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1、REFINITIV STREETEVENTSEDITED TRANSCRIPTACM.N-Q2 2025 AECOM Earnings CallEVENT DATE/TIME:MAY 06,2025/12:00PM GMTOVERVIEW:Company SummaryREFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is pro

2、hibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.CORPORATE PARTICIPANTSWill Gabrielski AECOM-Senior Vice President-Finance,Treasury and Investor RelationsTroy Rudd AECOM-Chairman,Chief Executive

3、 OfficerLara Poloni AECOM-PresidentGaurav Kapoor AECOM-Chief Financial and Operations OfficerCONFERENCE CALL PARTICIPANTSMichael Feniger Bank of America-AnalystSabahat Khan RBC Capital Markets-AnalystAndy Kaplowitz Citigroup-AnalystAdam Bubes Goldman Sachs-AnalystSteven Fisher UBS-AnalystJamie Cook

4、Truist Securities-AnalystAdam Thalhimer Thompson Davis-AnalystPRESENTATIONOperatorGood morning and welcome to the AECOM second-quarter 2025 conference call.I would like to inform all participants,this call is being recordedat the request of AECOM.This broadcast is a copyrighted property of AECOM.Any

5、 rebroadcast of this information in whole or part without theprior written permission of AECOM is prohibited.As a reminder,AECOM is also simulcasting this presentation with slides at the investors sectionat .Later,we will conduct a question-and-answer session.(Operator Instructions)I would like to t

6、urn the call over to Will Gabrielski,Senior Vice President,Finance,Treasury,and Investor Relations.Will Gabrielski-AECOM-Senior Vice President-Finance,Treasury and Investor RelationsThank you,operator.I would like to direct your attention to the Safe Harbor statement on page 1 of todays presentation

7、.Todays discussion containsforward-looking statements about future business and financial expectations.Actual results may differ significantly from those projected in todaysforward-looking statements due to various risks and uncertainties,including the risks described in our periodic report filed wi

8、th the SEC.Exceptas required by law,we undertake no obligation to update our forward-looking statements.We use certain non-GAAP financial measures in our presentation.The appropriate GAAP reconciliations are incorporated into our materials,whichare posted to our website.Growth rates are presented on

9、 a year-over-year basis unless otherwise noted.Any reference to segment margins orsegment adjusted operating margins will reflect the performance for the Americas and International segments.When discussing revenue andrevenue growth,we will refer to Net Service Revenue or NSR,which is defined as reve

10、nue excluding pass-through revenue.NSR growth rates arepresented on a constant currency basis unless otherwise noted.Todays remarks will focus on continuing operations.On todays call,Troy Rudd,our Chief Executive Officer,will review our key accomplishments,our strategy,and our outlook for the busine

11、ss.Lara Poloni,our President,will discuss key operational successes and priorities.And Gaurav Kapoor,our Chief Financial and Operations Officer,will review our financial performance and outlook in greater detail.We will conclude with aquestion-and-answer session.With that,I will turn the call over t

12、o Troy.2REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv a

13、nd its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings CallTroy Rudd-AECOM-Chairman,Chief Executive OfficerThank you,Will,and thank you all for joining us today.The second quarter was defined by change,some anticipated and some unexpected.Asweve done over the past six years whe

14、re we have faced events that created macroeconomic volatility,we successfully navigated the business todeliver strong results.Our second quarter results are a testament to the strength of our culture and of our professionals across the organization.Our teams are the bestand brightest in our industry

15、,and through their efforts,we deliver a technical advantage to every client and every project.Importantly,they continueto showcase the competitive edge that we have created in our platform that allows us to deliver results.I want to highlight two recent notableaccomplishments that demonstrate our in

16、dustry leading market position.First,ENR released its annual survey results last month,and Im pleased to report that we moved up one place to earn the distinction as the numberone overall design firm.We also had our number one rankings in Transportation,Water,and Facilities affirmed.And when combine

17、d with ourexisting number one ranking in Environment,we hold a leadership position in each of our end markets.Second,in March,we were appointed as the sole venue infrastructure partner for the LA28 Olympic and Paralympic Games.We are honored to beselected for an unprecedented scope that includes all

18、 critical elements of architecture,engineering,planning,program management,andconstruction management.The unrivaled depth and breadth of our technical expertise,as well as our proven track record of delivering past iconicglobal sporting events were essential in our success.No other company can rival

19、 what we offer and deliver to our clients on these types of large,complex projects.Turning to our financial results,Im pleased to report strong second quarter and first half financial results highlighted by record second quarterNSR,margins and EPS.Growth was the highest in the Americas,our largest a

20、nd most profitable region.IIJA spending continues to increase,andwith less than 35%of the total funding spent thus far,several years of strong federal funding for infrastructure remain for our markets.I should note,two items impacted our NSR growth.First,we had fewer workdays in the quarter due to t

