UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

 


 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): August 7, 2018

 

AECOM

(Exact name of Registrant as specified in its charter)

 

Delaware

 

0-52423

 

61-1088522

(State or Other Jurisdiction

 

(Commission

 

(I.R.S. Employer

of Incorporation)

 

File Number)

 

Identification No.)

 

 

 

1999 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
(Address of Principal Executive Offices, including Zip Code)

 

 

Registrant’s telephone number, including area code  (213) 593-8000

 

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

o  Pre-commencement communications pursuant to Rule 14d-(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company o

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

 

 

 



 

Item 2.02       Results of Operations and Financial Condition

 

On August 7, 2018, AECOM issued a press release announcing its financial results for the quarter ended June 30, 2018.  A copy of the press release is attached to this report as Exhibit 99.1.  Exhibit 99.1 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended.

 

AECOM reports its results of operations based on 52 or 53-week periods ending on the Friday nearest September 30, December 31, March 31, and June 30. For clarity of presentation, all periods are presented as if the periods ended on September 30, December 31, March 31, and June 30.

 

Item 9.01             Financial Statements and Exhibits. 

 

(d)  Exhibits

 

99.1

 

Press Release, dated August 7, 2018, entitled “AECOM reports third quarter fiscal year 2018 results.”

 

2



 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.

 

 

AECOM

 

 

 

 

Dated: August 7, 2018

By:

/s/ DAVID Y. GAN

 

 

David Y. Gan

 

 

Senior Vice President, Deputy General Counsel

 

3


Exhibit 99.1

 

 

Press Release

Investor Contact:

Media Contact:

 

Will Gabrielski

Brendan Ranson-Walsh

 

Vice President, Investor Relations

Vice President, Global Communications & Corporate Responsibility

 

213.593.8208

213.996.2367

 

William.Gabrielski@aecom.com

Brendan.Ranson-Walsh@aecom.com

 

AECOM reports third quarter fiscal year 2018 results

 

LOS ANGELES (August 7, 2018) — AECOM (NYSE:ACM), a premier, fully integrated global infrastructure firm, today reported third quarter revenue increased by 13% to $5.1 billion, which set a new quarterly all-time high. Net income and diluted earnings per share were $61 million and $0.37 in the third quarter, respectively. On an adjusted basis, diluted earnings per share(1) was $0.62.

 

($ in millions, except EPS)

 

As Reported

 

Adjusted
(Non-GAAP)

 

Revenue

 

$

5,148

 

 

Operating Income

 

$

161

 

$

202

(1)

Net Income

 

$

61

 

$

101

(1)

EPS (Fully Diluted)

 

$

0.37

 

$

0.62

(1)

Operating Cash Flow

 

$

72

 

 

Free Cash Flow

 

 

$

48

(2)

Backlog

 

$

53,794

 

 

 

Third Quarter 2018 Accomplishments:

 

·                  Organic(4) revenue increased by 10% over the prior year, which marks the seventh consecutive quarter of positive organic growth, led by the higher-margin DCS and MS segments and growth in all three segments.

·                  Adjusted EBITDA of $223 million increased by 15% year-over-year after adjusting for the large AECOM Capital gain in the prior-year quarter; sequential adjusted EBITDA growth of 11% was ahead of prior guidance for slight growth.

·                  Total backlog reached a new record of $54 billion, a 16%(3) increase over the prior year, which includes a continued favorable mix shift to the higher-margin DCS and MS segments.

·                  Wins of $9.4 billion also set a new record, resulting in a 1.7x book-to-burn(5) ratio, and included solid performance across the business.

·                  Delivered positive free cash flow(2) for the 23rd time in the past 25 quarters, and total debt declined by $69 million; cash flow was impacted due to working capital used to support 13% revenue growth, primarily from increased storm recovery work in the Americas.

 

Prioritizing Stock Repurchases to Create Shareholder Value:

 

·                  AECOM plans to commence its share repurchases ahead of its prior expectation by entering into a $150 million accelerated stock repurchase (ASR) once its trading window opens on August 9th due to confidence in the strength of its business and outlook for its markets.

·                  The Company continues to believe its shares are undervalued and that repurchases represent a compelling avenue to generate long-term value for both AECOM and its shareholders.

·                  Upon completion of the ASR, the Company intends to then deploy substantially all free cash flow towards ongoing debt reduction and repurchases under its $1 billion Board authorization.

·                  The Company reiterates its target net leverage(6) of 2.5x, which it expects to achieve through a combination of ongoing debt reduction and EBITDA growth.

 

Strategic Decisions Update:

 

·                  On June 25th, the Company completed the sale of its Canadian Industrial Services Division and expects to complete the second non-core Oil & Gas business sale over the next several months.

·                  Construction of the Alliant combined cycle gas power plant remains on schedule and budget.

 

1



 

“Our record revenue and all-time high backlog are evidence that our design, build, finance, and operate vision, along with our leading scale and broad geographic reach, are resulting in a differentiated competitive offering and strong performance,” said Michael S. Burke, AECOM’s chairman and chief executive officer. “In addition to our accomplishments in the quarter, we are off to a strong start in the fourth quarter, including sizable wins that increase our confidence in continued backlog growth. As a result, we are moving forward with share repurchases under a $150 million ASR, reflecting our industry-leading track record of superior cash generation and the strong tailwinds driving our performance. We believe buying our shares at current prices will create long-term value for our shareholders.”

