by 4.3% and declined 2% on a year-over-year basis. Meanwhile, adjusted net service revenues or NSR moved up 4% for the quarter, of which the design business contributed 5% year over year growth.
Segment Details
During the reported quarter, Americas’ revenues came in at $2,399.9 million, down 2.8% from the prior-year quarter’s levels. Net service revenues or NSR of $950 million in the quarter moved up 3% year over year, backed by 4% growth in the design business. The uptick was led by a high win rate, strength in market conditions, client budgets and the successful execution of backlogs and pursuits.
Adjusted operating income of $168 million was up 6% year over year. Adjusted operating margin (on an NSR basis) also expanded 50 basis points or bps year over year to 17.7%. The upside reflected the benefits of the actions undertaken to boost margins, featuring investments in technology.
International revenues increased 2.1% year over year to $813.3 million. During the quarter, NSR increased 6% year over year to $664 million, reflecting growth in the company’s largest and most profitable geographies.
Adjusted operating income in the segment rose 18% year on year to $55 million. Adjusted operating margin (on an NSR basis) also increased 100 bps year over year to 8.3%. This marks the seventh consecutive quarter of sequential margin improvement and reflects continued progress toward achieving a double-digit margin in the International segment.
Operating Highlights
Adjusted segment operating profit for the quarter amounted to $223.2 million, up 8.4% from the year-ago quarter’s level. The segment adjusted operating margin increased 70 basis points to 13.8%, marking a record high fiscal second-quarter margin. Adjusted EBITDA also rose 10.3% year over year to $223.3million.
As of March-end, the company’s total backlog came in at $40.8 billion compared with $39.43 billion reported in the prior-year quarter. The current backlog level includes 19.3% contracted backlog growth. The book-to-burn ratio of 1.6 reflects 1.6 in the Americas and 1.5 in the International segment.
Liquidity & Cash Flow
As of Mar 31, 2022, AECOM’s cash and cash equivalents totaled $965.1 million compared with $1,299.2 million at the fiscal 2021 end.
Total debt (excluding unamortized debt issuance cost) as of Mar 31, 2022, stood at $2,230.9 million, compared with $2,235.7 million as of Sep 30, 2021. Free cash flow for the quarter was negative $17.4 million versus $3.3 million reported a year ago.
Fiscal 2022 Guidance
For fiscal 2022, the company expects adjusted earnings per share (EPS) in the range of $3.30-$3.50, up from the prior estimate of $3.20-$3.40. This indicates a 21% adjusted EPS improvement at the mid-point of the guidance from fiscal 2021 levels.
AECOM expects adjusted EBITDA guidance in the range of $880-$920 million, indicating 8% year-over-year growth at the midpoint. The company anticipates generating 6% organic NSR growth, underpinned by robust pipeline and backlog momentum and strengthening market conditions across the company’s largest markets. Also, it projects segment adjusted operating margin of 14.1%, reflecting a 30 basis points increase on a year-over-year basis.
The company anticipates free cash flow in the range of $450-$650 million.
AECOM has also reiterated its long-term financial targets (through fiscal 2024). For the long term, it expects adjusted EPS of more than $4.75 and segment adjusted operating margin of 15%.
Zacks Rank & Some Recent Construction Releases
AECOM currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
KBR, Inc. (KBR - Free Report) reported mixed results for first-quarter 2022, with earnings topping the Zacks Consensus Estimate and revenues missing the same.
On a year-over-year basis, the metrics increased strongly. The company benefited from solid Government Solutions growth and strong execution across the business.
Jacobs Engineering Group Inc. (J - Free Report) reported second-quarter fiscal 2021 (ended Apr 1, 2022) results, with earnings and revenues surpassing their respective Zacks Consensus Estimate and rising year over year.
J’s earnings topped analysts’ expectations in three of the trailing four quarters, with an average of 3.9%.
Quanta Services Inc. (PWR - Free Report) reported impressive results for first-quarter 2022. Adjusted earnings and revenues surpassed the Zacks Consensus Estimate and increased impressively on a year-over-year basis.
Earnings beat the consensus mark in the trailing eight quarters, whereas revenues surpassed the same in five out of eight consecutive quarters.