21、he timing of holidays.This reduced growthby approximately 100 basis points in the quarter.Second,we experienced isolated delays and deferred decisions on a limited set of projects whichimpacted our top line growth.That said,these delays are not uncommon whenever there is a change in administration,a

22、nd the impact to ourbacklog was minimal.The segment adjusted operating margin rose 90 basis points to 16.1%,which is a second quarter record.This increase reflects strong execution,growing contribution from higher margin advisory services,faster growth in our highest margin markets,and ongoing conti

23、nuous improvementinitiatives.Our industry leading margins include record investments in innovation,technical excellence,and business development,all of whichare accelerating in the second half of the year based on the opportunities ahead.Adjusted EBITDA increased by 8%to$290 million and adjusted EPS

24、 increased by 20%to$1.25 both of which also set new second quarter highs.Free cash flow in the quarter increased by 141%to$178 million.We returned$110 million to shareholders during the quarter through sharerepurchases and dividends,and$165 million in the first half of the year.Our returns-based cap

25、ital allocation policy remains unchanged,and wewill continue to allocate our consistently strong cash flow to the highest returning opportunities.This includes the$900 million remaining on ourcurrent share repurchase authorization.Looking ahead,our confidence for the rest of the year and beyond is s

26、upported by several key factors.First,our backlog increased quarter to quarterto a new record,driven by a 1.1x book to burn ratio.Our underlying book to burn ratio was even higher,but changes in a small number of governmentcontracts following US Federal agency reviews resulted in the removal of appr

27、oximately$100 million from backlog.In addition,our pipeline ofopportunities is also at a record level,and growth is fastest at the earliest stages of our pipeline,consistent with our expectations for several yearsof continued growth in our largest markets.Second,through our competitive edge platform

28、,we are delivering record-high win rates.This includes 80%success on large enterprise criticalpursuits year-to-date and a better than 50%win rate overall.Our consistent success comes from strategically deploying our best technical resources3REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights

29、reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM

30、 Earnings Callto the highest-value clients and opportunities,strong client relationships,and differentiated capabilities across the investment life cycle,fromdesign to advisory and program management.Third,global megatrends remain robust,including$50 trillion in projected infrastructure investment t

31、hrough 2040 across transportation,water,and energy.Aging infrastructure,growing requirements for sustainability and resilience,and the rising energy demand create a favorable backdropthat drives inevitable demand.Infrastructure enjoys strong bipartisan support across all of our markets and is an ess

32、ential element of thrivingeconomies.Fourth,we are investing to accelerate organic growth and expand our competitive advantage.This includes ongoing additions to our advisoryand program management teams to meet growing demand as our clients navigate greater regulatory uncertainty and larger investmen

33、ts.This isconsistent with our long-term objective of delivering 50%of revenue from advisory and program management over time.Lastly,against a backdrop of changing political dynamics and resulting policy shifts after the unprecedented number of elections last year,a fewpoints bear repeating.The work

34、we do for our clients is highly technical and critical to their missions.In fact,many projects that were paused havenow resumed.Given the professional services nature of our work,tariffs are not expected to directly affect our business.Over 70%of our workforceis versatile across market sectors and c

35、an be deployed to the strongest growth opportunities.Deregulation and permitting reform are tailwindsto our business.And,a declining public sector workforce has been a secular tailwind for our industry and increasingly a demand driver for advisoryand program management services.To summarize,our firs

36、t half results were ahead of our initial expectations.Our backlog is at a record high.This performance underscores ourconfidence,and as a result,we are increasing the midpoints of our EBITDA and EPS guidance for a second consecutive quarter.With that,I will turnthe call over to Lara.Lara Poloni-AECO

37、M-PresidentThanks Troy.Our consistently strong results,including quarter-over-quarter growth in backlog to a new record,are a testament to the competitiveadvantages created by our strategy and our relentless focus on long-term value creation.These attributes enable us to deliver even during periodso

38、f increased uncertainty.I want to spend a moment discussing trends across our largest markets and how we are positioning to capitalize.Trends in the US remain robust,which is our largest market at more than 50%of our net service revenue.We have built a record backlog drivenby a 1.2x book-to-burn rat

39、io in the quarter.As Troy noted,less than 35%of IIJA funding has been spent,but nearly all has been appropriated andtherefore,not at risk of being cut.This creates a great deal of visibility for our clients and for us.Additionally,the passage of the continuing resolutionin March provides our public

40、sector clients with budget certainty for the remainder of the year.This includes our US state and local clients,whichaccount for approximately 30%of our revenue.Nearly half of our state and local revenue is from the transportation sector,with the remainderprimarily for water and environment projects

41、.All of these markets utilize dedicated funding sources,be it the Federal Highway Trust Fund,dedicated tax or bond measures,user fees,or regulatorydrivers.In addition,75%of our environmental remediation work is driven by state and local regulations,not Federal,and we are seeing increasedactivity as

