Backlog Surge and an Earnings Beat That Matters#
AECOM reported a record backlog of $24.59 billion alongside Q3 FY2025 adjusted EPS of $1.34, roughly +6% above consensus, and raised full‑year profitability guidance (management targets ~+10% EBITDA and +16% EPS). The combination of a markedly larger pipeline and a record segment adjusted operating margin of 17.1% creates an immediate tension for investors: the company is winning bigger, higher‑margin work even as total revenue growth stays modest. That duality — headline backlog growth versus measured topline expansion — is the defining feature of AECOM's current operating cycle and the most material near‑term development for [ACM].
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Financial performance: what the statutory numbers show#
AECOM’s FY2024 results (fiscal year ended 2024‑09‑30) show both scale and an improving earnings profile. Consolidated revenue rose to $16.11 billion from $14.38 billion in FY2023, a year‑on‑year increase of +12.03% (calculation based on reported figures). Operating income expanded sharply to $827.44 million, a +155.30% increase versus FY2023, driving an operating margin of 5.14% for FY2024. Net income moved to $402.27 million, a large swing from $55.33 million the prior year — a calculated increase of +627.46%.
At the same time, cash generation improved in step with profitability. Net cash provided by operating activities rose to $827.49 million (FY2024) versus $695.98 million (FY2023), an increase of +18.89%, while free cash flow reached $707.89 million, up +19.91% year‑over‑year. Those cash figures underpin management’s increased confidence on margins and provide the liquidity to support dividends, targeted buybacks and selective investments.
Income-statement trend (FY2021–FY2024)#
| Fiscal year | Revenue (USD) | Gross profit (USD) | Operating income (USD) | Net income (USD) | Operating margin |
|---|---|---|---|---|---|
| 2024 | 16,110,000,000 | 1,080,000,000 | 827,440,000 | 402,270,000 | 5.14% |
| 2023 | 14,380,000,000 | 945,470,000 | 324,130,000 | 55,330,000 | 2.25% |
| 2022 | 13,150,000,000 | 847,970,000 | 646,800,000 | 310,610,000 | 4.92% |
| 2021 | 13,340,000,000 | 798,420,000 | 629,550,000 | 173,190,000 | 4.72% |
Sources: AECOM FY2024 statutory financials (provided financial statements).
Cash flow and balance-sheet health — a pragmatic look#
At the FY2024 year end, AECOM had $1.58 billion in cash and short‑term investments against total debt of $3.03 billion, producing net debt of $1.45 billion. Using reported FY2024 EBITDA of $1.08 billion, net debt-to‑EBITDA calculates to ~1.34x, and enterprise‑value-to‑EBITDA (using market capitalization of $16.64 billion, year‑end debt and cash) computes to ~16.75x (EV ≈ market cap + debt – cash = 18.09B; EV / EBITDA = 18.09 / 1.08).
Calculated conservatively from the year‑end balance sheet, the current ratio is 7.18B / 6.37B = 1.13x. That figure differs from some TTM ratios included in summary datasets (which show a 1.17x current ratio and other TTM measures); the differences arise from the use of trailing‑twelve‑month averages and alternative timing conventions. Where discrepancies exist between FY‑end and TTM metrics, this analysis prioritizes the audited fiscal‑year line items while calling out the alternative TTM measures where relevant.
| Balance-sheet & cash-flow highlights (FY2021–FY2024) |
|---|
| Cash & short‑term investments: 2024 $1.58B; 2023 $1.26B; 2022 $1.17B; 2021 $1.23B |
| Total assets: 2024 $12.06B; Total liabilities: 2024 $9.69B; Total equity: 2024 $2.18B |
| Total debt: 2024 $3.03B; Net debt: 2024 $1.45B; Net debt/EBITDA ≈ 1.34x |
| Net cash provided by operations: 2024 $827.49M; Free cash flow: 2024 $707.89M |
Sources: AECOM FY2024 balance sheet and cash-flow statements (provided).
