|AECOM filed this Form 8-K on 05/08/2018|
Our revenue growth and $6.9 billion of wins reflect the competitive advantages of our diversified mix of geographies and leading capabilities, strong presence as a leading government services contractor, and strengthening markets in the Americas, said Michael S. Burke, AECOMs chairman and chief executive officer. Our backlog is at a new high of $50 billion, which is an 18% year-over-year increase with the fastest growth in our higher-margin DCS and MS segments. Importantly, this momentum is continuing into the third quarter, including more than $6 billion of wins since early April in MS. Furthermore, with our intention to sell and exit certain non-core Oil & Gas operations and our decision to no longer pursue fixed price gas power plant EPC work, we are positioning the business to deliver consistent operational and financial performance for our shareholders. As a result, we are confident in reiterating our industry-leading five-year financial targets through fiscal 2022, including a 5%+ organic revenue CAGR, a 7%+ adjusted EBITDA CAGR, a 12 15% adjusted EPS CAGR and at least $3.5 billion of free cash flow.
We are pleased with our cash flow performance through the first half of the year, said W. Troy Rudd, AECOMs chief financial officer. During the quarter, we undertook a refinancing of our credit facility, including the repayment of our 2022 Senior Notes, which improved the cost and extended the maturity profile of our debt. With this transaction and our progress through the first half of the fiscal year, we are positioned to operate the business and execute our capital allocation policy with a great degree of certainty.
Wins and Backlog
Wins were $6.9 billion, and resulted in a book-to-burn ratio(5) of 1.4. Wins were highlighted by strength across the business, including greater than 1 book-to-burn ratios in the DCS, CS and MS segments. Total backlog increased 18%(3) over the prior-year period to $50 billion, and continued to reflect a favorable mix shift to the higher-margin DCS and MS segments.
Design & Consulting Services (DCS)
The DCS segment delivers planning, consulting, architectural and engineering design services to commercial and government clients worldwide in markets such as transportation, facilities, environmental, energy, water and government.
Revenue in the second quarter was $2.0 billion. Constant-currency organic(4) revenue increased by 5% and included strong performance in the Companys transportation and water markets in the Americas, which are benefiting from improved levels of funding and a solid backlog position.
Operating income was $123 million compared to $113 million in the year-ago period. On an adjusted basis, operating income(1) was $130 million compared to $120 million in the year-ago period. Profitability in the Americas and APAC regions was strong, which was partially offset by slower growth and profitability in the EMIA region.
Construction Services (CS)
The CS segment provides construction services for energy, sports, commercial, industrial, and public and private infrastructure clients.
Revenue in the second quarter was $1.9 billion. Constant-currency organic(4) revenue increased by 4%, led by continued strong growth in the Building Construction business. Total revenue growth included strong performance from the recently acquired Shimmick Construction business.
Operating loss was $180 million compared to operating income of $26 million in the year-ago period due to a non-cash charge relating to Oil & Gas assets held for sale as described above. On an adjusted basis, operating income(1) was $26 million compared to $34 million in the year-ago period, primarily due to two projects in the building construction and civil construction businesses.
Management Services (MS)
The MS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance and systems-integration services and information technology services, primarily for agencies of the U.S. government, national governments around the world and commercial customers.
Revenue in the second quarter was $898 million. Organic(4) revenue increased by 9%, which included strong performance across the Companys portfolio of projects.
Operating income was $43 million compared to $52 million in the year-ago period. On an adjusted basis, operating income(1) was $53 million compared to $65 million in the year-ago period.