42、a result.In addition,we are well positioned to capitalize on Department of Defense funding increases where we provide highly technical and mission criticalservices.In fact,our pipeline of DOD opportunities was up by double digits over the prior quarter,and our win rate on these pursuits is materiall

43、yabove our enterprise win rates,bolstering our optimism in growth.Canada is strong as well,with double-digit growth in revenue and backlog.Prime Minister Carneys election crystallized the countrys ongoingcommitment to infrastructure,as evidenced by key elements of the new administrations$150 billion

44、 investment plan.In addition,Quebec unveiledits 10-year budget in March,which calls for a further 7%increase to its infrastructure investment forecast,providing for a strong market backdrop.4REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refini

45、tiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings CallAcross our International segment,sec

46、ular drivers are in place,but near-term trends remain mixed.In the UK,our largest international market,netservice revenue and backlog both increased,and backlog is at an all-time high.While larger transportation projects continue to face delays whilethe UK government works through its budgetary chal

47、lenges,our large positions on key frameworks create a stable level of activity through periodsof reduced large project activity.In the intermediate term,AMP8 water investment is set to more than double AMP7 in the coming years,and so far,our framework capacity is morethan 150%higher than in the AMP7

48、 program.This underscores that AMP8 is a key component of our target to double our global water revenue inthe next five years.We are also experiencing strong growth in energy,including our ongoing work for the multi-year Great Grid Upgrade program,as well as accelerating opportunities in the nuclear

49、 power market.To bolster our capabilities in this region,we recently acquired Allen Gordon,aScottish water and energy consultancy which enhances our UK and Ireland presence and client relationships.Turning to Australia,trends continue to be mixed.In the water sector,growth is accelerating,and we hav

50、e had several recent marquee wins,including our recent selection as the Design Delivery Partner for Sydney Waters capital investment program.However,this growth has been offsetby a pause in the transportation market following a robust decade of investment.Even so,our backlog increased by double digi

51、ts in the quarterand our pipeline remains strong,which are good indicators of future growth opportunities.Turning to the Middle East,revenue increased in the first half of the year.While the timing of holidays impacted our second-quarter results,growthremains positive.The reprioritization from Giga

52、Cities to projects for the World Cup and Expo is creating new opportunities.These events havedelivery dates that are fixed,which creates visibility for our industry leading position over the next few years.To that point,our backlog remainsall-time high.Lastly,in Hong Kong,work is beginning on the$30

53、 billion Northern Metropolis Investment program.This quarter,we were awarded a contract toprovide technical services for the Northern Metropolis Highway that will enhance East-West connectivity,which further demonstrates our leadingmarket share in Hong Kong and the scale of opportunities ahead.Acros

54、s these markets,one trend is clear.The demand for comprehensive design,program management,and advisory services has never beengreater.We are extending our competitive advantage with investments in key growth markets and ensuring that we continue to prioritize ourresources to the best growth opportun

55、ities.I couldnt be more proud of our win rates,record backlog position,and excellence in the marketplace.With that,I will turn the call over to Gaurav.Gaurav Kapoor-AECOM-Chief Financial and Operations OfficerThanks,Lara.Our second quarter and first half results underscored the strength of our profe

56、ssional services business model.As a result,we areraising our EBITDA and EPS guide in midpoints for a second consecutive quarter.Our second quarter results included records for net service revenueand margins,which contributed to 8%adjusted EBITDA growth and 20%adjusted EPS growth.Both of these metri

57、cs were second quarter records.Our backlog and pipeline are both at all-time highs.Within this contracted backlog in the design business increased by 5%,and our pipeline hasnow set new highs in four consecutive quarters,which supports our confidence in the second half of the year and beyond.As Troy

58、articulated,ourmargins were strong in the quarter and have increased by 70 basis points a year-to-date,which is modestly ahead of our expectations for the firsthalf of the year.There were no unusual items in our second quarter or first half margins.We are confident in delivering not only on our 16.1

59、%margin guidance this year,but in going well beyond our 17%long-term target as theopportunities for continued improvements are becoming more apparent.This includes a growing share of higher margin advisory services,continued advancement of our AI and digital initiatives,further growth in our enterpr

60、ise capability centers,and our focus on continuous improvement.Turning to our segment results beginning in the Americas.NSR increased by 6%,including growth in both the US and Canada.Growth was also broad-based across all of our end markets,underscoringcontinued client demand from the long-term secu

61、lar mega trends and continued robust funding from IIJA,state and local budgets and provincialand national funding in Canada.The adjusted operating margin increased by 130 basis points to 19.4%,a new second quarter high.We continue5REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.R

62、epublication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings

63、Callto deliver further expansion on our industry-leading margins,which is unlocking the capacity to invest in high-returning organic growth at recordlevels.Importantly,our backlog in the Americas is at a record level,reflecting a 1.2x book-to-burn ratio.Our contracted backlog is also at a nearrecord

