AECOM (ACM Q3 FY2024 earnings call

• Winning key pursuits: Win rate at a record level, especially for programs over $25 million. Larger pursuits expected in 2025 to be 70% greater than last year.
• Enhancing employee value proposition: Leadership development program enrollment tripled, voluntary attrition below industry average.
• Leveraging scale and capacity: Adoption of digital tools and AI integration in bid/proposal process; aim for 5%-15% of work hours via scripts/code.
• Focusing on fast-growing markets: 4 largest regions (U.S., Canada, U.K., Australia) generate ~90% profit; energy transition and digital consulting as new opportunities.
• Example: Involved in Pure Water Southern California program, managing environmental compliance and advanced purification facilities.

The Americas segment saw net service revenue (NSR) increase by 8%, with adjusted operating margin expanding by 50 basis points to 19.3%. The International segment had NSR increase by 7%, with an adjusted operating margin of 11.7% (a new quarterly high). Water and environment account for 35% of the company's revenue.

• Increased fiscal '24 earnings guidance, expecting 21% adjusted EPS growth at midpoint.
• Strong backlog and pipeline provide visibility for future growth.
• Expect continued growth in international markets despite reprioritization in some regions.
• Free cash flow conversion on track, with $407 million returned to shareholders in 2024.

• Reprioritization of funding in Middle East and U.K. due to elections.
• Larger projects take longer to convert from bid to contract.
• Uncertainty in timing of settlements from discontinued operations.

Q: About revenue outlook and pipeline conversion.

A: Troy Rudd discussed reprioritization in some markets but confidence in future growth due to strong backlog and pipeline.

Q: Margin cadence and backlog lumpiness.

A: Gaurav Kapoor talked about consistent margin delivery and backlog being lumpy due to larger projects.

Q: How margins in backlog compare to quarterly margins.

A: Gaurav Kapoor stated they don't provide margin in backlog details but are confident in achieving long-term margin targets.

Q: Setup for IIJA programs in 2025.

A: Troy Rudd said IIJA funding is deployed in pipeline projects, with visibility but couldn't give exact percentage relative to 2024.