Under the Trump Administration’s infrastructure program, Aecom (NYSE: ACM) reported a record year for 2017 ended on September 30, with revenues at an all-time high of US$18.2 billion. Its backlog grew 11% and reached a record of US$47.5 billion, with most of the revenue and backlog from the both federal and local governments. Noting substantial momentum in the market, Aecom is confident it will grow further between 2018 and 2022, forecasting profits annually of about 5% and anticipating creating over US$4 billion of capacity from the company’s robust five-year free cash flow forecast of more than US$3.5 billion. It also expects its earnings per share (EPS) to increase by 12% to 15%, and its earnings before interest, taxes, depreciation and amortization (EBITDA) to grow by more than 7% in order to enhance stockholder value.
In 2016, Caterpillar (NYSE:CAT) was at a five-year low point, with sales having fallen for four years straight. The company suffered a more than 36% decline in earnings, amid weak demand from industries including mining, construction, oil and gas, and rail. In 2017, however, Caterpillar managed to rebound and thrive. For the year, its sales were up 17.97% to 45.46 billion: but a year earlier its revenues were US$38.54 billion. Its net income was US$754 million versus a loss of US$67 million. Also, at the end of 2017, Caterpillar’s backlog was US$15.8 billion, up 2.6% from US$15.4 billion at third quarter end. Driven by bullish order rates, lean dealer inventories, growing backlog and prospects of higher sales volume, the company anticipates that its fiscal 2018 EPS will be at the range of US$8.25 to US$9.25.
Meanwhile, boosted by tax cuts, steelmaker Nucor (NYSE:NUE) closed the year well with revenue growth on double-digit growth in prices and shipments. For 2017, Nucor reported net earnings of US$1.32 billion or US$4.10 per share, up 65.77% from US$796.3 million or US$2.48 in 2016. Its net sales for the full year went up by about 25% year-over-year to US$20.3 billion.
A survey by the Associated General Contractors of America, shows contractors, machine makers and suppliers more optimistic about 2018. Even though there is concern about growing worker shortages, rising costs and the impact of new regulations and federal budget cutting, conditions in the sector are generally heading in the right direction. It is important to note also that most construction companies’ projects take years to complete, so they are, to some extent, immune from sudden economic shock.
In addition, their clients are often large and well capitalized. As such, utilities and energy firms and government entities tend to have more financial flexibility during tough times. A key barometer of the future success for these companies is the dollar value of backlog work that they get. This is an excellent indicator of what major businesses and government are spending and feeling about future expansions and renovations.