64、 level.In the International segment,net service revenue increased by 1%,which continues to reflect the varied trends by market that Lara reviewed earlier.A few factors give us confidence as we look ahead.First,our backlog in the International segment is at a record high.Second,our pipeline is alsoin

65、creasing,including substantial growth in early stages.And finally,we continue to expand our margins,which increased by 10 basis points to11.1%in the quarter.Turning to cash flow and capital allocation.Free cash flow increased by 80%in the first half of the year.As a result of the strong performance,

66、we returned$165 million to shareholders throughrepurchases and dividends over this period.We maintain excellent balance sheet strength with net leverage of 0.7x and certainty of low cost ofdebt.Turning to guidance,as I mentioned,we are increasing the midpoints of our adjusted EBITDA and EPS for the

67、full year,which are now expected toincrease 9%and 14%from the prior year.While we have experienced greater than expected volatility in certain of our end markets,we have builta track record of delivering through periods of uncertainty,which our first half financial results affirm.As Troy noted,we wi

68、ll continue to executeon factors within our control,and our confidence is high in delivering on our full year goals.With that,operator,we are now ready for questions.QUESTIONS AND ANSWERSOperator(Operator Instructions)Michael Feniger,Bank of America.Michael Feniger-Bank of America-AnalystThank you.G

69、ood morning,everyone.Just in terms of the guidance,Troy,it implies the second half healthy double-digit EBITDA growth.Can youjust talk about your visibility into that level of growth in the second half?Is it more top line based?Is it more bottom line in the confidence of theprofit margins?Just given

70、 some of the uncertainty out there and the macro,Im just kind of curious what your level of confidence is on that secondhalf,we think of top line or bottom line looking at those margins.Troy Rudd-AECOM-Chairman,Chief Executive OfficerSure.So good morning,Michael.Its-Im going to-Im just going to give

71、 you the headline and then Ill give you some more detail,but the headlineis its actually its going to be balanced,so we expect to continue to have top line growth.And as we said,even at the beginning of the year,weexpected that our revenue would ramp over the year,and that was really a result of the

72、 macroeconomic environment that we had forecasted.Andas we said in our prepared comments is that there had been an unprecedented number of elections,which means that there had been a shift inagendas.But now,as we look forward,the first thing we look at is we look at what we actually have in our cont

73、racted backlog,and that has grown mid-singledigits.Our overall growth in our backlog has continued,but the other thing that we see is weve actually seen some really healthy winds in thequarter,and some of those winds actually dont have an impact on our backlog.A good example that are some of the mas

74、ter services agreements or frameworks that we win.And when we win them,we dont actually recordbacklog until were confident that we actually have that work to do or perform and typically,thats under a task order.So when we sort of look at6REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights res

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76、rnings Callthe success weve had in our backlog,we also have visibility into things that we know that are going to come through frameworks and MSAs thatweve won,that will impact the second half of the year.And then the other really important thing is our pipeline is,even through this time,there has c

77、ertainly been pivots in what might be the componentsof our pipeline,but our pipeline has continued to grow.And again,as we said in the prepared comments,weve actually seen growth in the earlystages,which,again,gives us visibility into the next few quarters,but it gives us actually visibility beyond

78、that into the next few years.So we actuallyhave great optimism,not about certainly about the second half of the year,and growth,but we do for the long term.And then I said it was balanced with respect to margins.We still see a lot of room for margin improvement in the business,and I will just attrib

79、utethat to the investments that we have been making over the past years.And as we continue to make the run through our margins,and we expectthat those investments will continue to bear fruit and have us continue to improve margins as we move forward.So we see our success in thesecond half year being

80、 balanced,both in NSR growth and in margins improvement.Michael Feniger-Bank of America-AnalystHelpful.And just on the comment on the isolated delays,just are we through the worst you feel like on that-those isolated disruptions and someof the delays?Do you feel like the disruption could linger?Was

81、it more at the beginning of the quarter or towards the end in April?Just kind ofgive us some context on some of those isolated disruptions and delays and if you and the company feel confident,were-we kind of have ourarms around that.Troy Rudd-AECOM-Chairman,Chief Executive OfficerI would say yes,I t

82、hink we have confidence that we have our arms around it.Are we finished with the delays?I dont think so.I think theyre justsort of-they are delays caused by,again,for different reasons.And the first thing we saw,delays based on the decisions that were being madeafter the-yeah,in the second quarter,a

83、fter the result of the US Federal election,so as President Trump took office,there were some changes.As we look at our clients,certainly in the Federal government,the changes that will be ongoing,and there still will be decisions being made aboutwho actually will be our clients at some of those agen

