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With election season in full swing in the US and around the worldthis year is somewhat unusual, and that translates into some uncertainty for builders, AECOM CEO Troy Rudd said on a third-quarter earnings call Tuesday.
“When you look around the world, this is an election year. I think over the course of a 12-month period, there are about 64 federal government elections. And what that means is a little bit of uncertainty, because as governments change, there is no doubt that there is a change in new priorities,” Rudd said.
For example, it is seeing a reprioritization of funding in the Middle East and a pause in infrastructure projects in the UK as a result of the July election there.
However, Rudd said this does not change his confident view of long-term trends. He noted that the new UK government has flagged plans to invest in infrastructure, energy transition and sustainability and resilience, while in the Middle East, leaders are investing in export-related infrastructure.
“What we don’t see when we look around is that there is less focus on long-term investment in infrastructure, in more sustainable and resilient infrastructure,” Rudd said.
Rudd said the company saw no material change in its U.S. project portfolio this quarter, with one exception: the New York metro market. In June, New York Governor Kathy Hochul decided to do so stop the city’s congestion pricing planswhich would have generated $15 billion for the New York Metropolitan Transportation Authority’s capital investment program.
“There was a huge amount of funding that was being put in place through congestion pricing. It was going to drive some really important and necessary infrastructure investment, especially with some of the bigger customers out there,” Rudd said.
Numbers Q3
In that of the company third quarter ended June 30, AECOM reported income of 4.2 billion dollars, 13% more than the previous year. Its profits stood at $134.3 million, up from losses of $134.7 million in the third quarter of 2023.
Backlog for the quarter was $23.4 billion, up nearly 1% from a year earlier.
The firm has seen strong growth in its digital consulting for infrastructure, environmental remediation, water and transportation projects, and continues to benefit from its focus on project management, said AECOM President Lara Poloni , in the call.
Projects are growing in size and complexity, and while that plays to the company’s strengths, it also takes longer to get started, according to Rudd.
“We’ve been transforming the work we do in the business and the projects we take on, and they’re bigger, and that’s causing a change in the time it takes to make an award and convert [that] award to [a] hire and start these projects,” Rudd said.
Water work continues to boom
As climate change continues to cause increasingly erratic and extreme weather, in July the planet saw four hottest days in recorded history — Governments and other property owners are demanding infrastructure projects that can withstand these stressors.
“Increasing global floods and droughts introduce new challenges, which drive our clients to integrate sustainability and resilience more deeply into their planning and decision-making processes,” Poloni said.
This means an urgent need for infrastructure to protect against the inflow of water, as well as to cope with the lack of it. The company is seeing growing demand for its stormwater management and wastewater treatment services, as well as PFAS remediation. Per- and polyfluoroalkyl substances, or PFASs, are a group of widely used chemicals known as “forever chemicals” that can pose serious risks to human health and the environment.
“Urbanization is driving the demand for clean drinking water, energy-efficient wastewater treatment solutions, and effective strategies for storing and reusing water supplies,” Poloni said. “A recent US government report estimated that more than 630 billion dollars of investment in water infrastructure is needed over the coming decades to meet these challenges, which illustrates the scale of the opportunity.”
While cleaning up PFAS in the US water supply has become a larger area of focus of many major AEC companies after an April EPA ruling that designated two types of PFAS as hazardous substances, Poloni said investment in remediation is increasing globally.
“Already in the fourth quarter, we achieved one of our largest PFA wins worldwide for a project in Australia,” Poloni said. “Importantly, these same dynamics are occurring across all of our market sectors.”
