Q3 FY2026
Filed Aug 10, 2026AECOM reports third quarter fiscal 2026 results
A $337 million pre-tax Construction Management project charge drove a GAAP operating loss, net loss, negative adjusted EBITDA and reduced fiscal 2026 guidance, while underlying design demand, wins, backlog and International profitability remained strong.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| RevenueGAAP | $ 3,586 | – | (14 )% |
| Net Service Revenue (NSR)non-GAAP | $ 1,609 | – | (16 )% |
| Operating IncomeGAAP | $ (76 ) | – | NM |
| Operating Incomenon-GAAP | $ (49 ) | – | NM |
| Segment Operating Marginnon-GAAP | (1.0 )% | – | (1,810 ) bps |
| Net IncomeGAAP | $ (84 ) | – | NM |
| Net Incomenon-GAAP | $ (64 ) | – | NM |
| EPS (Fully Diluted)GAAP | $ (0.65 ) | – | NM |
| EPS (Fully Diluted)non-GAAP | $ (0.50 ) | – | NM |
| EBITDAnon-GAAP | $ (8 ) | – | NM |
| EBITDA Marginnon-GAAP | (0.3 )% | – | (1,790 ) bps |
| Operating Cash FlowGAAP | $ 95 | – | (66 )% |
| Free Cash Flowother | $ 55 | – | (79 )% |
| Total Backlogother | $ 27,816 | – | 13 % |
| Construction Management Project Chargenon-GAAP | $337 million pre-tax charge | – | – |
| Net Service Revenue (NSR) excluding Construction Management Project Chargenon-GAAP | $ 1,946 | – | 2 % |
| Segment Adjusted Operating Margin excluding Construction Management Project Chargenon-GAAP | 16.5 % | – | (60 ) bps |
| Adjusted EBITDA excluding Construction Management Project Chargenon-GAAP | $ 329 | – | 5 % |
| Adjusted EBITDA Margin excluding Construction Management Project Chargenon-GAAP | 17.0 % | – | (60 ) bps |
| Adjusted EPS excluding Construction Management Project Chargenon-GAAP | $ 1.49 | – | 11 % |
| Effective Tax RateGAAP | 24.9% | – | – |
| Effective Tax Ratenon-GAAP | 24.8% | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| AmericasNet service revenue was $808 million, a 29% decrease from the prior year, while the Americas design business grew 6% after adjusting for one fewer working day. Excluding the Construction Management charge, adjusted operating margin decreased by 250 basis points to 18.0%, primarily from record business development activity and the timing of Construction Management project starts, partially offset by operating efficiencies. | $2.6 billion | – | 20% decrease |
| InternationalNet service revenue was $800 million, a 4% increase from the prior year, driven by strong growth in the U.K and Australian markets. Adjusted operating income increased 26% to $114 million and adjusted operating margin increased 240 basis points to 14.3%, including benefits from improved growth and restructuring actions. | $953 million | – | 6% increase |
fiscal 2026 outlook
- RevenueTotal NSR 1 of between $7.30 and $7.35 billion
- Tax rateAn adjusted effective tax rate of approximately 19%
- NoteAdjusted 2 EPS of between $3.95 and $4.15
- NoteAdjusted 2 EBITDA 5 of between $935 million and $965 million
- NoteFree cash flow 8 of approximately $300 million
- NoteAn average fully diluted share count of 130 million
- NoteExcluding the Construction Management charge, total NSR of between $7.65 and $7.70 billion
- NoteExcluding the Construction Management charge, a segment adjusted operating margin 3 of 17.0%
- NoteExcluding the Construction Management charge, an adjusted EBITDA margin 4 of 17.4%
- NoteExcluding the Construction Management charge, adjusted 2 EPS of between $5.90 and $6.10
- NoteExcluding the Construction Management charge, adjusted 2 EBITDA 5 of between $1,275 million and $1,305 million
- Note20%+ margin exit rate by fiscal 2028
- Note15%+ CAGR from fiscal 2026 to fiscal 2029 for adjusted 2 EPS, excluding the Construction Management charge
Capital returns
- The Company remains committed to its returns-based capital allocation policy.
- In the near-term, capital allocation will be prioritized towards its organic growth investments and its quarterly dividend program.
What drove it
- Third-quarter results included a $337 million pre-tax charge resulting from a higher projected cost to complete a Construction Management project.
- Lower subcontractor productivity is driving a delayed completion and a higher estimated cost to complete on the Construction Management project.
- Design-business NSR increased 4%, and increased 5% when adjusted for a fewer working day, driven by 6% growth in the Americas and 4% growth in International.
- Record $4.2 billion in wins produced a 1.6 book-to-burn ratio and lifted total backlog 13% to a record high.