84、cies.Some people are retiring.And so,when you have that kind of change-personnelchange,it certainly has an impact,it creates disruptions and decisions.But remember,the US Federal Government represents,8%or 9%of our overall NSR.So when we talk about disruptions,I dont want to give theimpression thats

85、 across the entire business.Its the rest of our business,we certainly dont see that kind of change of disruption,anything fromwhat we typically see during the course of a year.Michael Feniger-Bank of America-AnalystGreat,Im just going to sneak one more in there just on the free cash flow.Last year,y

86、ou guys hit a milestone.It was 10%free cash flow margin onnet service revenue.I mean,how are you feeling tracking for 2025 given that first half performance?Is there some big give back in the second halfwe should be aware of,or is there some structural shift going on in the conversion rate that we s

87、hould be flagging?Thank you.Troy Rudd-AECOM-Chairman,Chief Executive OfficerIm going to let Gaurav take that question.7REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without

88、the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings CallGaurav Kapoor-AECOM-Chief Financial and Operations OfficerHey,Michael,how are you?Its specific to fast free

89、cash flow and thank you for acknowledging.We-it was a great milestone event we achievedlast year,and thats going to continue to be our focus on the annual basis.We want to continue to meet that great milestone of 10%free cash flowconversion.But at the same time,quarter to quarter,our focus always is

90、 to have as good of a phasing as we can.So in the first half,it was betterthan we have experienced in in almost over a decade.Well continue to challenge ourselves every quarter to be better than what we delivered inthe prior year.But I think for the full year,your expectations are quite consistent i

91、n terms of 100%plus free cash flow conversion of our adjustednet income and trying to achieve that 10%and trying to better that again.OperatorSabahat Khan,RBC Capital Markets.Sabahat Khan-RBC Capital Markets-AnalystOkay,great.Thanks,and good morning.Just,I guess,maybe just taking the line of questio

92、ning to the private sector,I guess,maybe if you can talkto us through your overall private sector exposure,what sectors thats focused on.And then maybe just-theres obviously a lot of headlinesthrough kind of the calendar Q1 here,maybe just the confidence of the private sector and how your customers

93、are feeling there.Thanks.Gaurav Kapoor-AECOM-Chief Financial and Operations OfficerHey,Sabahat,this is Gaurav.Ill take that question.So private sector represents approximately 30%of our overall business.And first of all,thankyou for that question because I think there continues to be some misconcept

94、ion as to our exposure or cyclicality of our private clients.So the mostimportant thing to note is our private business,that 30%of the overall enterprise number I gave you,it grew in the quarter and were seeing thesame trajectory for the remainder of the year as well.It-more importantly,it is not as

95、 cyclical as what one would normally connotate with a private business environment if the macroeconomicuncertainty continues.And the reason were confident in making that statement is two-thirds of our private business is water and environmentrelated.More specifically,its regulatorily driven and OpEx

96、 for those clients because theyre large public utilities.Also,large global ONG majors,who,again,statutory and legally have to do environmental remediation work.Weve been doing this work fordecades long for these clients.Its very consistent,very predictable,and the rest of the design business,outside

97、 of that two-thirds,its also not thatcyclical.It is focused on our facilities,business,and market.But its for ports and airports,where quite a bit of the portion of the funding does comefrom the public sector.Another great example of that is on our facility sites,we press released the Olympics 2028.

98、Its a long-term,not cyclical work over the next threeand a half years as we support that client for that event.So thats part of our private business as well.Sabahat Khan-RBC Capital Markets-AnalystOkay,great.And then maybe just,I guess,given all that is going on sort of seems like the underlying bus

99、iness trends are good,balance sheets ingood shape,but obviously a lot of sort of market volatility on the stock side.What are your perspectives on share buybacks capital allocation herefor the rest of the year?Thanks.8REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication

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101、poor-AECOM-Chief Financial and Operations OfficerIll respond to that as well,Sabahat.Theres no change in our capital allocation strategy.We continue to execute our capital allocation strategy inthe first half in the current quarter.And specific to our repurchases as weve told our investors,it will b

102、e consistent with the free cash flow wegenerate,which generally is second half weighted for us.OperatorAndy Kaplowitz,Citigroup.Andy Kaplowitz-Citigroup-AnalystHey,good morning,everyone.So I think we understand that you want to be conservative and also invest in your business,as you said,youre 70bas

103、is points ahead on margin in the first half of the year versus 30 base points,got it.So you can just give color into the better performance in theAmericas.Are you expecting to invest more in the second half or maybe give an International margin was only up modestly in Q2,you want to beconservative.I

104、 just think more color would be helpful.Troy Rudd-AECOM-Chairman,Chief Executive OfficerSure,Andy.When we think about kind of investing to create an improved margin,we think about that across the entire business.And again,recognizing that each of our geographies and frankly,lines of business,they co

