AECOM (ACM)·Q1 2026 Earnings Summary
AECOM Crushes Q1 Estimates, Raises Full-Year Guidance as Backlog Hits Record High
February 10, 2026 · by Fintool AI Agent
AECOM delivered a comprehensive beat in Q1 FY2026, exceeding expectations on every key financial metric while raising full-year guidance. Adjusted EPS of $1.29 topped consensus by 11.2%, revenue of $3.83B beat by 8.6%, and backlog surged to a record $26.0B. The stock gained 1.6% in regular trading and added another 3% after hours on the results.
Did AECOM Beat Earnings?
Yes—a double beat with meaningful upside on both revenue and EPS.
The beat was broad-based across segments. Net service revenue grew 5% after adjusting for fewer working days in the quarter, with Americas leading at 9% growth.
Management attributed the outperformance to strong execution, operational efficiencies, and continued investment in AI and technology capabilities that are winning key contracts.
Ask Fintool AI AgentWhat Did Management Guide?
FY2026 EPS guidance raised by $0.20 at the midpoint.
The guidance raise reflects:
- Q1 outperformance in the design business
- Lower effective tax rate (20-22% vs 22-23% prior)
- Benefits from capital allocation strategy
- Record backlog providing strong visibility
Long-Term Targets (FY'26-FY'29)
Note: EPS/FCF growth targets do not include prospective capital allocation benefits.
How Did the Stock React?
Positive reaction, with after-hours gains extending the move.
The stock is trading below its 52-week high of $135.52 and above its 52-week low of $85.00, giving room for further appreciation if execution continues.
What Changed From Last Quarter?
Several notable developments distinguish Q1 from prior quarters:
1. Construction Management Strategic Review Concluded
After a comprehensive review of strategic alternatives, AECOM decided to retain the Construction Management business rather than divest it. Management believes the business "is exceptionally well positioned for the future" with a strong backlog and pipeline.
CEO Troy Rudd elaborated on the call that the decision was driven by "substantial opportunities resulting from a closer connection between the construction management team and the rest of AECOM," citing collaborations like LA28 and Brisbane 2032 as examples. Management plans to run the business differently with closer alignment to program management, creating "a competitive advantage which we think is more valuable for customers."
2. Record Backlog with Marquee Wins
Total backlog hit $26.0B, up 9% year-over-year, driven by a 1.5x book-to-burn ratio—the 21st consecutive quarter above 1.0x.
Historical Backlog Progression ($B):
Key wins included:
- Scottish Water: Preferred bidder on multi-billion-dollar investment program
- Brisbane 2032 Olympics: Selected as Delivery Partner to the Games Independent Infrastructure and Coordination Authority
3. Government Shutdown Impact Absorbed
The Americas design business achieved a 1.0x book-to-burn ratio despite an unprecedented 43-day U.S. federal government shutdown that resulted in award delays.
4. $1B Share Repurchase Authorization & Capital Return Track Record
The Board approved an increase to the share repurchase authorization to $1 billion.
Capital Allocation Since FY'20: $3.6B total cash returned to shareholders :
- $2.88B in share repurchases (representing 40%+ of market cap at initiation in Sept '20)
- $483M in dividends
- $232M in M&A
Dividend per Share Growth: 20% CAGR from $0.60 (FY'22) to $1.24 (FY'26E)
Ask Fintool AI AgentValuation vs Peers
AECOM trades at a significant discount despite superior profitability.
Peers include Jacobs, Tetra Tech, Stantec, and WSP. Management highlighted this valuation gap, noting the company is "generating superior profitability and returns, while trading at a substantial discount."
Segment Performance
Americas (78% of Revenue)
Americas delivered a new first quarter margin high of 19.9%, reflecting strong growth and operating efficiencies. Growth was strong in both the U.S. and Canada.
International (22% of Revenue)
International backlog surged 25% to a new record on a 2.3x book-to-burn ratio with substantial wins across all regions.
Key Management Quotes
Troy Rudd, Chairman and CEO:
"We outperformed our expectations on every key financial metric in the quarter and raised our full year guidance as a result. Importantly, backlog increased by 9%, highlighted by a 1.5 book-to-burn ratio that featured some of the largest and most iconic projects in the world. Our investments in the Advisory and Program Management businesses, as well as in technology and AI enable us to scale these attributes, expand our addressable market, deliver even greater value to clients, and build an even stronger and more durable moat."