 

“Our strong third quarter results demonstrate the progress we are making on our five-year financial plan through fiscal 2022 to deliver a 5%+ revenue CAGR, 7%+ adjusted EBITDA CAGR, 12-15% adjusted EPS CAGR, and at least $3.5 billion of cumulative free cash flow,” said W. Troy Rudd, AECOM’s chief financial officer. “In fact, we are already outperforming our revenue growth targets and, after adjusting for the large AECOM Capital gain in the year-ago period, our EBITDA growth is also outperforming. We are on track to maximize shareholder value through our capital allocation commitments.”

 

Wins and Backlog

 

Wins were $9.4 billion, which set a new record for the Company, and resulted in a book-to-burn ratio(5) of 1.7x. Wins were highlighted by strength across the business, including a 6.6x book-to-burn ratio in the MS segment. Total backlog increased by 16%(3) over the prior-year period to $54 billion and continued to reflect a favorable mix shift to the higher-margin DCS and MS segments.

 

Business 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 third quarter was $2.1 billion. Constant-currency organic(4) revenue increased by 12% and included 17% growth in the Americas, which was driven by strong growth in the Company’s transportation and water markets, including accelerating work related to storm recovery efforts following last year’s hurricane season in the Southeastern U.S. and Caribbean.

 

Operating income was $120 million compared to $94 million in the year-ago period. On an adjusted basis, operating income(1) was $128 million compared to $104 million in the year-ago period. Profitability in the Americas and APAC regions was strong, which was partially offset by slower growth and reduced 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 third quarter was $2.1 billion. Constant-currency organic(4) revenue increased by 8%, led by double-digit growth in the Building Construction business. This strength was partially offset by a decline in the Power business due to the completion of a large project and the Company’s decision to exit the fixed-price combined-cycle gas power plant construction market.

 

Operating income was $9 million compared to operating income of $33 million in the year-ago period. On an adjusted basis, operating income(1) was $34 million compared to $42 million in the year-ago period, reflecting a decline in the Power business, as anticipated, and strong underlying performance in the Building Construction business.

 

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 third quarter was $936 million. Organic(4) revenue increased by 9%, which was driven by solid conversion on the Company’s recent significant wins.

 

2



 

Operating income was $66 million, which was effectively unchanged from the year-ago period. On an adjusted basis, operating income(1) was $76 million compared to $79 million in the year-ago period. This performance included a benefit from an anticipated recovery on a federal project.

 

Tax Rate

 

The effective tax rate in the third quarter was 30.6%. On an adjusted basis, the effective tax rate was 26.0%. The adjusted tax rate was derived by re-computing the expected annual effective tax rate on earnings from adjusted net income.(7) The adjusted tax expense differs from the GAAP tax expense based on the taxability or deductibility and tax rate applied to each of the adjustments.

 

Cash Flow

 

Operating cash flow for the third quarter was $72 million and free cash flow(2) was $48 million. The Company expects to achieve at least $600 million of free cash flow in fiscal 2018.

 

Balance Sheet

 

As of June 30, 2018, AECOM had $801 million of total cash and cash equivalents, $3.1 billion of net debt and $1.2 billion in unused capacity under its $1.35 billion revolving credit facility.

 

Financial Outlook

 

AECOM’s fiscal year 2018 financial guidance is as follows:

 

 

 

Fiscal Year 2018 Outlook

 

Adjusted EBITDA(1)

 

$ 880 million

 

Adjusted EPS(1)

 

$ 2.50 – $2.90

 

Free Cash Flow(2)

 

$ 600+ million

 

Interest Expense
(excluding amortization of deferred financing fees)

 

$ 210 million

 

Amortization(8)

 

$ 105 million

 

Full-Year Share Count

 

162 million

 

Effective Tax Rate for Adjusted Earnings(7)

 

~17%

 

Capital Expenditures(9)

 

$ 100 million

 

 

Conference Call

 

AECOM is hosting a conference call today at 12 p.m. Eastern Time, during which management will make a brief presentation focusing on the Company’s results, strategies and operating trends. Interested parties can listen to the conference call and view accompanying slides via webcast at http://investors.aecom.com. The webcast will be available for replay following the call.

 


(1) Excluding acquisition and integration related items, financing charges in interest expense, foreign exchange gains, the amortization of intangible assets, financial impacts associated with expected and actual dispositions of non-core businesses and assets, and the revaluation of deferred taxes and one-time tax repatriation charge associated with U.S. tax reform. If an individual adjustment has no financial impact then the individual adjustment is not reflected in the Regulation G Information tables. See Regulation G Information for a reconciliation of Non-GAAP measures.

 

(2) Free cash flow is defined as cash flow from operations less capital expenditures net of proceeds from disposals.

 

(3) On a constant-currency basis.

 

(4) Organic growth is year-over-year at constant currency and excludes revenue associated with actual and planned non-core asset and business dispositions. Results expressed in constant currency are presented excluding the impact from changes in currency exchange rates.