105、me with different margin,natural margin profiles,and those arethings that we simply cant control those are driven by the market or by the size or scale of those particular businesses.But as we think about howwe continue to invest,were going to continue to invest heavily in the second half of the yea

106、r,similar to what we did in the first half,and thinkabout this as investing in a few different ways.First is were always going to continue to invest in business development.We said our pipeline continues to grow.Were not going to shrink awayfrom investing in future work off future opportunities.Seco

107、ndly,is we continue to invest in how we actually drive efficiency and what we do,andwhether thats in how we run the business or how we deliver our work,were going to continue to make those investments.And those investmentscome in the way of either technology or they come in the way we think about ho

108、w our teams actually come together and share work and deliverit.And one of those examples that weve talked about frequently has been our enterprise capability centers.We continue to expand the use of thosecapability centers because they drive great efficiency in how we deliver our work,and they also

109、 help with quality.And so,we will continue toaccelerate investments in technology to support the business and in things like our capability centers.So those things arent going to change forus in the second half of the year.Andy Kaplowitz-Citigroup-AnalystVery helpful.And then maybe just like thinkin

110、g about book-to-burn,youve continued to have strong book-to-burn,1.1 here.Does the currentenvironment allow you to continue to book that kind of level of work,Troy?And have you seen any incremental slowdown in May,or is it sort ofsteady as she goes here and what markets are sort of driving the growt

111、h?Is it still more on the water side or is it kind of balanced as you said?Troy Rudd-AECOM-Chairman,Chief Executive OfficerSo I guess,the simple answer is yes,we have confidence that well continue to book more business than we burn in a quarter.And I think this is-I think this might be our 18th cons

112、ecutive quarter of book-to-burn greater than 1.So that,obviously,gives us some confidence that we know howto win work.And our win rates,we made this reference,I think in our prepared comments,that our win rates are also at an all-time high.We win9REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All r

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114、 AECOM Earnings Callof every$1 that we bid across the entire business,we win more than 50%of what we bid.But again,I think the thing you should think aboutcoupled with our win rates is,again,our pipeline,and our pipeline continues to grow.So we have confidence that well continue to book morework eac

115、h quarter than we burn.OperatorAdam Bubes,Goldman Sachs.Adam Bubes-Goldman Sachs-AnalystHi,good morning.I wanted to circle back to the Americas margin performance.Its really impressive,up 130 basis points year-over-year.You citedgrowth in higher-margin projects,continuous improvement,but wondering i

116、f we could just unpack that 130 basis points margin performancebecause it really stands out.Whats the greatest driver of that margin expansion,which higher margin and markets are supporting that growth?Any color that would be helpful.Gaurav Kapoor-AECOM-Chief Financial and Operations OfficerHey,Adam

117、,its Gaurav.Ill take that question.It was exceptional performance by Americas in margin,and what really contributed to it is fourfold.Ill give-Ill go into the detail.Some of this Troy has already shared in his previous response.If weve made significant organic investments over the past few years,so

118、the results were seeing today,its not based on actions we took in Q1 orQ2.These are continued organic investments this management team has made over the last two to three years.Its on high return on investedcapital organic investments like our program management initiative that we started five years

119、 ago that went from 3%to now greater than 13%ofour overall enterprise top line.Its also in the second half of the year,we invested in our advisory business.Were already seeing very good early returns,but more importantly,were seeing better rigor and better-a better focus on pricing in that business

120、that already existed for us.Its also a byproduct of our capabilitycenters.These are design centers that we have across the globe.Mind you,these may be in countries that we operationally have exited,over 60plus countries that weve exited,but we still keep our capability centers to drive work because

121、they have the best-not only the best technicalcapabilities,but they also provide benefit to us when we go to market in pricing and also leveraging it when we deliver those projects for margins.And we-also,if you would recall last year in the first half,we had significant restructuring that we had in

122、itiated.So now,what you saw in the firsthalf of this year in our trailing 12 months result is the full benefit of that restructuring show up,even though our results in the in the current yearare clean and will continue to be very clean,meaning no restructuring and forecasting.Adam Bubes-Goldman Sach

123、s-AnalystTerrific.And then is there a way to provide context as to the magnitude of margin differential between advisory and program management andthe balance of the business and just how youre thinking about the potential for a mixed tail into to margins as you folks continue to grow thatpart of th

124、e business.Troy Rudd-AECOM-Chairman,Chief Executive OfficerYeah.So maybe think about it this way,is that program management has margins and margins that are very similar to our design business.Andthe advisory business,those margins are actually higher than that,but were-we havent given guidance on s

125、pecifically what those ranges looklike,but you can rest assured that theyre better.10REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refini

126、tiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings CallOperatorSteven Fisher,UBS.Steven Fisher-UBS-AnalystThanks.Good morning.I just wanted to ask you to put a finer-morning.I wanted to ask you to

