AECOM bullish on data center, defense spending

With some election fog clearing, AECOM has insight into the construction outlook for the years ahead, which includes plenty of opportunity in data centers and defense, leaders of the Dallas-based firm said during an earnings call on Tuesday.

A series of elections around the world in the past year meant a shift in policy and funding agendas, AECOM President Lara Poloni said on the call, but the new administrations’ priorities in the U.S., Canada, the U.K. and Australia include speeding up construction.

“A recent Supreme Court ruling and several executive orders are streamlining the NEPA permitting process, while Transportation Secretary Duffy’s America is Building Again agenda focuses on removing investment barriers,” Poloni said. “Similarly, the U.K.’s 10-year strategy prioritizes efficient project delivery, and Canada is centralizing permitting with the goal of approving projects 60% faster.” 

State and local transportation budgets remain robust in the U.S., buoyed by the five-year Infrastructure Investment and Jobs Act, CEO Troy Rudd said on the call.

“Only 36% of IIJA funding targeted to our markets has been spent, which provides for continued growth opportunities as evident in our pipeline,” Rudd said. “State DOT budgets [are] forecasted to achieve another record high in 2026. Our state and local clients continue to prioritize infrastructure spending to maximize available federal matching funds.”

The passage of the One Big Beautiful Bill Act brings new opportunities, Rudd said, as the federal government focuses on investments in critical infrastructure such as data centers and power for the growing artificial intelligence industry. The military is another big winner in the legislation, which allocates $150 billion of mandatory defense spending.

“The [Department of Defense] is our largest single client and activity is gaining momentum,” Rudd said. “It also includes substantial funding for aviation and the Coast Guard, both markets where we have a leading presence.”

Indeed, in July the U.S. Army Corps of Engineers Honolulu District awarded AECOM a package of architect-engineer indefinite delivery, indefinite quantity contracts valued at more than $400 million, as well as two USACE contracts for projects in Europe totaling up to $490 million.

The firm also snagged the engineering lead role in the White House ballroom project.

By the numbers

AECOM reported profit of $131 million for its fiscal third quarter, down 2.5% from the same period last year. Revenue for Q3 was $4.18 billion, up a hair from Q3 of the previous year.

Backlog stood at $24.59 billion, up 5% from last year.

“Within the pipeline, growth remains fastest in the earliest stages, which indicates several years of continued strong market conditions as our clients plan for a future of higher spending,” said Rudd. “The water market is strong, but these projects tend to be longer in duration and therefore less impactful to near-term revenue as compared to the large civil projects that we completed during the last cycle.”

The firm raised its annual financial guidance for the third consecutive time this year, including upping its full year adjusted EBITDA and EPS by 10% and 16% respectively.

Overall, the firm is well-poised to capitalize future infrastructure demand, Rudd said.

“The multi-decade secular megatrends that are driving our markets are accelerating. This includes global investments in infrastructure, sustainability and resilience and energy,” Rudd said. “These megatrends are apparent in our pipeline.”