SEC Filings

10-Q
AECOM filed this Form 10-Q on 02/06/2019
Entire Document
 

Table of Contents

 

Gross Profit

 

Our gross profit for the three months ended December 31, 2018 increased $34.4 million, or 25.3%, to $170.6 million as compared to $136.2 million for the corresponding period last year.  For the three months ended December 31, 2018, gross profit, as a percentage of revenue, increased to 3.4% from 2.8% in the three months ended December 31, 2017.

 

Gross profit changes were due to the reasons noted in DCS, CS and MS reportable segments below.

 

Equity in Earnings of Joint Ventures

 

Our equity in earnings of joint ventures for the three months ended December 31, 2018 was $12.5 million as compared to $29.7 million in the corresponding period last year.

 

The decrease in equity in earnings of joint ventures for the three months ended December 31, 2018 was due primarily to a gain from the acquisition of a previously unconsolidated joint venture in our CS segment recorded in the prior period and did not repeat in the current period, and a decrease in volume in storm recovery activity in a joint venture in our DCS segment.

 

General and Administrative Expenses

 

Our general and administrative expenses for the three months ended December 31, 2018 increased $1.2 million, or 3.5%, to $35.9 million as compared to $34.7 million for the corresponding period last year. As a percentage of revenue, general and administrative expenses was 0.6% and 0.7% for the three months ended December 31, 2018 and 2017, respectively.

 

Restructuring Costs

 

In the first quarter of fiscal 2019, we commenced a restructuring plan to improve profitability. We expect to incur restructuring costs of $80 to $90 million in fiscal 2019 primarily related to personnel and real estate costs. During the first quarter of fiscal 2019, we incurred restructuring expenses of $63.3 million. We expect to achieve approximately $225 million of annual cost savings, which is expected to contribute to $85 million of cost savings in fiscal 2019.

 

Other Income

 

Our other income for the three months ended December 31, 2018 increased to $3.6 million from $2.3 million for the corresponding period last year.

 

Other income is primarily comprised of interest income.

 

Interest Expense

 

Our interest expense for the three months ended December 31, 2018 decreased to $56.0 million as compared to $56.2 million for the corresponding period last year.

 

Income Tax Benefit

 

Our income tax benefit for the three months ended December 31, 2018 was $33.6 million as compared to $47.1 million in the corresponding period last year. The decrease in tax benefit for the current period compared to the corresponding period last year is due primarily to a greater tax benefit from accounting for the tax impacts of the Tax Act and benefits related to changes in uncertain tax positions in the first quarter of fiscal 2018 as compared to the benefit recorded in the first quarter of fiscal 2019 related to releasing a valuation allowance as a result of final regulations related to the Tax Act.

 

During the first quarter of fiscal 2019, a valuation allowance in the amount of $38.1 million related to foreign tax credits was released due to sufficient positive evidence obtained during the quarter. The positive evidence included the issuance of regulations related to the Tax Act during the quarter and forecasting the utilization of the foreign tax credits within the foreseeable future. This item is not expected to have a continuing impact on the effective tax rate for the remainder of the fiscal year. During the first quarter of fiscal 2018, we recorded a tax benefit of $41.7 million related to one-time U.S. federal tax law changes and recorded a benefit of $11.2 million related to changes in uncertain tax positions primarily in the U.S. and Canada.

 

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