127、put a finer point on the expectations you have forthe growth rate in the second half.If were talking about,say,the midpoint of your organic growth rate,you kind of have to be at the upper endfor the next couple of quarters.I know in your first,in Mike Fenigers question,you talked about sort of an EB

128、ITDA perspective.Im just sort offocusing on the top line part of it.With the visibility you have,do you think youre aiming for the midpoint at this point?Do you think the uncertaintykind of at this point means youre thinking about sort of the lower end?How are you thinking about sort of a finer poin

129、t on the growth rateexpectation for the next couple of quarters?Gaurav Kapoor-AECOM-Chief Financial and Operations OfficerHey,Stephen,this is Gaurav.Ill take that question.So as we move into the second half of the year,I think your calculations are spot on in terms ofto achieve the midpoint,what wou

130、ld we have to deliver.Now,remember our first half growth was impacted by fewer workdays.The second halfof the year is going to be benefiting as we turn around,right?And in the second half,we are going to see some tailwind from it.When we look at our pipeline,more importantly,our backlog,contracted,a

131、warded backlog,our book-to-burn,all those things provide us withgood confidence in the second half of the year that well be able-were still very confident in delivering the midpoint of our range.Now,with allthat said,as Troy has commented earlier in previous quarterly calls,were not that precise,whe

132、re we have 35,000 to 50,000 ongoing contracts.Ifits off by 50 basis points either way,25 basis points,within a quarter,a couple of quarters,thats manageable for us.And as you pointed out,when we bring that into balance with our margin delivery,our organic investments that we make,it provides-it cont

133、inuesto provide us with utmost confidence that all the key metrics that create shareholder value,the earnings metrics,our cash flow metrics,we havefull confidence well be achieving those as well.And on the earning side,as you may have noticed,for the second quarter in the row,weve raisedthe midpoint

134、 to articulate the confidence were seeing.Steven Fisher-UBS-AnalystSuper helpful.And then continued good progress on the International margin front,albeit a little bit slower than the Americas to be expected,right?But I guess,you know,curious if you have a playbook of things that are within your con

135、trol that you can implement to drive any moreimprovement in those International margins.I know selectivity has been a big focus area for you,for example,so just curious if theres anythingkind of within your control that youre focusing on to the International side.Thank you.Lara Poloni-AECOM-Presiden

136、tThanks,Stephen.Ill-its Lara,Ill take that.I mean,I think a lot of the drivers are similar to the ones that Gaurav mentioned earlier,so the strategyto leverage our enterprise capability centers,thats equally mature,for example,in the International segment.And youre right,I mean,this quarterwas tempe

137、red in terms of top line growth,but the most positive thing that we see was that pipeline was up 6%.So youre right,selectivity in termsof the clients,the key pursuits,so the-weve had some good wins in the quarter equally between the Americas segment and the Internationalsegment,and well continue to

138、work the frameworks.I think those frameworks are particularly important on the International side,particularly inour largest international market like the UK.So weve got good coverage there,not just in transportation,but also in AMP8 where weve now got,were sitting at about 150%coverage building on

139、the position we had in AMP7.And I think Spring Statement,the new Planning and InfrastructureBill,all of those sort of policy shifts will help to accelerate,and now,that we also have an election outcome in Australia,again,it allows us to doubledown in terms of the momentum and the pipeline that weve

140、been very focused on with some of our core infrastructure clients as well.11REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refin

141、itiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings CallTroy Rudd-AECOM-Chairman,Chief Executive OfficerAnd Im just going to add one more point.Im going to add one finer point to that,which is that when we-I

142、 mean,when we look at our businessand we look at where were investing in the business,we dont necessarily focus on simply organic growth or marginal improvement.We also lookat the return on our capital.And so,sometimes when you look at markets that might have lower margins,when you take into account

143、 how quicklyyou can effectively record and collect the work-record in your books and collect the work that for the work that youre performing,we actuallysee in a bunch of our international markets that we do very well in terms of the DSOs or the sales outstanding.And so,when we evaluate thosemarkets

144、,it isnt simply the margin profile.The margin is improving,and its certainly good margins,but we also look at the return on capital andthe return on capital and a bunch of international markets that might look like lower margins have great returns on capital for us.OperatorJamie Cook,Truist Securiti

145、es.Jamie Cook-Truist Securities-AnalystHi,good morning.Just two follow-up questions.One,and nice quarter.Specifically,just given where we started,you know what I mean,for theyear,in International,I mean,what is your expectation for International margins year-over-year for the full year?Do we expect

146、them to be flat orcan they grow just again based on where we are?And understanding the Americas margins were very strong,but just clarification there.And then my second question just on your longer-term margin targets,you target the 5%to 8%top line growth and then the 20 to 30 bps ofmargin expansion

147、.If we look at your actual performance,you know,you continue to exceed expectations on the margin side,right?Youre doingmuch better than the 20 to 30 bps,whereas the top line,seems to be more challenged,not challenging when youre doing a good job,but itsalways harder to get the top line growth.So I