 

(5) Book-to-burn ratio is defined as the amount of wins divided by revenue recognized during the period, including revenue related to work performed in unconsolidated joint ventures.

 

(6) Net debt-to-EBITDA is comprised of EBITDA as defined in the Company’s credit agreement, which excludes stock-based compensation, and net debt as defined as total debt on the Company’s financial statements, net of cash and cash equivalents.

 

(7) Inclusive of non-controlling interest deduction and adjusted for acquisition and integration expenses, financing charges in interest expense, the amortization of intangible assets and financial impacts associated with actual and planned dispositions of non-core businesses and assets.

 

(8) Amortization of intangible assets expense includes the impact of amortization included in equity in earnings of joint ventures and non-controlling interests.

 

(9) Capital expenditures, net of proceeds from disposals.

 

3



 

About AECOM

 

AECOM (NYSE:ACM) is built to deliver a better world. We design, build, finance and operate infrastructure assets for governments, businesses and organizations in more than 150 countries. As a fully integrated firm, we connect knowledge and experience across our global network of experts to help clients solve their most complex challenges. From high-performance buildings and infrastructure, to resilient communities and environments, to stable and secure nations, our work is transformative, differentiated and vital. A Fortune 500 firm, AECOM had revenue of approximately $18.2 billion during fiscal year 2017. See how we deliver what others can only imagine at aecom.com and @AECOM.

 

All statements in this press release other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue, cash flows, tax rate, share count, stock repurchases, interest expense, capital expenditures, amortization of intangible assets and financial fees, or other financial items, non-core Oil & Gas business sales, any statements of the plans, strategies and objectives for future operations and any statements regarding future economic conditions or performance. Although we believe that the expectations reflected in our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements.

 

Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in our forward-looking statements include, but are not limited to, the following: our business is cyclical and vulnerable to economic downturns and client spending reductions; we are dependent on long-term government contracts and subject to uncertainties related to government contract appropriations; governmental agencies may modify, curtail or terminate our contracts; government contracts are subject to audits and adjustments of contractual terms; impacts of the Tax Cuts and Jobs Acts; we may experience losses under fixed-price contracts; we have limited control over operations run through our joint venture entities; we may be liable for misconduct by our employees or consultants or our failure to comply with laws or regulations applicable to our business; we may not maintain adequate surety and financial capacity; we are highly leveraged and may not be able to service our debt and guarantees; we have exposure to political and economic risks in different countries where we operate as well as currency exchange rate fluctuations; we may not be able to retain and recruit key technical and management personnel; we may be subject to legal claims and we may have inadequate insurance coverage; we are subject to environmental law compliance and we may have inadequate nuclear indemnification; there may be unexpected adjustments and cancellations related to our backlog; we are dependent on partners and third parties who may fail to satisfy their obligations; we may not be able to manage pension costs; we may face cybersecurity issues and IT outages; as well as other additional risks and factors that could cause actual results to differ materially from our forward-looking statements set forth in our reports filed with the Securities and Exchange Commission. We do not intend, and undertake no obligation, to update any forward-looking statement.

 

This press release contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”). In particular, the Company believes that non-GAAP financial measures such as adjusted EPS, adjusted EBITDA, adjusted operating income, adjusted tax rate, adjusted interest expense, organic revenue, and free cash flow also provide a meaningful perspective on its business results as the Company utilizes this information to evaluate and manage the business. We use adjusted EBITDA, EPS and operating income to exclude the impact of non-operating items, such as amortization expense, taxes, acquisition and integration expenses, and non-core operating losses. We use free cash flow to represent the cash generated after capital expenditures to maintain our business. Our non-GAAP disclosure has limitations as an analytical tool, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of our results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. A reconciliation of these non-GAAP measures is found in the Regulation G Information tables at the back of this release.

 

When we provide our long term projections for organic revenue growth, adjusted EBITDA, adjusted EPS growth, and free cash flow on a forward-looking basis, the closest corresponding GAAP measure and a reconciliation of the differences between the non-GAAP expectation and the corresponding GAAP measure generally is not available without unreasonable effort due to length of the forecasted period and potential high variability, complexity and low visibility as to items that would be excluded from the GAAP measure in the relevant future period.

 

4



 

AECOM

Consolidated Statements of Income

(unaudited - in thousands, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

June 30,
2017

 

June 30,
2018

 

%
Change

 

June 30,
2017

 

June 30,
2018

 

%
Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

4,561,467

 

$

5,147,920

 

12.9

%

$

13,347,014

 

$

14,849,662

 

11.3

%

Cost of revenue

 

4,386,291

 

4,962,741

 

13.1

%

12,833,421

 

14,387,059

 

12.1

%

Gross profit

 

175,176

 

185,179

 

5.7

%

513,593

 

462,603

 

(9.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity in earnings of joint ventures

 

66,458

 

12,863

 

(80.6

)%

109,667

 

55,621

 

(49.3

)%

General and administrative expenses

 

(33,944

)

(35,159

)

3.6

%

(96,427

)

(100,046

)

3.8

%

Impairment of assets held for sale, including goodwill

 

 

 

 

 

(168,178

)

NM

 

Acquisition & integration expenses

 

 

 

 

(35,409

)

 

