AECOM

Hello, everyone. Thank you for joining us and welcome to ACOM's third quarter 2026 earnings conference call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Will Gabrielski, Senior Vice President of Finance and Investor Relations. You may begin.

Thank you, operator. I would like to direct your attention to the safe harbor statement on page one of today's presentation. Today's discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today's forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we undertake no obligation to update our forward-looking statements. We use certain non-GAAP financial measures in our presentation. The appropriate GAAP reconciliations are incorporated into our materials, which are posted to our website. Growth rates are presented on a year-over-year basis and less otherwise noted. Any references to segment margins or segment-adjusted operating margins will reflect the performance for the Americas and international segments. When discussing revenue and revenue growth, we will refer to Net Service Revenue, or NSR, which is defined as revenue excluding pass-through revenue. NSR growth rates are presented on a constant currency basis unless otherwise noted. Today's remarks will focus on continuing operations. On today's call, Troy Rudd, our chief executive officer, will review key developments and accomplishments this quarter, as well as our outlook for the business. Lara Poloni, our president, will discuss key trends across our markets. And Gaurav Kapoor, our chief financial and operations officer, will review our financial performance and outlook in greater detail. We will conclude with a question and answer session. With that, I will turn the call over to Troy. Troy?

Thank you, Will, and thank you all for joining us today. We had many accomplishments in the quarter, and I'm proud of our teams and the positive impact we are having on our clients' critical infrastructure investments. But before getting into the details of our results, I'd like to address the $337 million pre-tax charge included in the quarter. The charge is primarily the result of a delay in delivering a large construction management project due to several factors, the largest of which is overall productivity of subcontractors on the last phase of this project. We had expected this project to be substantially completed in the first quarter of fiscal 2027 and now expect this near the end of the second quarter of fiscal 2027. In addition to the financial impacts in this period, we are pursuing sizable claims for this project and our confidence in recovery has been validated by our success in the dispute resolution process to date. We expect resolution of the remaining claims will take some time and this will continue to burden our cash flow through the first half of 2027. 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. We decided many years ago to no longer pursue design-build work for P3 clients in the construction management business due to the inherent challenges this structure can present. As a result, this project would not clear our risk hurdles today. I also want to provide an update on the second design-build P3 project in construction management, which was bid around the same time. We are progressing towards the plan's substantial completion date of phase one in the first quarter of fiscal 2027, and this remains consistent with our previous forecast. The second CM project also has a significant claim position to recoveries due to delays not caused by us. Finally, notwithstanding these two projects, the construction management business has produced strong cash flow and high returns on capital consistently over time. Based on the composition of our backlog and pipeline today, I expect this trend will continue. Now turning to the details of our results. Our teams are winning work at a record rate. Our backlog increased 13% to a new all-time high on record quarterly wins and a 1.6 book to burn across the business, including 1.8 times in the Americas. Year to date, our book to burn is 1.4 times, providing extraordinary long-term visibility. Adjusted for one last working day in the quarter, NSR in the design business increased by 5%. This was led by 6% growth in the America's design business, as well as a return to growth in the international business, which increased 4%, led by the UK and Australia. Even so, overall NSR growth in the quarter was below our expectations. The primary drivers are slower than anticipated new project starts in the construction management business and the continued impact from the conflict in the Middle East, which we see continuing through the fourth quarter. While both businesses have fallen short of our expectations in the second half of fiscal 2026, they have strong backlogs and are well positioned for return to growth in 2027. Excluding the financial impacts of the construction management project charge, adjusted EBITDA and EPS improved year-over-year by 5% and 11%, benefiting from the return to NSR growth, which resulted in margin expansion in the international segment. We also delivered positive free cash flow of $55 million, despite the handwind from the construction management projects mentioned earlier, demonstrating the strength of our historically consistent free cash flow conversion. Turning to financial guidance. Our updated financial guidance captures three main changes from last quarter. The impacts of the construction management project charge, lower than expected NSR growth, and continued margin outperformance. As a result, we now expect full-year NSR of approximately $7.3 billion and adjusted EBITDA and EPS of $950 million and $4.05 respectively at the midpoint of the ranges. Adjusted for the charge and to help with comparability, we now expect full-year NSR of $7.65 to $7.7 billion and adjusted EBITDA and EPS consistent with our prior guidance at $1.29 million and $6 at the midpoints. This includes a raised expectation for adjusted EBITDA margin to 17.4% versus the 17% previously. We also expect to deliver free cash flow of $300 million for the full 2026 fiscal year. With that, I will turn our call over to Lara.