AECOM (ACM Q1 FY2025 earnings call

• Acknowledged safe employees in Southern California fire region and commitment to support recovery. - Named to Fortune’s World Most Admired Companies list for 11th consecutive year, with employee engagement at an all-time high. - NSR increased by 5.5%, adjusted EBITDA up 8%, adjusted EPS up 25%. - Backlog and pipeline at record levels, with Americas Design backlog up 7%. - Program Management business increased three-fold in four years, now over 15% of total revenue; Water and Environment Advisory business growing with key hires and wins. - Investing in Digital Transformation, AI, and higher margin advisory capabilities.

Americas: NSR increased by 9% in the Design business. Segment-adjusted operating margin increased by 40 basis points. Americas Design backlog increased by 7%. International: Revenue varied by market; UK had stability with strong positions on key frameworks, Middle East had high-single-digit revenue growth, backlog at all-time high. Segment-adjusted operating margin increased by 20 basis points. NSR for Americas grew by 8% including 9% in Design, while international revenue varied but backlog remained strong.

• Increased guidance for fiscal 2025 adjusted EBITDA and EPS. - Full year 24% tax guidance unchanged, with tax rate expected to approximate 25% in Q2 and high 20s in H2, but around 24% over next several years. - Confident in continued record revenue, margins, and earnings in fiscal 2025 with strong free cash flow conversion.

• Risks from Federal budget freezes and 90-day reviews, though impact on AECOM is negligible and short-term. - Foreign exchange rate headwinds experienced so far in the year. - Potential impact of changing market agendas in international markets.

Q: Michael Feniger asked about NSR growth visibility, pipeline, and impact of funding freezes.

A: Troy Rudd said no material impact on AECOM, pipeline and backlog growing, NSR growth expected to ramp up in H2 with high win rate.

Q: Andrew Kaplowitz inquired about Americas growth drivers, local vs private sector, and book-to-bill.

A: Troy Rudd stated growth is balanced across sectors, pipeline expanding, and book-to-bill expected to be over 1 throughout the year.

Q: Jamie Cook asked about investments in water/environmental business and international Design backlog growth.

A: Lara Poloni mentioned strong momentum in water/environmental advisory with talent hires and wins, and international backlog growing with Middle East and UK showing positivity.

Q: Adam Bubes asked about Program Management growth outlook, Americas growth bifurcation, and margin contributors.

A: Troy Rudd said Program Management growth continues, growth is broadbased, and margins strong with organic investments and business development.

Q: Sangita Jain asked about LA rebuild contribution and International vs Americas margins.

A: Troy Rudd discussed recovery and resilience work, Gaurav Kapoor said International margins expected to outpace Americas due to lower base but balanced with organic investments.

Q: Michael Dudas asked about client optimism, reshoring, and water project expansion.

A: Troy Rudd said aligned with administration's reshoring intentions, but impact to be seen after next budget.

Q: Judah Aronovitz asked about factors driving organic growth acceleration and M&A.

A: Troy Rudd said stability in markets and organic investments key, M&A considered for accelerating advisory growth but prioritizing returns-based capital allocation.