The Investor
12 May 2026, 09:19
AECOM (ACM) Q1 2026: Record Backlog and Raised Guidance Drive 1% Gain
Tuesday, May 12, 2026
AECOM is up 1% today after delivering a second quarter that set multiple records and prompted management to raise full-year earnings guidance for the second consecutive quarter. For a global infrastructure engineering firm navigating Middle East payment delays and currency headwinds, the underlying momentum is impressively clean.
Record Quarter Across Key Metrics
Adjusted EPS grew 27% to $1.59, adjusted EBITDA rose 8% to $312 million, and net service revenue increased 2% on a constant-currency basis. The segment adjusted operating margin hit 16.5% — a new all-time high for a second quarter — and the adjusted EBITDA margin also reached 16.5%, up 20 basis points year-over-year. Americas design was the standout, delivering 8% constant-currency growth and a 20.0% adjusted operating margin on net service revenue — another all-time Q2 record. As-reported GAAP net income grew 19% to $184 million, with diluted EPS up 22% to $1.42.
Backlog: The Most Important Number
Total backlog grew 8% to a record $26.2 billion, driven by a design book-to-burn ratio of 1.2 — meaning AECOM is winning new work 20% faster than it is burning through existing contracts. This is the 22nd consecutive quarter with a book-to-burn ratio above 1.0, an unbroken streak that stretches back nearly six years and is the strongest forward revenue signal in the business. The design pipeline grew double-digits to a record level, with strength across Transportation, Environment, and Water end markets in the Americas, and strong wins in the U.K. and Middle East internationally. International backlog surged 25% year-over-year.
The One Soft Spot: Cash Flow
Operating cash flow was just $4 million in the quarter — down 98% year-over-year — and free cash flow was negative $27 million. Management was transparent about the cause: delayed payment timing in the Middle East business, compounded by longer-than-anticipated resolution on certain project claims. Critically, collections in the Middle East have already recovered in the fiscal third quarter, and AECOM reiterated its full-year free cash flow guidance of approximately $400 million. The market is giving management the benefit of the doubt on this, correctly treating it as a timing issue rather than a structural problem.
Capital Return and Balance Sheet
AECOM returned $155 million to shareholders through buybacks and dividends in the quarter, bringing total returns since September 2020 to more than $3.5 billion. Net leverage stands at a conservative 1.2x. The company remains committed to returning substantially all available cash flow to shareholders.
Raised Guidance
Full-year adjusted EPS guidance was raised to $5.90 to $6.10 — representing 14% year-over-year growth at the midpoint — up from $5.85 to $6.05 previously. Adjusted EBITDA guidance was nudged up to $1,275 to $1,305 million. Organic NSR growth of 6-8% was reaffirmed, along with a full-year segment adjusted operating margin target of 16.8% and adjusted EBITDA margin of 17.0%. The long-term targets — a 20%+ margin exit rate by fiscal 2028 and 15%+ adjusted EPS CAGR from fiscal 2026 to 2029 — were also reaffirmed.
The Bottom Line
AECOM is a steady, high-quality compounder in global infrastructure that is quietly delivering record results while most of the market's attention is on AI and energy. Record backlog, 22 consecutive quarters of book-to-burn above 1.0, expanding margins, raised guidance, and an aggressive buyback program make a compelling case. The 1% gain today is modest given the quality of the print — but for a name that compounds rather than surprises, that is entirely on brand.
Tuesday, May 12, 2026
AECOM is up 1% today after delivering a second quarter that set multiple records and prompted management to raise full-year earnings guidance for the second consecutive quarter. For a global infrastructure engineering firm navigating Middle East payment delays and currency headwinds, the underlying momentum is impressively clean.
Record Quarter Across Key Metrics
Adjusted EPS grew 27% to $1.59, adjusted EBITDA rose 8% to $312 million, and net service revenue increased 2% on a constant-currency basis. The segment adjusted operating margin hit 16.5% — a new all-time high for a second quarter — and the adjusted EBITDA margin also reached 16.5%, up 20 basis points year-over-year. Americas design was the standout, delivering 8% constant-currency growth and a 20.0% adjusted operating margin on net service revenue — another all-time Q2 record. As-reported GAAP net income grew 19% to $184 million, with diluted EPS up 22% to $1.42.
Backlog: The Most Important Number
Total backlog grew 8% to a record $26.2 billion, driven by a design book-to-burn ratio of 1.2 — meaning AECOM is winning new work 20% faster than it is burning through existing contracts. This is the 22nd consecutive quarter with a book-to-burn ratio above 1.0, an unbroken streak that stretches back nearly six years and is the strongest forward revenue signal in the business. The design pipeline grew double-digits to a record level, with strength across Transportation, Environment, and Water end markets in the Americas, and strong wins in the U.K. and Middle East internationally. International backlog surged 25% year-over-year.
The One Soft Spot: Cash Flow
Operating cash flow was just $4 million in the quarter — down 98% year-over-year — and free cash flow was negative $27 million. Management was transparent about the cause: delayed payment timing in the Middle East business, compounded by longer-than-anticipated resolution on certain project claims. Critically, collections in the Middle East have already recovered in the fiscal third quarter, and AECOM reiterated its full-year free cash flow guidance of approximately $400 million. The market is giving management the benefit of the doubt on this, correctly treating it as a timing issue rather than a structural problem.
Capital Return and Balance Sheet
AECOM returned $155 million to shareholders through buybacks and dividends in the quarter, bringing total returns since September 2020 to more than $3.5 billion. Net leverage stands at a conservative 1.2x. The company remains committed to returning substantially all available cash flow to shareholders.
Raised Guidance
Full-year adjusted EPS guidance was raised to $5.90 to $6.10 — representing 14% year-over-year growth at the midpoint — up from $5.85 to $6.05 previously. Adjusted EBITDA guidance was nudged up to $1,275 to $1,305 million. Organic NSR growth of 6-8% was reaffirmed, along with a full-year segment adjusted operating margin target of 16.8% and adjusted EBITDA margin of 17.0%. The long-term targets — a 20%+ margin exit rate by fiscal 2028 and 15%+ adjusted EPS CAGR from fiscal 2026 to 2029 — were also reaffirmed.
The Bottom Line
AECOM is a steady, high-quality compounder in global infrastructure that is quietly delivering record results while most of the market's attention is on AI and energy. Record backlog, 22 consecutive quarters of book-to-burn above 1.0, expanding margins, raised guidance, and an aggressive buyback program make a compelling case. The 1% gain today is modest given the quality of the print — but for a name that compounds rather than surprises, that is entirely on brand.