(100.0

)%

(Loss) gain on disposal activities

 

 

(2,149

)

NM

 

572

 

(2,149

)

(475.7

)%

Income from operations

 

207,690

 

160,734

 

(22.6

)%

491,996

 

247,851

 

(49.6

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other income

 

2,136

 

2,752

 

28.8

%

4,237

 

17,542

 

314.0

%

Interest expense

 

(61,547

)

(55,213

)

(10.3

)%

(176,985

)

(211,955

)

19.8

%

Income before income tax expense (benefit)

 

148,279

 

108,273

 

(27.0

)%

319,248

 

53,438

 

(83.3

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

12,205

 

33,131

 

171.5

%

1,556

 

(38,362

)

NM

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

136,074

 

75,142

 

(44.8

)%

317,692

 

91,800

 

(71.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Noncontrolling interests in income of consolidated subsidiaries, net of tax

 

(34,747

)

(14,232

)

(59.0

)%

(66,790

)

(39,309

)

(41.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to AECOM

 

$

101,327

 

$

60,910

 

(39.9

)%

$

250,902

 

$

52,491

 

(79.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to AECOM per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.65

 

$

0.38

 

(41.5

)%

$

1.62

 

$

0.33

 

(79.6

)%

Diluted

 

$

0.64

 

$

0.37

 

(42.2

)%

$

1.58

 

$

0.32

 

(79.7

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

155,763

 

160,395

 

3.0

%

155,128

 

159,266

 

2.7

%

Diluted

 

158,820

 

163,213

 

2.8

%

158,488

 

162,426

 

2.5

%

 

Balance Sheet and Cash Flow Information

(unaudited - in thousands)

 

 

 

September 30, 2017

 

June 30, 2018

 

Balance Sheet Information:

 

 

 

 

 

Total cash and cash equivalents

 

$

802,362

 

$

801,419

 

Accounts receivable — net

 

5,127,743

 

5,447,985

 

Working capital

 

1,103,843

 

1,153,772

 

Total debt, excluding unamortized debt issuance costs

 

3,896,398

 

3,929,758

 

Total assets

 

14,396,956

 

14,727,417

 

Total AECOM stockholders’ equity

 

3,996,126

 

4,077,732

 

 

5



 

AECOM

Reportable Segments

(unaudited - in thousands)

 

 

 

Design &
Consulting
Services

 

Construction
Services

 

Management
Services

 

AECOM
Capital

 

Corporate

 

Total

 

Three Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

2,105,219

 

$

2,106,720

 

$

935,981

 

$

 

$

 

$

5,147,920

 

Cost of revenue

 

1,989,093

 

2,097,586

 

876,062

 

 

 

4,962,741

 

Gross profit

 

116,126

 

9,134

 

59,919

 

 

 

185,179

 

Equity in earnings of joint ventures

 

4,275

 

2,276

 

6,312

 

 

 

12,863

 

General and administrative expenses

 

 

 

 

(3,682

)

(31,477

)

(35,159

)

Loss on disposal activities

 

 

(2,149

)

 

 

 

(2,149

)

Income (loss) from operations

 

$

120,401

 

$

9,261

 

$

66,231

 

$

(3,682

)

$

(31,477

)

$

160,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a % of revenue

 

5.5

%

0.4

%

6.4

%

 

 

3.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

1,863,475

 

$

1,841,620

 

$

856,372

 

$

 

$

 

$

4,561,467

 

Cost of revenue

 

1,772,240

 

1,815,467

 

798,584

 

 

 

4,386,291

 

Gross profit

 

91,235

 

26,153

 

57,788

 

 

 

175,176

 

Equity in earnings of joint ventures

 

2,371

 

7,022

 

8,638

 

48,427

 

 

66,458

 

General and administrative expenses

 

 

 

 

(2,147

)

(31,797

)

(33,944

)

Income (loss) from operations

 

$

93,606

 

$

33,175

 

$

66,426

 

$

46,280

 

$

(31,797

)

$

207,690

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a % of revenue

 

4.9

%

1.4

%

6.7

%

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30, 2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

6,051,864

 

$

6,120,549

 

$

2,677,249

 

$

 

$

 

$

14,849,662

 

Cost of revenue

 

5,737,658

 

6,097,631

 

2,551,770

 

 

 

14,387,059

 

Gross profit

 

314,206

 

22,918

 

125,479

 

 

 

462,603

 

Equity in earnings of joint ventures

 

14,500

 

16,890

 

24,231

 

 

 

55,621

 

General and administrative expenses

 

 

 

 

(9,169

)

(90,877

)

(100,046

)

Loss on disposal activities

 

 

(2,149

)

 

 

 

(2,149

)

Impairment of assets held for sale, including goodwill

 

 

(168,178

)

 

 

 

(168,178

)

Income (loss) from operations

 

$

328,706

 

$

(130,519

)

$

149,710

 

$

(9,169

)

$

(90,877

)

$

247,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a % of revenue

 

5.2

%

0.4

%

4.7

%

 

 

3.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracted backlog

 

$

9,326,176

 

$

10,558,903

 

$

3,212,884

 

$

 

$

 

$

23,097,963

 

Awarded backlog

 

7,338,587

 

4,935,679

 

15,284,218

 