- International growth was driven by strong growth in the U.K and Australian markets.
- International margin improvement reflected improved growth and restructuring actions taken within the last year.
Concerns
- The Construction Management project charge impacted both revenue and profitability in the quarter.
- The project is expected to achieve substantial completion during the second quarter of fiscal 2027.
- The Company expects it will likely take several years and litigation to fully resolve all matters related to claims on the project.
- Fiscal 2026 NSR growth expectations were reduced primarily due to delayed project starts in the Construction Management business and ongoing conflict in the Middle East.
- Excluding the Construction Management charge, segment adjusted operating margin and adjusted EBITDA margin would each have decreased by 60 basis points.
What to watch
- Progress toward substantial completion of the Construction Management project during the second quarter of fiscal 2027.
- The timing and potential resolution of claims related to the Construction Management project.
- Delivery against fiscal 2026 free cash flow guidance of approximately $300 million.
- Whether delayed Construction Management project starts and ongoing conflict in the Middle East continue to constrain NSR growth.
- Conversion of the record design pipeline and record backlog into revenue and margins.
Balance sheet and cash flow
- Operating Cash Flow: $ 95, down (66 )% year over year.
- Free Cash Flow: $ 55, down (79 )% year over year.
- The Company is now projecting full year free cash flow of approximately $300 million.
- The Company maintains a strong balance sheet with net leverage 9 of 1.5x.
Analysis
AECOM's reported third-quarter results were dominated by a $337 million pre-tax charge from a Construction Management project. Revenue was $ 3,586, down (14 )%, and the company reported a GAAP operating loss of $ (76 ), net income of $ (84 ), and fully diluted EPS of $ (0.65 ). Adjusted results were also negative as reported, with operating income of $ (49 ), EBITDA of $ (8 ), and EPS of $ (0.50 ). The charge reflected a higher projected cost to complete and affected both revenue and profitability.
Underlying operating indicators were materially better than the reported figures. Excluding the Construction Management project charge, NSR was $ 1,946 and increased 2 %, adjusted EBITDA was $ 329 and increased 5 %, and adjusted EPS was $ 1.49 and increased 11 %. However, underlying segment adjusted operating margin and adjusted EBITDA margin each declined by (60 ) bps to 16.5 % and 17.0 %, respectively. The release attributes the pressure to business development activity and the timing of Construction Management project starts, while citing operating efficiencies as a partial offset in the Americas.
Demand indicators remained strong. Total backlog increased 13 % to $ 27,816, supported by record $4.2 billion in wins and a 1.6 book-to-burn ratio. The Americas backlog grew by 8% and International backlog grew 28%, both to new record highs. International was the clear reported-profitability strength, with revenue of $953 million, adjusted operating income of $114 million, and adjusted operating margin of 14.3%, an increase of 240 basis points. Americas revenue fell 20% to $2.6 billion and its reported operating loss was $139 million, reflecting the Construction Management effects.
Cash flow was affected by the project, with operating cash flow of $ 95 and free cash flow of $ 55, down (66 )% and (79 )%, respectively. Management emphasized a 1.5x net-leverage position and stated that near-term capital allocation will prioritize organic growth investments and the quarterly dividend program. The company expects to return to its long-term 100%+ free cash flow conversion target once Construction Management project headwinds subside.
Fiscal 2026 guidance was updated to reflect the Construction Management charge, lower expected NSR growth from delayed project starts, and ongoing conflict in the Middle East. The revised outlook calls for adjusted EPS of between $3.95 and $4.15, adjusted EBITDA of between $935 million and $965 million, total NSR of between $7.30 and $7.35 billion, and free cash flow of approximately $300 million. Excluding the charge, the company said adjusted EPS of between $5.90 and $6.10 and adjusted EBITDA of between $1,275 million and $1,305 million are consistent with prior guidance, while the project is expected to achieve substantial completion during the second quarter of fiscal 2027.
Management, verbatim
We are disappointed by the loss we took this quarter on the Construction Management project. The project is nearing completion, but lower subcontractor productivity is driving a delayed completion and a higher estimated cost to complete.
Troy Rudd, AECOM’s chairman and chief executive officer
Our momentum continues to build, as we win work at a record pace and gain further share in the marketplace.
Lara Poloni, AECOM’s president
We have a strong balance sheet and healthy underlying cash flow.
Gaurav Kapoor, AECOM’s chief financial and operations officer
Not in the filing
stated, not guessed- Fiscal-quarter period end date
- Gross profit and gross margin
- Operating expenses
- Cash balance
- Debt balance
- Repurchase amount
- Dividend amount
- Prior-quarter comparisons for reported metrics
- Prior-year dollar amounts for consolidated reported metrics
- Previous quarterly outlook for formal actual-versus-prior-guidance comparisons
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.