AECOM (NYSE: ACM) reported fiscal third-quarter 2026 revenue of $3.586 billion, down 14.2% from $4.178 billion, while diluted EPS from continuing operations swung to a loss of $0.65 from earnings of $1.31. A $337 million pre-tax charge on a delayed Construction Management project pushed the company into a reported loss and reduced cash generation, even as backlog climbed 13% to a record $27.816 billion.
Core Earnings Data
For the quarter ended June 30, 2026, the project charge affected both revenue and profitability. AECOM recorded a GAAP gross loss of $34 million and an operating loss of $76 million, compared with profits in both measures a year earlier.
Cash generation also weakened, with operating cash flow down 66% and free cash flow down 79%. In contrast, record backlog and a 1.6 book-to-burn ratio indicated that new awards continued to outpace recognized work.
| Metric | Fiscal Q3 2026 | Fiscal Q3 2025 | YoY change |
|---|---|---|---|
| Revenue | $3,586.1 million | $4,178.4 million | -14.2% |
| Gross profit (loss) / margin | $(34.0) million / (0.9%) | $327.0 million / 7.8% | Swung to loss |
| Operating income (loss) | $(76.0) million | $294.1 million | Swung to loss |
| Net income (loss) attributable to AECOM, continuing operations | $(83.8) million | $174.8 million | Swung to loss |
| Diluted EPS, continuing operations | $(0.65) | $1.31 | Swung to loss |
| Operating cash flow | $95 million | — | -66% |
| Free cash flow | $55 million | — | -79% |
| Total backlog | $27,816 million | $24,588 million | +13% |
The earnings and EPS figures above are based on continuing operations where specified. Free cash flow is a non-GAAP measure defined as operating cash flow less net capital expenditures.
The $337 Million Project Charge Obscures Positive Underlying Earnings
The central issue in the quarter was a $337 million pre-tax charge related to a Construction Management project awarded in 2019. Lower subcontractor productivity delayed completion and increased AECOM’s estimated cost to finish the work. The company expects substantial completion in fiscal Q2 2027.
Excluding the charge, underlying earnings remained positive and increased year over year, although margins still declined. The difference between reported and charge-adjusted results was substantial.
| Metric | Reported adjusted result | Excluding project charge | YoY change excluding charge |
|---|---|---|---|
| Net service revenue | $1,609 million | $1,946 million | +2% |
| Segment adjusted operating margin | (1.0%) | 16.5% | -60 bps |
| Adjusted EBITDA | $(8) million | $329 million | +5% |
| Adjusted EBITDA margin | (0.3%) | 17.0% | -60 bps |
| Adjusted EPS | $(0.50) | $1.49 | +11% |
AECOM is pursuing claims connected with the project and said favorable initial rulings support its confidence in recovery. However, management expects litigation and resolution of all matters to take several years, so the timing and amount of any recovery remain uncertain.
Business and Segment Performance
The Americas and International businesses moved in different directions during the quarter. The Americas absorbed the Construction Management charge, while International delivered higher revenue, operating income and margin.
- Americas: Revenue fell 20% to $2.633 billion, and NSR declined 29% to $808 million. The segment recorded a $139 million operating loss, compared with $241 million of operating income a year earlier. Excluding the charge, adjusted operating margin was 18.0%, down 250 basis points because of record business-development activity and the timing of Construction Management project starts. Americas design NSR grew 6% after adjusting for one fewer working day.
- International: Revenue increased 6% to $953 million, while NSR rose 4% to $800 million on growth in the U.K. and Australia. Operating income increased 21% to $109 million, and adjusted operating margin expanded 240 basis points to 14.3%, benefiting from growth and restructuring actions completed during the past year.
Demand indicators remained favorable across both segments. AECOM recorded $4.2 billion of total wins, including $4.0 billion in design wins, producing an overall book-to-burn ratio of 1.6. Americas backlog rose 8%, while International backlog increased 28%, taking both to record levels.
Profitability, Cash Flow and the Balance Sheet
The project charge turned AECOM’s reported adjusted EBITDA negative and contributed to the sharp decline in cash flow. Even without the charge, the adjusted EBITDA margin would have declined 60 basis points to 17.0%, showing that business-development spending and project timing also created underlying margin pressure.
AECOM ended the quarter with $1.013 billion in cash and cash equivalents, down from $1.586 billion at the end of fiscal 2025. Working capital fell from $801 million to $340 million, while total debt was nearly unchanged at $2.745 billion. Net leverage was 1.5 times.