 

 

27,558,484

 

Unconsolidated JV backlog

 

 

2,190,808

 

946,732

 

 

 

3,137,540

 

Total backlog

 

$

16,664,763

 

$

17,685,390

 

$

19,443,834

 

$

 

$

 

$

53,793,987

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended June 30, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

5,571,823

 

$

5,324,561

 

$

2,450,630

 

$

 

$

 

$

13,347,014

 

Cost of revenue

 

5,279,322

 

5,264,199

 

2,289,900

 

 

 

12,833,421

 

Gross profit

 

292,501

 

60,362

 

160,730

 

 

 

513,593

 

Equity in earnings of joint ventures

 

12,578

 

16,596

 

32,066

 

48,427

 

 

109,667

 

General and administrative expenses

 

 

 

 

(6,594

)

(89,833

)

(96,427

)

Acquisition & integration expenses

 

 

 

 

 

(35,409

)

(35,409

)

Gain on disposal activities

 

572

 

 

 

 

 

572

 

Income (loss) from operations

 

$

305,651

 

$

76,958

 

$

192,796

 

$

41,833

 

$

(125,242

)

$

491,996

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit as a % of revenue

 

5.2

%

1.1

%

6.6

%

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contracted backlog

 

$

8,523,849

 

$

11,650,567

 

$

3,376,912

 

$

 

$

 

$

23,551,328

 

Awarded backlog

 

6,738,345

 

4,696,196

 

8,395,977

 

 

 

19,830,518

 

Unconsolidated JV backlog

 

 

2,023,084

 

995,820

 

 

 

3,018,904

 

Total backlog

 

$

15,262,194

 

$

18,369,847

 

$

12,768,709

 

$

 

$

 

$

46,400,750

 

 

6



 

AECOM

Regulation G Information

($ in millions)

 

Reconciliation of Revenue to Amounts Provided by Acquired Companies

 

 

 

Three Months Ended June 30, 2018

 

Nine Months Ended June 30, 2018

 

 

 

Total

 

Provided by
Acquired
Companies

 

Excluding
Effect of
Acquired
Companies

 

Total

 

Provided by
Acquired
Companies

 

Excluding
Effect of
Acquired
Companies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue:

 

 

 

 

 

 

 

 

 

 

 

 

 

AECOM Consolidated

 

$

5,148.0

 

$

129.0

 

$

5,019.0

 

$

14,849.7

 

$

412.1

 

$

14,437.6

 

Design & Consulting Services

 

2,105.4

 

 

2,105.4

 

6,052.0

 

 

6,052.0

 

Construction Services

 

2,106.7

 

129.0

 

1,977.7

 

6,120.5

 

412.1

 

5,708.4

 

Management Services

 

935.9

 

 

935.9

 

2,677.2

 

 

2,677.2

 

 

Reconciliation of Net Income Attributable to AECOM to EBITDA and to Adjusted EBITDA

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

Jun 30,
2017

 

Mar 31,
2018

 

Jun 30,
2018

 

Jun 30,
2017

 

Jun 30,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to AECOM

 

$

101.3

 

$

(119.7

)

$

60.9

 

$

250.9

 

$

52.5

 

Income tax expense (benefit)

 

12.1

 

(24.4

)

33.1

 

1.5

 

(38.4

)

Income (loss) attributable to AECOM before income taxes

 

113.4

 

(144.1

)

94.0

 

252.4

 

14.1

 

Depreciation and amortization expense(1)

 

67.4

 

81.0

 

68.0

 

206.0

 

212.5

 

Interest income(2)

 

(1.7

)

(3.4

)

(2.3

)

(3.7

)

(7.5

)

Interest expense(3)

 

58.5

 

90.9

 

52.7

 

161.6

 

196.9

 

EBITDA

 

$

237.6

 

$

24.4

 

$

212.4

 

$

616.3

 

$

416.0

 

Non-core operating losses

 

3.2

 

21.2

 

18.7

 

5.7

 

39.9

 

Loss on assets held for sale, including goodwill

 

 

168.2

 

 

 

168.2

 

Acquisition and integration related items

 

 

 

(6.5

)

35.4

 

(6.5

)

Loss (gain) on disposal activities

 

 

 

2.1

 

(0.6

)

2.1

 

FX gain from forward currency contract

 

 

(9.1

)

 

 

(9.1

)

Depreciation expense included in non-core operating losses and acquisition and integration items above

 

 

(3.8

)

(3.7

)

(0.8

)

(7.5

)

Adjusted EBITDA

 

$

240.8

 

$

200.9

 

$

223.0

 

$

656.0

 

$

603.1

 

 


(1) Includes the amount for noncontrolling interests in consolidated subsidiaries;   (2) Included in other income;   (3) Excludes related amortization

 

Reconciliation of Total Debt to Net Debt

 

 

 

Balances at:

 

 

 

Jun 30, 2017

 

Mar 31, 2018

 

Jun 30, 2018

 

Short-term debt

 

$

1.7

 

$

9.8

 

$

47.4

 

Current portion of long-term debt

 

155.4

 

123.9

 

125.6

 

Long-term debt, gross

 

3,809.2

 

3,865.4

 

3,756.7

 

