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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): November 12, 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 November 12, 2018, AECOM issued a press release announcing its financial results for the year ended September 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 November 12, 2018, entitled “AECOM reports fiscal fourth quarter and full year 2018 results.”
99.2		Transcript of fiscal fourth quarter and full year 2018 earnings call held on November 12, 2018.

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: November 12, 2018	By:	/s/ DAVID Y. GAN
		David Y. Gan
		Senior Vice President, Deputy General Counsel

Exhibit 99.1

Press Release

Investor Contact:
Will Gabrielski
Vice President, Investor Relations
213.593.8208
William.Gabrielski@aecom.com

Media Contact:
Brendan Ranson-Walsh
Vice President, Global Communications & Corporate Responsibility
213.996.2367
Brendan.Ranson-Walsh@aecom.com

AECOM reports fiscal fourth quarter and full year 2018 results

LOS ANGELES (November 12, 2018) — AECOM (NYSE:ACM), a premier, fully integrated global infrastructure firm, today reported fourth quarter revenue of $5.3 billion and full year revenue of $20.2 billion. Net income and diluted earnings per share were $84 million and $0.52 in the fourth quarter, respectively. Net income and diluted earnings per share were $136 million and $0.84 for the full year. On an adjusted basis, diluted earnings per share(1) was $0.83 for the fourth quarter and $2.68 for the full year.

	Fourth Quarter
($ in millions, except EPS)	As Reported		Adjusted (Non-GAAP)			As Reported YoY % Change		Adjusted YoY % Change
Revenue	$	5,306	—			9	%	—
Operating Income	$	177	$	218	(1)	9	%	9	%
Net Income	$	84	$	134	(1)	(5	)%	12	%
EPS (Fully Diluted)	$	0.52	$	0.83	(1)	(5	)%	12	%
EBITDA	—		$	233	(1)	—		4	%
Operating Cash Flow	$	532	—			112	%	—
Free Cash Flow	—		$	511	(2)	—		121	%
Backlog	$	54,070	—			14	%(3)	—

Financial Performance and Outlook:

· Organic(4) revenue increased by 9% in the fourth quarter and by 8% in the full year, resulting in record full year revenue of $20.2 billion.

· Total backlog increased by 14%(3) year-over-year to a new all-time high of $54.1 billion.

· Wins for the year increased by 23% to a record $28.4 billion, including wins of over $6 billion in all four quarters, and momentum has continued in the first quarter with more than $7 billion of large MS and CS wins in October.

· Fourth quarter free cash flow(2) of $511 million was a quarterly record, which drove full year free cash flow of $688 million and resulted in a fourth consecutive year of free cash flow over $600 million.

· Total debt declined by $256 million in the fourth quarter, and the Company executed a $150 million accelerated share repurchase (ASR) that reduced total shares outstanding by 3%.

Strategic Actions to Substantially Enhance Margins and Reduce Risk Profile:

· AECOM also announced strategic actions to improve profitability, de-risk its business profile and to prioritize investments in its highest-growth markets:

· Initiated a $225 million G&A reduction plan to maximize the profitability of the Company’s record $54 billion backlog; the majority of the cost reductions are expected to occur in the first half of fiscal 2019 and will primarily benefit the DCS segment where the fiscal 2019 adjusted operating income margin is expected to increase by at least 110 basis points to greater than 7%.

· Continued evaluation of the Company’s geographic exposure to prioritize investments in markets with higher growth prospects and where its competitive advantages are greatest, which includes the expectation to exit more than 30 countries.

· AECOM Capital formed a joint venture with Canyon Partners for a real estate investment fund that will generate management fees to support the segment’s overhead costs and which will limit AECOM’s future balance sheet commitments.

· Fiscal 2019 adjusted EBITDA guidance of $920 — $960 million reflects 12% growth at the mid-point as compared to fiscal 2018, which demonstrates the expected strong payback on the above initiatives.

· A more profitable and lower-risk business profile, combined with the Company’s capital allocation policy focused on shareholder returns, including $850 million remaining under the $1 billion Board stock repurchase authorization, is expected to result in consistently strong financial performance and shareholder value creation.