Management said near-term capital allocation will prioritize organic growth investments and the quarterly dividend program. It expects free cash flow conversion to return to its long-term target of more than 100% after the Construction Management project headwinds subside.
Fiscal 2026 Guidance
AECOM updated fiscal 2026 guidance to incorporate the project charge, its cash-flow impact and lower expected NSR growth. Excluding the charge, adjusted EPS and adjusted EBITDA guidance remained consistent with the company’s prior ranges, as better expected margins offset slower NSR growth caused mainly by delayed Construction Management project starts and conflict in the Middle East.
| Metric | Latest FY2026 guidance | Excluding project charge | Change or context |
|---|---|---|---|
| Adjusted EPS | $3.95–$4.15 | $5.90–$6.10 | Ex-charge range consistent with prior guidance |
| Adjusted EBITDA | $935–$965 million | $1,275–$1,305 million | Ex-charge range consistent with prior guidance |
| Net service revenue | $7.30–$7.35 billion | $7.65–$7.70 billion | Reflects lower growth expectations |
| Free cash flow | Approximately $300 million | — | Updated for project-related cash impact |
| Segment adjusted operating margin | — | 17.0% | Underlying guidance |
| Adjusted EBITDA margin | — | 17.4% | Underlying guidance |
Other assumptions include an average diluted share count of 130 million and an adjusted effective tax rate of approximately 19%. AECOM also reaffirmed its longer-term goals of reaching a margin exit rate above 20% by fiscal 2028 and growing adjusted EPS at a compound annual rate above 15% from fiscal 2026 through fiscal 2029, excluding the project charge.
Recent Insider Transactions
The supplied transaction records show three direct purchases by senior executives in May and June 2026, followed by seven director stock awards dated March 3, 2026. These records describe the transactions but do not establish the insiders’ views on AECOM’s future performance.
| Date | Insider and role | Transaction | Price per share | Reported amount |
|---|---|---|---|---|
| Jun. 16, 2026 | Lara Maria Lucia Poloni, President | Direct purchase | $70.63 | $298,341 |
| May 14, 2026 | Troy William Rudd, CEO | Direct purchase | $71.02 | $300,060 |
| May 14, 2026 | Gaurav Kapoor, CFO | Direct purchase | $71.12 | $100,990 |
| Mar. 3, 2026 | Kristy M. Pipes, Director | Direct stock award | $0.00 | $0 |
| Mar. 3, 2026 | Bradley W. Buss, Director | Direct stock award | $0.00 | $0 |
| Mar. 3, 2026 | Derek J. Kerr, Director | Direct stock award | $0.00 | $0 |
| Mar. 3, 2026 | Douglas W. Stotlar, Director | Direct stock award | $0.00 | $0 |
| Mar. 3, 2026 | Janet Carol Wolfenbarger, Director | Direct stock award | $0.00 | $0 |
| Mar. 3, 2026 | Daniel R. Tishman, Director | Direct stock award | $0.00 | $0 |
| Mar. 3, 2026 | Alexander M. Van ’t Noordende, Director | Direct stock award | $0.00 | $0 |
Risks Investors Should Watch
- Further project execution pressure: The charged Construction Management project is not expected to reach substantial completion until fiscal Q2 2027. Additional productivity problems or delays could affect costs and cash flow.
- Uncertain claims recovery: AECOM expects the claims process to involve litigation and take several years, making both the timing and ultimate amount of recovery uncertain.
- Slower NSR growth: Delayed Construction Management project starts and conflict in the Middle East have already reduced fiscal 2026 NSR expectations.
- Underlying Americas margin pressure: Even excluding the charge, Americas adjusted operating margin declined 250 basis points because of business-development spending and project timing.
- Lower cash generation: Quarterly operating and free cash flow fell sharply, while cash and working capital declined from fiscal year-end levels. Full-year free cash flow is now projected at approximately $300 million.
Summary
AECOM’s fiscal third-quarter results were dominated by a single $337 million Construction Management project charge that produced GAAP and adjusted losses and weakened cash flow. Excluding that item, adjusted EPS and EBITDA increased, International performance improved and record wins lifted backlog by 13%. The main issues ahead are completing the charged project, managing the lengthy claims process and converting record backlog into revenue without further margin or cash-flow pressure.
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