Total debt excluding unamortized debt issuance costs

 

3,966.3

 

3,999.1

 

3,929.7

 

Less: Total cash and cash equivalents

 

812.5

 

867.2

 

801.4

 

Net debt

 

$

3,153.8

 

$

3,131.9

 

$

3,128.3

 

 

Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow

 

 

 

Three Months Ended

 

 

 

Sep 30,
2016

 

Dec 31,
2016

 

Mar 31,
2017

 

Jun 30,
2017

 

Sep 30,
2017

 

Dec 31,
2017

 

Mar 31,
2018

 

Jun 30,
2018

 

Net cash provided by (used in) operating activities

 

$

362.9

 

$

77.5

 

$

(46.1

)

$

413.9

 

$

251.4

 

$

52.4

 

$

118.4

 

$

71.9

 

Capital expenditures, net

 

(36.9

)

(21.0

)

(17.7

)

(19.8

)

(20.0

)

(18.5

)

(23.7

)

(23.5

)

Free cash flow

 

$

326.0

 

$

56.5

 

$

(63.8

)

$

394.1

 

$

231.4

 

$

33.9

 

$

94.7

 

$

48.4

 

 

 

 

Fiscal Years Ended Sep 30,

 

 

 

 

 

 

 

2012

 

2013

 

2014

 

2015

 

2016

 

2017

 

 

 

 

 

Net cash provided by operating activities

 

$

433.4

 

$

408.6

 

$

360.6

 

$

764.4

 

$

814.2

 

$

696.7

 

 

 

 

 

Capital expenditures, net

 

(62.9

)

(52.1

)

(62.8

)

(69.4

)

(136.8

)

(78.5

)

 

 

 

 

Free cash flow

 

$

370.5

 

$

356.5

 

$

297.8

 

$

695.0

 

$

677.4

 

$

618.2

 

 

 

 

 

 

7



 

AECOM
Regulation G Information
(in millions, except per share data)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

Jun 30,
2017

 

Mar 31,
2018

 

Jun 30,
2018

 

Jun 30,
2017

 

Jun 30,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Income from Operations to Adjusted Income from Operations

 

 

 

 

 

Income (loss) from operations

 

$

207.7

 

$

(44.1

)

$

160.8

 

$

492.0

 

$

247.9

 

Non-core operating losses

 

3.2

 

21.2

 

18.5

 

5.7

 

39.7

 

Impairment of assets held for sale, including goodwill

 

 

168.2

 

 

 

168.2

 

Acquisition and integration related items

 

 

 

(7.9

)

35.4

 

(7.9

)

Loss (gain) on disposal activities

 

 

 

2.1

 

(0.6

)

2.1

 

Amortization of intangible assets

 

28.4

 

33.7

 

28.4

 

83.5

 

89.0

 

Adjusted income from operations

 

$

239.3

 

$

179.0

 

$

201.9

 

$

616.0

 

$

539.0

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Income Before Income Taxes to Adjusted Income Before Income Taxes

 

 

 

 

 

Income (loss) before income tax benefit

 

$

148.2

 

$

(132.1

)

$

108.2

 

$

319.2

 

$

53.4

 

Non-core operating losses

 

3.2

 

21.2

 

18.6

 

5.7

 

39.8

 

Impairment of assets held for sale, including goodwill

 

 

168.2

 

 

 

168.2

 

Acquisition and integration related items

 

 

 

(7.9

)

35.4

 

(7.9

)

Loss (gain) on disposal activities

 

 

 

2.1

 

(0.6

)

2.1

 

Amortization of intangible assets

 

28.4

 

33.7

 

28.4

 

83.5

 

89.0

 

FX gain from forward currency contract

 

 

(9.1

)

 

 

(9.1

)

Financing charges in interest expense

 

2.9

 

44.2

 

2.6

 

14.4

 

49.7

 

Adjusted income before income tax expense (benefit)

 

$

182.7

 

$

126.1

 

$

152.0

 

$

457.6

 

$

385.2

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Income Taxes to Adjusted Income Taxes

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

$

12.1

 

$

(24.4

)

$

33.1

 

$

1.5

 

$

(38.4

)

Tax effect of the above adjustments

 

10.5

 

26.6

 

2.3

 

34.8

 

34.3

 

Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform

 

 

 

 

 

41.7

 

Adjusted income tax expense

 

$

22.6

 

$

2.2

 

$

35.4

 

$

36.3

 

$

37.6

 

 


  Adjusts the income tax expense (benefit) during the period to exclude the impact on our effective tax rate of the pre-tax adjustments shown above and the impact of the tax reform changes.