Lara Poloni, President:
"Across our markets, clients are increasingly turning to us to deliver their biggest and most critical infrastructure projects and programs. From our selection as a preferred bidder on Scottish Water's new multi-billion-dollar investment program to our selection as Delivery Partner to the Games Independent Infrastructure and Coordination Authority for the Brisbane 2032 Olympic and Paralympic Games, we consistently win what matters through our unrivaled competitive advantages."
Gaurav Kapoor, CFO:
"Our strong performance, record backlog and increased guidance demonstrate we are creating significant competitive differentiation in the market. Year after year we have expanded our productivity, which is evident in the persistent NSR and profit per employee growth we have delivered for the past six years."
Balance Sheet and Cash Flow
Free cash flow was $42M in the quarter, down sequentially and year-over-year, though management maintained full-year FCF guidance of ~$400M. The company returned $340M+ to shareholders through repurchases and dividends during the quarter.
No debt maturities for several years provides capital flexibility.
Other Notable Items
Legacy Matter Resolution: AECOM agreed in principle to settle a legacy project-related matter acquired with the 2014 URS Corporation acquisition. The company expects to receive approximately $50 million in cash this fiscal year and recorded a $61.8 million non-cash loss in discontinued operations in Q1.
Q&A Highlights from the Earnings Call
The earnings call provided additional color on several key topics:
AI and Technology Value Creation
When asked about AI's potential impact on revenue, CEO Troy Rudd emphasized that AECOM is rewarded for delivering value to clients:
"If you create more value, ultimately for your clients, you're rewarded for that... Our clients are recognizing that we might not have a way of contracting that makes sense. And so they're bringing up in the dialogue how they would like to move to a method of contracting that recognizes that value. So, moving away from something like cost plus to something that looks more like a fixed fee."
CFO Gaurav Kapoor highlighted the Scottish Water win as a proof point for AI differentiation:
"This is a client that we had practically no exposure for... During that process, the client asked us, they're willing to sign an NDA to understand what we have developed and what we will be developing over the next quarter, the next few years. Clearly, we were one of the two, including the incumbent, that were successful in securing this nine-figure contract over a ten-year period."
Data Center Business Momentum
President Lara Poloni noted exceptional growth in their data center practice:
"We have one of the larger global data center practices in our industry. And in fact, we grew the business 50% in FY 2025, and we see a lot of very positive trends for this high growth to continue... We're performing this work for all of the major hyperscalers around the world."
Americas Pipeline Strength
Gaurav Kapoor provided detail on the robust pipeline supporting Americas growth:
"Our pipeline continues to be very robust. It's up 20% year-over-year at end of the first quarter. In fact, the early stage pipeline for us is up 34% over that same timeframe... At any given point in time, we have between 35,000-50,000 contracts ongoing across the globe."
International Inflection Underway
On the strong international book-to-bill, management noted wins across all regions:
"Outside of our Asia business, every other region, UK and I, Australia, New Zealand, and Middle East, all drove to that very healthy, exceptional backlog growth and book-to-burn that you see."
The Sydney Metro win in ANZ signals the uptick in the next wave of infrastructure investment following the end of the previous 10-year infrastructure cycle.
Cash Flow Phasing
Management clarified that Q1 cash flow of $42M was consistent with historical patterns:
"If you look at the last five years, the first quarter is approximated about 10% of our outlook, and that's what this quarter was, very consistent. And first half is approximately 30%... There is a ramp consistent with our historical experience in the second half of the year."
Q2 Guidance Details
For modeling purposes, management provided specific Q2 guidance:
- Q2 NSR and Adjusted EBITDA expected to be ~24% of full-year guidance
- Q2 tax rate expected to be approximately 12-13%
- International growth expected to pick up in second half of the year
Ask Fintool AI AgentForward Catalysts
- Q2 FY2026 Earnings (expected May 2026) — Progress on backlog conversion and margin trajectory
- Government Spending Normalization — Resolution of federal shutdown effects on award timing; spring federal highway bill expected
- Defense Spending Tailwinds — Defense represents ~10% of NSR, with the U.S. Department of War (formerly DOD) as largest client. President Trump reaffirmed AUKUS commitment, creating a substantial pipeline.
- Olympic-Related Work — Brisbane 2032 and LA28 Games delivery partnerships
- AI/Technology Initiatives — Continued investment driving wins and efficiency; integration complete and investments ramping through the year
- Capital Allocation — Execution against $1B buyback authorization
Ask Fintool AI AgentConference Call
AECOM held its Q1 FY2026 earnings conference call on February 10, 2026 at 8:00 AM Eastern Time. Key themes from the call included confidence in the AI investment roadmap, strong Americas fundamentals supported by healthy state and municipal budgets, and the construction management synergy opportunity.
A replay is available at https://investors.aecom.com.
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