AECOM posts $0.50 loss as $337M charge hits Q3 earnings

AECOM posted a Q3 adjusted loss of $0.50 per share, missing the $1.46 consensus by $1.96 on a $337 million project charge.

"The charge is primarily the result of a delay in delivering a large construction management project due to several factors, the largest of which is overall productivity of subcontractors on the last phase of this project," Chief Executive Officer Troy Rudd said.

Revenue came in at $3.59 billion, above the $2.01 billion consensus but down 14.2 percent year over year. Net service revenue was $1.61 billion. Americas revenue fell 19.7 percent to $2.63 billion. Total backlog reached $27.82 billion, up 13 percent, with a 1.6x book-to-burn ratio.

Management cut full-year adjusted EPS guidance to $3.95-$4.15, down from a prior $5.95 midpoint, and lowered free cash flow guidance to $300 million from $400 million. Shares fell 8.6 percent to $67.01 on the report.

The charge stems from a construction management project bid in 2019 under terms Rudd said would not clear the company's current risk hurdles. AECOM has since changed leadership and tightened risk controls, and the project is now expected to complete in the second quarter of fiscal 2027, later than planned. A second troubled project remains on track for the first quarter of fiscal 2027.

Excluding the charge, adjusted EBITDA and EPS improved 5 percent and 11 percent year over year, respectively. The company raised its adjusted EBITDA margin target to 17.4 percent from 17 percent. International NSR returned to growth at 4 percent, led by the U.K. and Australia, while Americas design grew 6 percent adjusted for one fewer working day.

Levi & Korsinsky said it is investigating potential securities law violations related to the gap between prior adjusted EPS guidance of $1.29 for the quarter and the reported loss. The firm noted the roughly $1.79-per-share discrepancy and the full-year outlook cut.

The guidance cut and project charge signal continued cash burn through the first half of fiscal 2027, with about $500 million of combined cash impact expected from the two projects. Investors will watch the fourth-quarter report for progress on project completion and whether the company resumes share buybacks after leverage normalizes.

This article is for informational purposes only and does not constitute investment advice.