 

Reconciliation of Noncontrolling Interests to Adjusted Noncontrolling Interests

 

 

 

 

 

Noncontrolling interests in income of consolidated subsidiaries, net of tax

 

$

(34.8

)

$

(12.0

)

$

(14.2

)

$

(66.8

)

$

(39.3

)

Acquisition and integration related items, net of tax

 

 

 

1.4

 

 

1.4

 

Amortization of intangible assets included in NCI, net of tax

 

(2.1

)

(3.3

)

(2.8

)

(6.9

)

(8.6

)

Adjusted noncontrolling interests in income of consolidated subsidiaries, net of tax

 

$

(36.9

)

$

(15.3

)

$

(15.6

)

$

(73.7

)

$

(46.5

)

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income Attributable to AECOM to Adjusted Net Income Attributable to AECOM

 

 

 

Net income (loss) attributable to AECOM

 

$

101.3

 

$

(119.7

)

$

60.9

 

$

250.9

 

$

52.5

 

Non-core operating losses

 

3.2

 

21.2

 

18.5

 

5.7

 

39.7

 

Impairment of assets held for sale, including goodwill

 

 

168.2

 

 

 

168.2

 

Acquisition and integration related items

 

 

 

(6.5

)

35.4

 

(6.5

)

Loss (gain) on disposal activities

 

 

 

2.1

 

(0.6

)

2.1

 

Amortization of intangible assets

 

28.4

 

33.7

 

28.4

 

83.5

 

89.0

 

FX gain from forward currency contract

 

 

(9.1

)

 

 

(9.1

)

Financing charges in interest expense

 

2.9

 

44.2

 

2.6

 

14.4

 

49.7

 

Tax effect of the above adjustments

 

(10.4

)

(26.6

)

(2.3

)

(34.8

)

(34.3

)

Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform

 

 

 

 

 

(41.7

)

Amortization of intangible assets included in NCI, net of tax

 

(2.1

)

(3.3

)

(2.8

)

(6.9

)

(8.6

)

Adjusted net income attributable to AECOM

 

$

123.3

 

$

108.6

 

$

100.9

 

$

347.6

 

$

301.0

 

 

8



 

AECOM
Regulation G Information
(in millions, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

Jun 30,
2017

 

Mar 31,
2018

 

Jun 30,
2018

 

Jun 30,
2017

 

Jun 30,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share

 

 

 

Net income (loss) attributable to AECOM — per diluted share

 

$

0.64

 

$

(0.75

)

$

0.37

 

$

1.58

 

$

0.32

 

Per diluted share adjustments:

 

 

 

 

 

 

 

 

 

 

 

Non-core operating losses

 

0.02

 

0.13

 

0.11

 

0.04

 

0.24

 

Impairment of assets held for sale, including goodwill

 

 

1.04

 

 

 

1.04

 

Acquisition and integration related items

 

 

 

(0.04

)

0.22

 

(0.04

)

Loss on disposal activities

 

 

 

0.01

 

 

0.01

 

Amortization of intangible assets

 

0.18

 

0.21

 

0.18

 

0.53

 

0.55

 

FX gain from forward currency contract

 

 

(0.06

)

 

 

(0.06

)

Financing charges in interest expense

 

0.02

 

0.27

 

0.02

 

0.09

 

0.31

 

Tax effect of the above adjustments

 

(0.07

)

(0.15

)

(0.01

)

(0.23

)

(0.21

)

Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform

 

 

 

 

 

(0.26

)

Amortization of intangible assets included in NCI, net of tax

 

(0.01

)

(0.02

)

(0.02

)

(0.04

)

(0.05

)

Adjusted net income attributable to AECOM — per diluted share

 

$

0.78

 

$

0.67

 

$

0.62

 

$

2.19

 

$

1.85

 

Weighted average shares outstanding — diluted

 

158.8

 

162.2

 

163.2

 

158.5

 

162.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of EBITDA to Adjusted Income from Operations

 

 

 

EBITDA(1)

 

$

237.6

 

$

24.4

 

$

212.4

 

$

616.3

 

$

416.0

 

Non-core operating losses

 

3.2

 

21.2

 

18.7

 

5.7

 

39.9

 

Impairment of assets held for sale, including goodwill

 

 

168.2

 

 

 

168.2

 

Acquisition and integration related items

 

 

 

(6.5

)

35.4

 

(6.5

)

Loss (gain) on disposal activities

 

 

 

2.1

 

(0.6

)

2.1

 

FX gain from forward currency contract

 

 

(9.1

)

 

 

(9.1

)

Depreciation expense included in non-core operating losses and acquisition and integration expenses above

 

 

(3.8

)

(3.7

)

(0.8

)

(7.5

)

Adjusted EBITDA

 

$

240.8

 

$

200.9

 

$

223.0

 

$

656.0

 

$

603.1

 

Other income

 

(2.1

)

(12.5

)

(2.7

)

(4.2

)

(17.5

)

FX gain from forward currency contract

 

 

9.1

 

 

 

9.1

 

Interest income(2)

 

1.7

 

3.4

 

2.3

 

3.7

 

7.5

 

Depreciation(3)

 

(38.0

)

(37.2

)

(36.3

)

(113.2

)

(109.7

)

Noncontrolling interests in income of consolidated subsidiaries, net of tax

 

34.8

 

12.0

 

14.2

 

66.8

 

39.3

 

Acquisition and integration related items included in NCI, net of tax

 

 

 

(1.4

)

 

(1.4

)

Amortization of intangible assets included in NCI, net of tax

 

2.1

 

3.3

 

2.8

 

6.9

 

8.6

 

Adjusted income from operations

 

$

239.3

 

$

179.0

 

$

201.9

 

$

616.0

 

$

539.0

 

 


(1) See Reconciliation of Net Income Attributable to AECOM to EBITDA;    (2) Included in other income;    (3) Excludes depreciation from non-core operating losses, and acquisition and integration expenses

