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Dive brief:
- AECOM’s profit fell 75.9% year over year to $25.5 million in its fiscal fourth quarter ended Sept. 30. with revenue of $3.8 billion, a 12% increase over the year-ago period, according to its Results report for the 4th fiscal quarter and for the year 2024 released on Monday. The Dallas-based global contractor’s total backlog was $41.2 billion, up 2% from the year-ago period.
- Despite headwinds from a strengthening US dollar, Chief Executive Troy Rudd said on an earnings call on Tuesday that he felt confident about the outlook for infrastructure, resilience and energy transition work, which the company is well positioned to take advantage, in its core markets of the US, UK, Canada and Australia.
- “We are watching [Infrastructure Investment and Jobs Act money] going into funding projects across the business, including design, and we really see that pace picking up as we go through the next few years,” Rudd said. The company released fiscal 2024 financial guidance with adjusted EPS from $4.35 to $4.55, or 20% year-over-year growth in half.
Diving knowledge:
While the House averted a federal shutdown with a short-term funding deal on TuesdayRudd said he was not worried about how potential future shutdowns would affect business.
“The impacts of a typical shutdown are not significant to us and we estimate that less than 1% of our business would be affected,” Rudd said. “Our contracts are well funded, and everything shows [show] that most of our work would continue with a shutdown. In addition, our state and local clients benefit from historically strong tax revenues, accelerating IIJA-related grant activity and direct funding from the Federal Highway Trust Fund, which is funded through a process of separate and already completed authorization.
Rudd also highlighted what he called record safety performance over the past year. AECOM had struggled to find workers fast enough to staff its projects, but now turnover is much lower and the company is able to hire fast enough to keep up with its growth, he said.
AECOM is growing its expertise in program management and consulting, particularly its digital and energy consulting practices, which match its design services, said Lara Poloni, president of AECOM. The company’s emphasis on design and technical excellence has paid off over the past year, he said.
“We are ideally positioned to deliver as global infrastructure megatrends accelerate. We are consistently winning our high-priority activities at a record pace, and in 90% of our wins, our technical score is essential to our success,” Poloni said.
Infrastructure, resilience perspective
Infrastructure and sustainability remain bright spots for the coming year, as US federal funding flows to projects and clients around the world spend heavily in these sectors, Poloni said.
Last year, AECOM won a role in the review of the $3.6 billion Brent Spence Bridge, which spans Cincinnati and Covington, Kentucky. Funded through the IIJA, the project has become a symbol of the country’s infrastructure push.
Increased demand for projects to address drought, flooding and drinking water shortages and other resilience projects contribute to AECOM’s strengths, Poloni said. He highlighted two project wins in this sector: a large hydroelectric project in Canada and a transportation tunnel in New York to improve the reliability of its water supply. In addition, increased regulation around PFAS, a group of synthetic and potentially harmful chemicals, is significantly catalyzing growth in the water treatment sector, he said.
Transportation is also likely to be a hot spot next year: “Our largest state and local customers are predicting double-digit spending growth for fiscal year 2024,” Polani said.
