AECOM NYSE: ACM raised its full-year profit outlook after reporting record second-quarter backlog and stronger margins, with management pointing to demand across transportation, water, energy, defense and high-tech infrastructure despite uncertainty in the Middle East.
On the company’s second-quarter 2026 earnings call, Chief Executive Officer Troy Rudd said net service revenue, or NSR, margins, adjusted EBITDA and adjusted EPS reached new second-quarter highs. Backlog rose 8% to a record level, supported by a design book-to-burn ratio of 1.2 times.
“Our second quarter results demonstrate the strength and resilience of our teams and our focus on delivering the most iconic infrastructure projects around the world,” Rudd said. He also noted that AECOM was again named the No. 1 firm by ENR in transportation, facilities and water markets.
Guidance Raised as Backlog Hits Record
AECOM increased its full-year profit guidance for the second time this year. At the midpoint of the updated ranges, Rudd said the company expects adjusted EBITDA to rise 7% and adjusted EPS to increase 14% from the prior year.
Chief Financial and Operations Officer Gaurav Kapoor said the company is reaffirming its 4% to 6% NSR growth outlook for the year, which includes the impact of fewer workdays in the fourth quarter. Excluding that workday impact, AECOM continues to expect 6% to 8% NSR growth.
Kapoor said second-quarter performance benefited from strong margin execution, with segment adjusted operating margin rising 50 basis points year over year to 16.5%. He said AECOM is “on track” with its full-year margin expansion goals.
The company also reaffirmed its free cash flow guidance and long-term target of more than 100% free cash flow conversion. Kapoor said cash flow in the quarter was affected by delayed payment timing in the Middle East and longer-than-expected resolution of claims on certain projects, but added that Middle East collections had already recovered in the third quarter.
Americas Design Business Leads Growth
The Americas design business remained a key driver of results, with NSR rising 8%. Kapoor said the Americas adjusted operating margin increased 60 basis points to 20%, helping drive 10% operating income growth.
Rudd cited continued strength in U.S. infrastructure demand and funding, noting that more than half of Infrastructure Investment and Jobs Act funding remains to be spent. He pointed to the Brent Spence Bridge project in Ohio, where AECOM won a sizable phase 2 contract after its work on phase 1.
Management also highlighted growth in U.S. defense-related opportunities. Rudd said the company’s pipeline with what he called the Department of War, AECOM’s single largest client, increased by 50%. He said the President’s $1.5 trillion budget proposal points to accelerated defense spending in areas where AECOM participates, including facilities work for the Army and Navy.
In Canada, Rudd said NSR growth remained strong and broad-based across market sectors, supported by national and provincial funding announcements.
International Trends Mixed, With Middle East Uncertainty
AECOM’s international segment produced 2% NSR growth, though NSR declined 3% on a constant-currency basis. Kapoor said growth in the U.K. and Australia was offset by declines in the Middle East and Asia. International adjusted operating margin was unchanged at 11%, while operating income rose 2%.
Rudd said U.K. growth turned positive, led by water and energy, including activity tied to AMP8 and The Great Grid project. Transportation remained weak in the U.K., though Rudd said the longer-term need for investment is “undeniable.”
In Australia, backlog reached a multi-year high, including wins related to the $3 billion AUKUS partnership and other defense investments. Rudd said the company also has a growing transportation pipeline in Australia that supports its outlook for 2027 and beyond.
The Middle East remained a source of near-term uncertainty. Kapoor said the conflict in the region created an approximately 100-basis-point headwind to NSR in the quarter. However, management said profit was less affected because of consolidated joint venture structures in the region. Rudd said the company continues to win work at a high rate in the Middle East, including awards after the quarter ended.
AI Investments Become Part of Competitive Strategy
AECOM executives repeatedly emphasized the company’s proprietary artificial intelligence investments, saying the technology is increasingly being deployed on projects and client deliverables.
Rudd said AECOM recently won a major energy client recompete where its proprietary AI solution was central to the proposal and competitive positioning. He said the contract includes mechanisms that allow AECOM to capture value as AI is used to deliver benefits to the client.
During the question-and-answer session, Rudd said two large AI-influenced wins had an aggregate value of nearly $1 billion, with one coming after the quarter ended and not yet included in backlog. He said the technology is expected to support improved margins on those contracts and is also improving the company’s competitive position for large programs.
Kapoor said AECOM spent $13 million on its AI roadmap in the second quarter, equal to about 66 basis points of margin. He said the company continues to see early benefits from internally deployed tools, particularly as a “force multiplier” for its workforce.
Rudd added that AI could expand AECOM’s addressable market, citing healthcare design as an example of an area where the company has not historically participated meaningfully but may be able to enter with technology-supported capabilities.
High-Tech, Power and Advisory Businesses Highlighted
President Lara Poloni said AECOM is benefiting from client investment in AI infrastructure, including data centers and related services such as environmental permitting, site selection, stakeholder engagement, design and program management. She described the company’s high-tech business as one of its fastest-growing, particularly in the U.S., and said AECOM expanded its relationship with a key hyperscaler during the quarter.
Poloni also highlighted power demand and the company’s role across the power generation stack. She said AECOM expects to deliver “nine figures” of NSR in nuclear fusion in coming years, including work with Type One Energy and TVA in the U.S. and its selection for design and technical services on the U.K.’s STEP Nuclear Fusion program.
She said AECOM’s recompete win rate exceeds 90%, with the company increasingly winning a larger share of client spending on those opportunities. Poloni also said the advisory business remains on track to double NSR within three years.
“The result is sustained, strong performance across the business and clear visibility for future growth,” Poloni said.
About AECOM NYSE: ACM
AECOM is a multinational infrastructure consulting firm that provides a broad range of professional technical and management services. Its core offerings include architecture and engineering design, program and construction management, environmental remediation and consulting, and operations and maintenance support. The company works across the full project lifecycle from planning and design through construction and long‑term asset management.
AECOM serves public- and private-sector clients in major built-environment markets, including transportation (roads, bridges, rail, airports), water and wastewater systems, buildings and places, energy and power, and environmental services.
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