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Dive brief:
- AECOM’s profits and revenue rose in the first quarter amid strength in its markets, while its backlog shrank compared to the same period last year due to the elimination of two projects of its construction management portfolio, according to the company. Results report for the first quarter of 2024 premiered on Monday.
- The Dallas-based global contractor saw profits rise 7.4% year-over-year to $94 million in the first quarter on revenue of $3.9 billion, up 15% from the period last year. ‘last year. AECOM’s backlog was $39.8 billion, down 2.5% from the first quarter of 2023.
- “Growth was particularly strong in our global water and transportation markets,” CEO Troy Rudd said on an earnings call Tuesday. “Investments in sustainability, resilience and the energy transition are expanding rapidly, which is creating new opportunities for which we are ideally suited.”
Diving knowledge:
CFO Gaurav Kapoor linked a decline in the company’s construction management portfolio to AECOM’s decision to remove two projects from its awarded pipeline because the project owners wanted final terms and conditions that were inconsistent with the AECOM’s “risk framework”.
“The developers wanted to pass incremental risk to us after the project was awarded but before it was contracted, and we just said no,” Kapoor said. “We will always make investments that have the highest and best use for our shareholders and to create profitability.”
While publicly funded projects have thrived due to legislation aimed at stimulating activity in infrastructure, manufacturing and utility projects, developers have been struggling to make offers in pencil due to higher interest rates.
Water, strong disaster recovery sectors
Rudd noted that the office and high-rise sector is still weak in the US, but federal money continues to fuel infrastructure construction across the country.
“IIJA funding is accelerating, as evidenced by another milestone for program management Amtrak’s Susquehanna Bridge Replacement Projectwhich will improve operations on one of the busiest rail corridors in the US. In addition, state and local budgets remain strong,” Rudd said.
The IIJA is funding lead pipe replacement projects, and that work will likely accelerate if EPA Proposed Lead and Copper Rule is approved, said the president Lara Poloni in the call. AECOM has also made progress in the disaster recovery sector, as damage caused by bad weather has become more frequent.
“We have gained significant market share with FEMA, having won several of their largest contracts over the past few years,” Poloni said. “[This] it positions us for the first time as leaders in mission-critical and preparedness, mitigation, response and recovery at a time when the stakes have never been higher.”
The company reaffirmed its fiscal 2024 guidance of adjusted EPS of $4.35 to $4.55, or 20% year-over-year growth at the half.
