AECOM 10-Q Filing Summary: Q1 Fiscal 2026
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended January 2, 2026 (reported as December 31, 2025 for presentation purposes). AECOM is a global provider of professional infrastructure consulting, advisory, and engineering services. The company operates through three reportable segments: Americas, International, and AECOM Capital. The company has exited substantially all self-perform at-risk construction businesses, which are now classified as discontinued operations.
Key Financial Metrics
| Metric | Q1 2026 (3 Months Ended Dec 31) | Q1 2025 (3 Months Ended Dec 31) |
|---|---|---|
| Revenue | $3,830.8 million | $4,014.2 million |
| Gross Profit | $281.0 million (7.3% margin) | $268.4 million (6.7% margin) |
| Net Income Attributable to AECOM | $74.5 million | $167.0 million |
| Diluted EPS (Continuing Ops) | $1.06 | $1.33 |
| Diluted EPS (Total) | $0.56 | $1.25 |
| Operating Cash Flow | $70.2 million | $151.1 million |
| Total Debt | $2,738.5 million | $2,743.7 million |
| Cash and Cash Equivalents | $1,246.7 million | $1,585.7 million |
Material Changes vs. Prior Period
- Revenue Decline: Total revenue decreased 4.6% year-over-year. This was primarily driven by a reduction in pass-through revenues ($2.0 billion vs. $2.2 billion) and approximately 3 percentage points fewer working days in the quarter.
- Discontinued Operations Loss: Net loss from discontinued operations increased significantly to $65.9 million from $9.6 million. This was driven by a $61.8 million non-cash loss related to a revised estimated recovery on a Department of Energy deactivation project.
- Restructuring Costs: The company incurred $27.9 million in restructuring and acquisition costs, compared to none in the prior year period.
- Segment Performance:
- Americas: Revenue down 4.3%, but gross profit margin improved to 7.0% from 6.1%.
- International: Revenue down 5.4%, with gross profit margin slightly declining to 8.4% from 8.6%.
- Capital Allocation: The company repurchased $325.9 million of common stock during the quarter. On February 4, 2026, the Board approved an increase in the stock repurchase authorization to $1.0 billion.
Guidance, Outlook, and Risks
- Outlook: Management expects underlying revenue excluding pass-through revenues to increase across most end markets due to global infrastructure spending (e.g., U.S. Infrastructure Investment and Jobs Act) and rising national defense spending.
- Restructuring: The company expects to spend approximately $36 million on restructuring costs for fiscal 2026 to deliver margin improvements.
- Debt Refinancing: In July 2025, the company issued $1.2 billion of 6.000% Senior Notes due 2033 and used proceeds to redeem the 2027 Senior Notes. The average effective interest rate on total debt was 5.3%.
- Risks: Key risks include exposure to government spending reductions, currency fluctuations, and the resolution of legal claims related to discontinued operations (specifically the DOE project and a refinery turnaround project). The company is currently under tax audit in several jurisdictions.
Investor Verification Checklist
- Discontinued Operations Impact: Verify the final settlement terms of the DOE deactivation project, as the $61.8 million loss was based on revised estimates.
- Pass-Through Revenue Trends: Monitor the ratio of pass-through revenue to total revenue to assess the true organic growth of fee-based services.
- Working Capital Efficiency: Review Days Sales Outstanding (DSO), which increased to 77 days from 74 days, indicating potential collection headwinds.
- Debt Covenants: Confirm continued compliance with the consolidated leverage ratio covenant (max 4.00:1.00) under the Credit Agreement.
- Stock Repurchase Activity: Track the execution of the new $1.0 billion repurchase authorization approved in February 2026.