“Our fourth quarter and full year 2018 results include new records for revenue, backlog, wins and free cash flow, demonstrating the strength of our industry-leading franchises and setting a strong foundation for continued growth,” said Michael S. Burke, AECOM’s chairman and chief executive officer. “We are proud of these many accomplishments. However, our adjusted EBITDA for the fourth quarter and full year was below our expectations due to the timing of AECOM Capital asset sales, which we now expect in 2019, and execution challenges on a handful of projects in the Construction Services segment. Importantly, we are taking strategic actions from a position of strength that we expect will substantially improve our profitability and position us to fully capitalize on our record $54 billion backlog, which is reflected in our guidance for 12% adjusted EBITDA growth in fiscal 2019.”

“We are pleased to have delivered a record quarter of free cash flow and to continue our industry-leading track record of consistently strong cash performance, which enabled further debt reduction and capital returns to shareholders through the execution of a $150 million ASR,” said W. Troy Rudd, AECOM’s chief financial officer. “With our margin-enhancement initiatives well underway, the profitability of our record backlog is increasing. As a result, we remain focused on executing our capital allocation policy, which prioritizes further share repurchases under our $1 billion Board authorization while balancing the second-half seasonality of our cash flow and our 2.5x net leverage(6) target.”

Wins and Backlog

Full year wins were $28.4 billion, which set a new record for the Company, and resulted in a book-to-burn ratio(5) of 1.3. Wins included strength across the business, highlighted by a 2.5x book-to-burn ratio in the MS segment. Total backlog increased by 14%(3) over the prior year to $54.1 billion. In addition, the Company is off to a strong start in fiscal 2019, including more than $7 billion of large MS and CS wins in October.

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 fourth quarter was $2.2 billion. Constant-currency organic(4) revenue increased by 11%. Full year revenue was $8.2 billion and constant-currency organic(4) revenue increased by 8%. This performance included 17% growth in the Americas in the second half of the year, which was driven by strong growth in the transportation and water markets, including work related to storm recovery efforts following last year’s hurricanes in the Southeastern U.S.

Fourth quarter and full year operating income was $126 million and $455 million, respectively. On an adjusted basis, fourth quarter and full year operating income(1) was $133 million and $483 million, respectively. Profitability in the Americas and Asia-Pacific regions was strong, which was partially offset by lower than expected volumes in the U.K. and costs associated with ongoing efforts in EMEA to improve profitability and align the business with current and expected market conditions.

Construction Services (CS)

The CS segment provides construction services for energy, sports, commercial, industrial, and public and private infrastructure clients.

Revenue in the fourth quarter was $2.1 billion. Constant-currency organic(4) revenue increased by 5%. Full year revenue was $8.2 billion, and constant-currency organic(4) revenue increased by 7%, led by double-digit growth in the Building Construction business for the fourth consecutive year and double-digit growth in the fourth quarter. This strength was partially offset by an expected decline in Power due to project completions in prior periods and lower volume following the Company’s decision to exit the fixed-price combined-cycle gas power plant construction market. Importantly, the Alliant Energy Riverside combined cycle gas power plant remains on schedule and on budget.

Fourth quarter operating income was $21 million and full year operating loss was $109 million. On an adjusted basis, fourth quarter and full year operating income(1) was $46 million and $156 million, respectively, which reflects strong contributions in the Power business and solid execution on the vast majority of projects underway. However, the Company experienced execution issues on a handful of projects, which offset otherwise strong performance.

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 fourth quarter was $1.0 billion. Organic(4) revenue accelerated in the quarter to 14%. Full year revenue was $3.7 billion, and organic(4) revenue increased by 11%.

Operating income was $50 million and $200 million in the fourth quarter and full year, respectively. On an adjusted basis, operating income(1) was $60 million and $239 million in the fourth quarter and full year, respectively. Results for the fourth quarter and the full year represented strong execution across the portfolio of projects, and the benefits of nearly 120% backlog growth since the start of fiscal 2017.

