AECOM Considering Selling Construction Management Arm To Go All-In On AI, Advisory
AECOM’s construction management business might be up for sale soon.
The company is reviewing possible alternatives that might include selling that division off, it announced Tuesday in a quarterly earnings release.
AECOM stands for architecture, engineering, construction, operations and management, and construction management is one of its longest-standing business lines. AECOM Construction Management will officially be classified as held for sale on its balance sheet.
AECOM’s advisory business is the company’s biggest moneymaker and produces the highest levels of returns, executives said during a conference call. Its investment in proprietary artificial intelligence platforms is also yielding outsized returns, and AECOM said it is testing third-party applications.
The firm is focusing on expanding both areas and has changed its financial forecast for fiscal years 2026 through to 2029. The company saw a 4% year-over-year increase in its backlog of projects across its business lines, a new company high and the fifth consecutive quarter of growth.
Demand for large, complex infrastructure projects is increasing, which is good news for the firm’s advisory services, AECOM President Lara Poloni said during the call. AECOM plans to use AI in tandem with advising on sustainable and resilient projects.
AECOM brought in $4.2B in revenue last quarter, a 2% year-over-year increase. Operating income stayed flat at $237M, and net income fell by 22% to $132M.
Thanks to delivering its previous 17% target in its fiscal third quarter, five quarters ahead of schedule, its adjusted operating margin and earnings before interest, taxes, depreciation and amortization margin are expected to be at a 20% exit rate by FY 2028. The main driver is expected to be a boost in operating leverage driven by the use of AI, particularly in its advisory businesses, meaning small increases in sales more significantly impact profits and boost yields.
Net service revenue is expected to grow 5% to 8% annually across the company, but it projects the advisory business will double its net service revenue to $400M over the next three years.
AECOM’s construction management business has two divisions: Tishman and Hunt. Last month, Hunt was picked to manage the construction process as the new stadium for the Philadelphia 76ers and Flyers sports teams gets underway.
The company planned and managed the modernization efforts for Los Angeles International Airport, and it designed and built Barclays Center, a 670K SF mixed-use sports arena that houses the Brooklyn Nets.