148、guess,is there any-we get this question,is there any view that potentially we could switch thetargets and potentially have a more aggressive margin target and a less aggressive top line target?Gaurav Kapoor-AECOM-Chief Financial and Operations OfficerHey,Jamie.Ill take the first half of the question

149、.Specific to International and DCSA margins,as we look to the entirety of the year and second half,we expect DCSA and our Americas margins to continue to improve.Now,as Lara articulated just before in the question,one of the things werereally proud of is our International and Americas business conti

150、nue to make significant investments through our margins in the first half of theyear.Now,this also means that in our International business where we dont-did not have the growth as we were expecting on the revenue sidein the first half of the year,were willing to make that investment in our people b

151、ecause its going to drive that return on investment that is alwaysour key focus and mentality of how we operate.As we look forward to the second half of the year,again,one of the things to factor in is we expect growth consistent with the margin guidancethat we have provided,but also balance that yo

152、ure not going to see the same result in the first half because now the restructuring benefit isincluded that we undertook in the first half of the year last year is now included in our trailing 12 months.But still,the margins should be growing.Troy Rudd-AECOM-Chairman,Chief Executive OfficerAnd Jami

153、e,I just want to add something to that.This is I think its an important concept and its something that we think about a lot when we runthe business,and that is not all growth is of equal value.Because you-as you point out,top line growth can be hard.The contrary point is top linegrowth could be real

154、ly easy.If we want to erode our margins and actually,deliver work and grow a lot faster rate,we could.That is not a problem,we could bid work at lower rates,and we could live in a lot more work,and we could drive our margins down.12REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.

155、Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings

156、 CallAnd so,I think in this business,a really important sort of tenant for making sure youre making good decisions is we should be finding competitiveadvantage and competitive advantage turns into work that is more valuable for our customers and for us,and that sometimes might mean thatyour top line

157、 growth maybe looks a little slower.So I think its an important part of what we think about when we run the business,and we makedecisions on whats important in creating value.OperatorAdam Thalhimer,Thompson Davis.Adam Thalhimer-Thompson Davis-AnalystHey.Good morning,guys.Im trying to think through t

158、he gross revenue versus net revenue,and I think thats starting to reflect.You talked aboutwalking away from some construction management opportunities,is that reflective of you de-emphasizing construction management,or is thereanything or is there something starting in construction management that w

159、ill-that would cause gross revenue to increase more in the comingquarters?Troy Rudd-AECOM-Chairman,Chief Executive OfficerYeah.So good-again,good observation,and its really a combination of two things.One is being really thoughtful about the work that youregoing to do and the risk that might be inhe

160、rent in it,but also recognize that in Construction Management,there are cycles.And so,what we havebeen experiencing in the business is weve been working through a cycle,and weve been repositioning that business to do different kinds of workin the future.And as you reposition the business,you burn of

161、f backlog,and so as youre burning off backlog,youll see a decline in gross revenue.And as weve built that backlog up in the future,it starts out in the first few years,usually a year or two years where youre doing,Im going to callit pre-construction work,that doesnt come with it the significant amou

162、nt of gross revenue as you start to procure to build.And so,were just reallygoing through that cycle,weve been burning off backlog.And as weve refilled the backlog,with,Im going to call it with great projects,were inthat phase where we just dont have that same amount of procurement through those thr

163、ough that work,but it will improve over time.Adam Thalhimer-Thompson Davis-AnalystOkay,perfect.And then just quickly,can you give us an update on the wind down of AECOM capital and just curious if we should keep modelingsomething for that business in 2026?Troy Rudd-AECOM-Chairman,Chief Executive Off

164、icerNo,you shouldnt.OperatorAnd that concludes our question-and-answer session.I will now turn the call back over to Troy Rudd for closing remarks.Troy Rudd-AECOM-Chairman,Chief Executive OfficerYeah.Again,I just want to-I want to end by complimenting all the folks here at AECOM.Theyve done an outst

165、anding job working together towork through an uncertain time and an uncertain environment.And as a result of their extraordinary effort,its proven up in our results.So thankyou to our team and thank you all for joining us today.Take care.13REFINITIV STREETEVENTS|Contact Us2025 Refinitiv.All rights r

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167、Earnings CallOperatorThat concludes todays conference call.Thank you for your participation.You may now disconnect.DISCLAIMERRefinitiv reserves the right to make changes to documents,content,or other information on this web site without obligation to notify any person of such changes.In the conferen

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173、IV STREETEVENTS|Contact Us2025 Refinitiv.All rights reserved.Republication or redistribution of Refinitiv content,including by framing or similar means,is prohibited without the prior writtenconsent of Refinitiv.Refinitiv and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies.MAY 06,2025/12:00PM,ACM.N-Q2 2025 AECOM Earnings Call