Margin expansion: composition and sustainability#
The more meaningful story behind the backlog headline is margin improvement. AECOM’s FY2024 EBITDA of $1.08 billion (EBITDA margin ~6.70%) and the reported Q3 FY2025 segment adjusted operating margin of 17.1% point to a pronounced mix shift into higher‑margin advisory, program‑management and water/environment services. Net Service Revenue (NSR) growth appearing in the quarterly commentary (Q3 NSR +6% YoY while total revenue was +0.7% YoY for the quarter, per management commentary in the provided draft) confirms that revenue is shifting away from lower‑margin delivery toward fee‑based, asset‑light engagements.
Margin improvement has both structural and tactical drivers. Structurally, public infrastructure programs (notably U.S. IIJA disbursements) and multi‑year frameworks reward consultative, program‑management skills. Tactically, AECOM reports higher win rates on large frameworks, standardized delivery playbooks and AI/digital tools applied to bidding and execution — all of which reduce cost leakage and raise realized margins on won work.
Sustainability of margin expansion will depend on continued success converting backlog with the improved mix intact, controlling execution risks on large projects, and avoiding margin erosion from cost inflation on capital‑intensive assignments. The FY2024 evidence of strong free cash flow conversion and Q3’s record segment margin provide encouraging early signs but not a guarantee of permanence.
Backlog composition and recent contract wins: quality matters#
AECOM’s reported $24.59B backlog (Q3 FY2025) is the single most important development because it concentrates the company’s future revenue visibility into higher‑margin segments. Recent major awards cited in the provided company commentary and filings — including the UK National Highways SPaTS3 framework (up to £495M over six years), Singapore Changi Water Reclamation Plant Phase 3, a >$4B PMC role on The Avenues – Riyadh Phase II, and USACE Europe IDIQs with a combined ceiling >$490M — illustrate a diversified, international mix spanning transportation, water/environment, defense, and mixed‑use development. Those contract types tend to have more recurring, advisory‑style work and higher NSR content than pure EPC projects.
The critical implication is that backlog growth in dollars is matched by an improving margin potential per unit of backlog. The reported 19 consecutive quarters with a book‑to‑burn ratio above 1.0x supports the view that wins continue to outpace revenue recognition, a positive for multi‑year visibility if execution remains on plan.
Capital allocation: balancing shareholder returns and strategic bets#
AECOM returned capital in FY2024 through dividends (dividend per share $1.00 annualized) and sizable buybacks (common stock repurchased: $478.5M in FY2024). The company’s dividend yield is roughly 0.80% at the current share price of $125.64, and the payout ratio based on EPS of $5.03 (stock quote EPS) is approximately 19.88%. These moves indicate a balanced approach: deploy free cash flow to sustain a modest dividend while repurchasing shares when management sees value.
From a leverage perspective, AECOM’s total debt of $3.03B against $2.18B of shareholders’ equity yields a book‑basis debt/equity of ~1.39x (138.99%). Using net debt and EBITDA gives a moderate leverage profile (net debt / EBITDA ≈ 1.34x). That leaves the company with sufficient headroom to pursue selective bolt‑on acquisitions, invest in digital capabilities, or absorb temporary project‑level disruptions without compromising liquidity.
Reconciling data inconsistencies and analytical choices#
Readers should note several internal dataset discrepancies. For example, reported net income in the income statement is $402.27M for FY2024, but the cash‑flow schedule shows a net‑income line of $460.25M for the same period; TTM ratios in summary tables (ROE, current ratio, net debt/EBITDA) differ from direct fiscal‑year computations. These differences most commonly stem from timing windows used for TTM metrics, classification differences (net income attributable to controlling interest vs consolidated), and rounding conventions. For transparency, this analysis prioritizes the audited fiscal‑year line items listed in the statutory income, balance‑sheet and cash‑flow schedules and calls out TTM summary metrics when they materially alter the interpretation.
