AECOM sees more runway ahead for the data center boom, especially as clients continue to ramp up spending, according to remarks made during the company’s fiscal third-quarter earnings call Tuesday.
Unlike previous cycles, today’s funding environment is “incredibly healthy,” said Lara Poloni, president of AECOM, and represents a strong tailwind for several of the contractor’s core markets. Investment from the U.S. private sector is also accelerating, she added.
“This is particularly true in data centers, which remains one of our fastest-growing businesses, and where we have been expanding our hyperscaler relationships,” Poloni said. “Our data center work and outlook continues to be very strong and fast-growing.”
Along with data center growth, AECOM also is seeing opportunities in commercial and healthcare projects, said CEO Troy Rudd. Poloni added AECOM’s water and Department of War pipeline expanded by about 30% each in the quarter, respectively. This includes significantly increased facilities work, where AECOM is the leading provider to the Army and the Navy.
She said state and local clients have also announced major multiyear infrastructure plans as well. These projects center around highways, bridges, transit and rail, sectors where AECOM wins contracts consistently, she said during the call.
“Additionally, Congress is progressing the next five-year surface transportation authorization,” said Poloni. “The House’s initial $580 billion proposal includes key funding for all key areas to which we are exposed and gives us further conviction in the continued bipartisan commitment to infrastructure investment.”
However, that funding still isn’t finalized, with the original $1.2 trillion Infrastructure Investment and Jobs Act set to expire on Sept. 30.
Construction management charges
Despite the positivity around the Dallas-based firm’s core sectors, AECOM reported a $337 million charge on a construction management project after subcontractor productivity pushed its expected completion date further into next year.
Baird, a Milwaukee-based financial services firm, believes the charge stems from one of AECOM’s contracts on the JFK Airport modernization program, according to an analyst note shared with Construction Dive. AECOM did not identify the project during its earnings call.
Rudd said the firm initially expected to substantially complete the project during the first quarter of 2027. Now, the project, which AECOM won in 2019, should reach completion by the end of the firm’s fiscal second quarter in 2027, he said.
“The largest [factor] is overall productivity of subcontractors on the last phase of this project,” said Rudd during the call. “We are disappointed with this outcome, but I want to add some context. This project was bid in 2019. Since that time, we have changed leadership and tightened our risk controls.”
AECOM no longer pursues design-build P3 work in its construction management business, said Gaurav Kapoor, chief financial and operations officer at AECOM. The company now predominantly focuses only on guaranteed maximum price contracts, where designs and subcontractor costs are further developed before AECOM assumes additional risk, he said.
“These types of projects will never even qualify to be approved in our current structure, commercial structure,” said Kapoor during the call. “We don’t have any design build P3 in our portfolio, in our CM business. It just doesn’t exist.”
Q3 by the numbers
AECOM reported an $86.71 million net loss during its fiscal third quarter, compared with $130.97 million income in the year-ago period. Revenue totaled $3.59 billion, down 14% year over year, according to the report. That $337 million charge impacted both revenue and profitability in the quarter, according to the company.
Backlog reached a record $27.82 billion in the fiscal third quarter, up 13% from a year earlier.
Baird called the report “incrementally negative” in the analyst note.
“AECOM’s F3Q26 report showed a $337M project charge and a reduction to the company’s forward revenue guide, easily overshadowing a strong long-term awards quarter,” wrote Andrew Wittmann, senior research analyst at Baird. “Last quarter’s high cash burn rate foreshadowed the charges, somewhat cushioning today’s blow, but the magnitude is notable and the project still has 20% to go.”