 

9



 

AECOM
Regulation G Information
(in millions, except per share data)

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

Jun 30,
2017

 

Mar 31,
2018

 

Jun 30,
2018

 

Jun 30,
2017

 

Jun 30,
2018

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Segment Income from Operations to Adjusted Income from Operations

 

Design & Consulting Services Segment:

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

93.7

 

$

123.0

 

$

120.4

 

$

305.7

 

$

328.7

 

Non-core operating losses

 

3.1

 

1.2

 

0.7

 

5.6

 

1.9

 

Gain on disposal activities

 

 

 

 

(0.6

)

 

Amortization of intangible assets

 

6.8

 

6.2

 

6.4

 

20.7

 

18.8

 

Adjusted income from operations

 

$

103.6

 

$

130.4

 

$

127.5

 

$

331.4

 

$

349.4

 

 

 

 

 

 

 

 

 

 

 

 

 

Construction Services Segment:

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

33.2

 

$

(180.3

)

$

9.3

 

$

77.0

 

$

(130.5

)

Acquisition and integration related items

 

 

 

(7.9

)

 

(7.9

)

Non-core operating losses

 

 

20.0

 

17.9

 

 

37.9

 

Impairment of assets held for sale, including goodwill

 

 

168.2

 

 

 

168.2

 

Loss on disposal activities

 

 

 

2.1

 

 

2.1

 

Amortization of intangible assets

 

8.7

 

17.8

 

12.3

 

23.8

 

40.9

 

Adjusted income from operations

 

$

41.9

 

$

25.7

 

$

33.7

 

$

100.8

 

$

110.7

 

 

 

 

 

 

 

 

 

 

 

 

 

Management Services Segment:

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

66.4

 

$

43.4

 

$

66.2

 

$

192.8

 

$

149.7

 

Amortization of intangible assets

 

12.9

 

9.7

 

9.7

 

39.0

 

29.3

 

Adjusted income from operations

 

$

79.3

 

$

53.1

 

$

75.9

 

$

231.8

 

$

179.0

 

 

10



 

AECOM

Regulation G Information

 

FY18 GAAP EPS Guidance based on Adjusted EPS Guidance

 

 

 

Fiscal Year End 2018

 

GAAP EPS Guidance

 

$0.84 to $1.24

 

Adjusted EPS Excludes:

 

 

 

Amortization of intangible assets

 

$0.65

 

Acquisition and integration related items

 

($0.07)

 

Foreign exchange gain

 

($0.06)

 

Financing charges in interest expense

 

$0.33

 

Loss on disposal

 

$0.01

 

Year-to-date non-core operating losses

 

$0.25

 

Tax effect of the above items*

 

($0.23)

 

Loss on assets held for sale, including goodwill

 

$1.04

 

Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform

 

($0.26)

 

Adjusted EPS Guidance

 

$2.50 to $2.90

 

 


*The adjusted tax expense differs from the GAAP tax expense based on the deductibility and tax rate applied to each of the adjustments.

 

FY18 GAAP Net Income Guidance based on Adjusted EBITDA Guidance

 

(in millions)

 

Fiscal Year End 2018

 

 

 

 

 

GAAP Net Income Attributable to AECOM Guidance*

 

$

171

 

Adjusted Net Income Attributable to AECOM Excludes:

 

 

 

Amortization of intangible assets, net of NCI

 

$

105

 

Acquisition and integration related items

 

$

(11

)

Foreign exchange gain

 

$

(9

)

Financing charges in interest expense

 

$

53

 

Loss on disposal

 

$

2

 

Year-to-date non-core operating losses

 

$

40

 

Tax effect of the above items**

 

$

(37

)

Loss on assets held for sale, including goodwill

 

$

168

 

Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform

 

$

(42

)

Adjusted Net Income Attributable to AECOM

 

$

440

 

Adjusted EBITDA Excludes:

 

 

 

Interest Expense

 

$

210

 

Interest Income

 

$

(8

)

Depreciation

 

$

145

 

Taxes

 

$

92

 

Adjusted EBITDA Guidance

 

$

880

 

 


*Calculated based on the mid-point of AECOM’s fiscal year 2018 EPS guidance.

**The adjusted tax expense differs from the GAAP tax expense based on the deductibility and tax rate applied to each of the adjustments.

Note: the components in this table may not sum to the total due to rounding.

 

FY18 GAAP Tax Rate Guidance based on Adjusted Tax Rate Guidance

 

 

 

Fiscal Year End 2018

 

 

 

 

 

GAAP Tax Rate Guidance

 

5

%

Tax rate impact from adjustments to GAAP earnings

 

10

%

Tax rate impact from inclusion of NCI deduction

 

2

%

Effective Tax Rate for Adjusted Earnings Guidance

 

17

%

 

11



 

FY18 GAAP Interest Expense Guidance based on Adjusted Interest Expense Guidance

 

(in millions)

 

Fiscal Year End 2018

 

 

 

 

 

GAAP Interest Expense Guidance

 

$

263

 

Financing charge in interest expense

 

$

53

 

Adjusted Interest Expense Guidance

 

$

210

 

 

###

 

12