Competitive position and strategic execution#
AECOM competes among global engineering and professional‑services firms where scale, cross‑disciplinary delivery, and public‑sector relationships are decisive. The company’s advantage is an expanding footprint in advisory and program management, digital delivery platforms and a large installed base of framework contracts. Relative to peers, AECOM’s combination of backlog scale and improving NSR mix creates a path to sustainable margin outperformance if the company consistently converts high‑quality backlog at forecasted margins.
Execution risk remains the principal watch item. Large complex projects (e.g., multi‑billion‑dollar master‑planned developments or integrated water treatment facilities) carry schedule and cost risk that can compress margins if not tightly managed. AECOM’s investments in AI-backed bidding, Aconex‑style collaboration platforms and an enterprise risk management framework are designed to reduce that execution volatility; early results visible in FY2024 cash flow and Q3 segment margins are supportive but require continued discipline.
Key risks to monitor#
Macroeconomic and geopolitical shocks that slow public procurement or delay IIJA disbursements would materially reduce near‑term opportunities. Currency volatility and localized content requirements can compress margins on international awards. Finally, concentrated exposure to a handful of very large projects increases earnings volatility if any single program experiences overruns.
What this means for investors#
AECOM’s record backlog and recent margin gains shift the investment conversation from “Can the company win work?” to “Can the company consistently convert higher‑quality wins into predictable, higher‑margin revenue?” The FY2024 audited accounts and Q3 FY2025 trading update show three important, data‑anchored takeaways. First, revenue growth is healthy and accelerating relative to 2021–2022, with FY2024 revenue up +12.03% year‑over‑year. Second, margin and cash‑flow improvements are real: operating income and free cash flow grew +155.30% and +19.91%, respectively, year‑over‑year. Third, balance‑sheet metrics (net debt roughly $1.45B, net debt/EBITDA ≈ 1.34x) give AECOM flexibility to invest in digital capabilities, complete selective M&A and continue shareholder returns without excessive leverage.
Taken together, these data patterns suggest a company that is operationally tightening execution, capturing higher‑value work, and converting that into improved earnings quality. The durability of that trajectory will be decided by execution on major international projects, the pace of IIJA fund deployment in target markets, and the company’s ability to sustain its book‑to‑burn advantage while controlling delivery risk.
Key takeaways#
The most actionable, evidence‑based conclusions from the provided financials and company disclosures are straightforward. AECOM’s $24.59B backlog is not just a vanity metric — it reflects a real tilting of the business mix toward higher‑margin advisory and program‑management work, visible in Q3 FY2025’s 17.1% segment margin. Cash flow is strengthening in parallel, with $707.89M of free cash flow in FY2024 and operating cash growth of +18.89% YoY. Balance‑sheet leverage is moderate on a net‑debt basis, giving management multiple options for capital allocation.
However, the thesis is conditional: sustained margin expansion depends on disciplined project execution and steady public‑sector fund deployment. Large project concentration and international execution risk are the principal downside vectors that could reverse margin improvements if not managed tightly.
Final synthesis#
AECOM today sits at a constructive inflection: wins are larger, backlog is deeper and the revenue mix is shifting to better margins. The FY2024 statutory financials — corroborated by Q3 FY2025 operating commentary — show real improvement in earnings quality and cash generation, backed by a manageable net‑debt position. That combination creates strategic optionality for the company while raising the bar on execution. The coming 12–18 months will be decisive: management’s ability to convert the $24.59B backlog into profitable revenue at the margins signaled in Q3 will determine whether the current improvement becomes a durable earnings upgrade or a temporary outperformance.
All calculations above use the provided AECOM fiscal‑year financial statements and Q3 operating commentary from the materials supplied. Where dataset summary metrics (TTM ratios) diverge from fiscal‑year calculations, fiscal‑year audited line items were used and differences are explicitly noted.