AECOM's third quarter 2025 financial results exceeded expectations with record NSR, margins, EBITDA, EPS, backlog, and pipeline.
Backlog and contracted backlog both grew sequentially and year-over-year, reaching all-time highs.
Business development expenses increased above prior year and plan, supporting strong pipeline and backlog growth.
Capital allocation included returning nearly $240 million to shareholders year-to-date and maintaining a strong balance sheet with net leverage of 0.6.
Free cash flow increased by 27% year-to-date, with $262 million generated in the quarter.
International segment NSR grew 3%, driven by the U.K. and Middle East, with an 11.9% adjusted operating margin.
Organic NSR growth accelerated to 6%, led by 8% growth in the Americas segment, the highest margin segment.
Segment adjusted operating margin reached a record 17.1%, a 90 basis point improvement year-over-year.
The Americas segment NSR grew 8% with a 20.5% adjusted operating margin, a new quarterly record.
Third quarter adjusted EBITDA and EPS increased by 10% and 16%, respectively; year-to-date increases were 9% and 20%.
Record Performance in Power Systems and Distribution Segments
Power Systems segment achieved record revenues of $1.9 billion and EBITDA of $433 million, driven by strong demand in data center and mission-critical applications.
Distribution segment also posted record EBITDA of $445 million, with a 14.6% margin, benefiting from higher Power Generation demand and operational efficiencies.
Management emphasized operational improvements and capacity expansion, with capacity doubling expected to be fully online by early 2026.
Adjusted EBITDA excluding LIFO was $45 million in Q2, up from $32.8 million in Q1.
Cash from operations was $24 million, with a cash conversion cycle of 66 days, improved from prior periods.
Excluding LIFO, gross margin expanded by 40 basis points sequentially to 19%.
Gross margin contracted by 10 basis points to 17.9%, impacted by a higher-than-expected LIFO expense of $13 million due to rising commodity prices outpacing selling prices.
LIFO charge increased due to rising metal costs, with full year LIFO expense estimated at approximately $40 million.
Net income attributable to Ryerson was $1.9 million or $0.06 per diluted share, compared to a net loss of $5.6 million and loss per share of $0.18 in the prior quarter.
Ryerson reported net sales of $1.17 billion in Q2 2025, a 3% increase compared to Q1, driven by a 2.8% rise in average selling prices and a slight increase in tons shipped.
Second quarter shipments decreased by 1.2% quarter-over-quarter, outperforming the North American industry volume decline of 2.1%.
Total company tons shipped were up fractionally quarter-over-quarter with strength in consumer durable and HVAC sectors, but weakness in construction equipment and commercial ground transportation.
Total debt ended at $510 million with net debt of $479 million, resulting in a leverage ratio of 4.4x, above the target range of 0.5x to 2x.
Warehousing, delivery, selling, general and administrative expenses increased slightly to $204 million due to one additional business day but decreased as a percentage of revenue and per day.
Dafinchi