SEC Filings

10-Q
AECOM filed this Form 10-Q on 02/06/2019
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Table of Contents

 

Our principal sources of liquidity are cash flows from operations, borrowings under our credit facilities, and access to financial markets. Our principal uses of cash are operating expenses, capital expenditures, working capital requirements, acquisitions, repurchases of common stock, and repayment of debt. We believe our anticipated sources of liquidity including operating cash flows, existing cash and cash equivalents, borrowing capacity under our revolving credit facility and our ability to issue debt or equity, if required, will be sufficient to meet our projected cash requirements for at least the next twelve months. We sold non-core oil and gas assets in fiscal 2018 and we expect to sell additional non-core oil and gas assets in the next twelve months. We expect to spend approximately $60 to $70 million in restructuring costs in fiscal 2019, and we also expect to evaluate our geographic exposure as part of a proposed plan to exit more than 30 countries, subject to applicable laws, to improve profitability and reduce our risk profile.

 

Generally, we do not provide for U.S. taxes or foreign withholding taxes on gross book-tax basis differences in our non-U.S. subsidiaries because such basis differences are able to and intended to be reinvested indefinitely. At December 31, 2018, we have determined that we will continue to indefinitely reinvest the earnings of some foreign subsidiaries and therefore we will continue to account for these undistributed earnings based on our existing accounting under ASC 740 and not accrue additional tax outside of the one-time transition tax required under the Tax Cuts and Jobs Act that was enacted on December 22, 2017. Determination of the amount of any unrecognized deferred income tax liability on this temporary difference is not practicable because of the complexities of the hypothetical calculation. Based on the available sources of cash flows discussed above, we anticipate we will continue to have the ability to permanently reinvest these remaining amounts.

 

At December 31, 2018, cash and cash equivalents were $838.3 million, a decrease of $48.4 million, or 5.5%, from $886.7 million at September 30, 2018. The decrease in cash and cash equivalents was primarily attributable to cash used in operating activities, investments in unconsolidated joint ventures and repurchases of common stock, partially offset by net borrowings under our credit agreement.

 

Net cash used in operating activities was $200.4 million for the three months ended December 31, 2018, compared with net cash provided of $52.4 million for the three months ended December 31, 2017. The decrease was primarily attributable to the timing of receipts and payments of working capital, which includes accounts receivable, contract assets, accounts payable, accrued expenses, and contract liabilities. The sale of trade receivables to financial institutions during the three months ended December 31, 2018 provided a net benefit of $13.9 million as compared to $29.6 million during the three months ended December 31, 2017. We expect to continue to sell trade receivables in the future as long as the terms continue to remain favorable to us.

 

Net cash used in investing activities was $59.7 million for the three months ended December 31, 2018, as compared to $27.5 million for the three months ended December 31, 2017. This increase in cash used was primarily attributable to an increase in investments in unconsolidated joint ventures of $23.7 million.

 

Net cash provided by financing activities was $213.2 million for the three months ended December 31, 2018 as compared to net cash used of $17.0 million for the three months ended December 31, 2017. This change was primarily attributable to an increase in net borrowings under our credit agreements, partially offset by repurchases of common stock.

 

Working Capital

 

Working capital, or current assets less current liabilities, increased $211.2 million, or 21.2%, to $1,208.8 million at December 31, 2018 from $997.6 million at September 30, 2018. Net accounts receivable and contract assets, net of contract liabilities, stayed flat at $4,537.4 million at December 31, 2018 and September 30, 2018.

 

Days Sales Outstanding (DSO), which includes net accounts receivable and contract assets, net of contract liabilities, and excludes the effects of recent acquisitions, was 82 days at December 31, 2018 compared to 78 days at September 30, 2018.

 

In Note 4, Revenue Recognition, in the notes to our consolidated financial statements, a comparative analysis of the various components of accounts receivable is provided. Except for claims, substantially all contract assets are expected to be billed and collected within twelve months.

 

Contract assets related to claims are recorded only if it is probable that the claim will result in additional contract revenue and if the amount can be reliably estimated. In such cases, revenue is recorded only to the extent that contract costs relating to the claim have been incurred. Award fees in contract assets are accrued only when there is sufficient information to assess contract performance. On contracts that represent higher than normal risk or technical difficulty, award fees are generally deferred until an award fee letter is received.

 

Because our revenue depends to a great extent on billable labor hours, most of our charges are invoiced following the end of the month in which the hours were worked, the majority usually within 15 days. Other direct costs are normally billed along with labor hours. However, as opposed to salary costs, which are generally paid on either a bi-weekly or monthly basis, other direct costs are generally not paid until payment is received (in some cases in the form of advances) from the customers.

 

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