AECOM Capital (ACAP)

The ACAP segment invests in and develops real estate, public private partnership (P3) and infrastructure projects. Operating income in the fourth quarter was $13 million and full year operating income was $4 million. In the quarter, ACAP also achieved the first close on a new third-party real estate investment joint venture with Canyon Partners.

Tax Rate

The effective tax rate was 15.1% and (11.1%) for the fourth quarter and full year, respectively. On an adjusted basis, the effective tax rate was 6.4% and 9.7% for the fourth quarter and full year, respectively. The Company’s adjusted tax expense in the fourth quarter included a $28 million benefit related to prior period federal audits. The Company’s GAAP tax expense in the fourth quarter included a $38 million impact for a valuation allowance against foreign tax credits resulting from U.S. tax reform. The adjusted tax rate was derived by re-computing the 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 fourth quarter was $532 million and free cash flow(2) was $511 million, which set a new record for the Company. For the full year, AECOM generated operating cash flow of $775 million and free cash flow(2) of $688 million, which marked the fourth consecutive year of at least $600 million of free cash flow. Both operating cash flow and free cash flow increased by 11% as compared to the prior year.

Balance Sheet

As of September 30, 2018, AECOM had $887 million of total cash and cash equivalents, $3.7 billion of total debt, $2.8 billion of net debt and $1.32 billion in unused capacity under its $1.35 billion revolving credit facility. Total debt has declined by $1.7 billion since closing the URS acquisition in October 2014.

Financial Outlook and Impacts of Strategic Actions

AECOM is initiating fiscal 2019 financial guidance as follows:

		Fiscal Year 2019 Outlook
Adjusted EBITDA(1)		$920 - $960 million
Adjusted EPS(1)		$2.60 – $2.90
Free Cash Flow(2)		$600 - $800 million
Adjusted Interest Expense (excluding amortization of deferred financing fees)		$200 million
Amortization(8)		$88 million
Full-Year Share Count		161 million
Effective Tax Rate for Adjusted Earnings(7)		~25%
Capital Expenditures(9)		~$120 million

AECOM expects the G&A reduction program to deliver $140 million of annual run-rate cost savings, net of any leakage and reinvestment, by the end of fiscal year 2021. Of the gross amount, the majority has already been actioned since the beginning of the fiscal year. The Company expects to incur restructuring costs of $80 to $90 million in fiscal 2019, the majority of which will occur in the first half of the fiscal year and will be excluded from the Company’s adjusted results. Total cash costs for the restructuring are expected to be between $60 and $70 million.

Also included in the Company’s fiscal 2019 guidance is approximately $13 million of adjusted EBITDA from AECOM Capital contributions.

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.

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. 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 $20.2 billion during fiscal year 2018. 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, cost savings, profitability, cash flows, tax rate, share count, stock repurchases, interest expense, capital expenditures, amortization of intangible assets and financial fees, or other financial items, any statements of the plans, strategies and objectives for future operations, profitability, risk profile and investment strategies 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 legislation; 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.

AECOM

Consolidated Statements of Income

(in thousands, except per share data)

	Three Months Ended								Twelve Months Ended
	Sep 30, 2017			Sep 30, 2018			% Change		Sep 30, 2017			Sep 30, 2018			% Change
Revenue	$	4,856,388		$	5,305,850		9.3	%	$	18,203,402		$	20,155,512		10.7	%
Cost of revenue	4,686,261			5,117,804			9.2	%	17,519,682			19,504,863			11.3	%
Gross profit	170,127			188,046			10.5	%	683,720			650,649			(4.8	)%

Equity in earnings of joint ventures	31,915			25,512			(20.1	)%	141,582			81,133			(42.7	)%
General and administrative expenses	(36,882		)	(35,741		)	(3.1	)%	(133,309		)	(135,787		)	1.9	%
Impairment of assets held for sale, including goodwill	—			—			0.0	%	—			(168,178		)	0.0	%
Acquisition and integration expenses	(3,300		)	—			(100.0	)%	(38,709		)	—			(100.0	)%
(Loss) gain on disposal activities	—			(800		)	0.0	%	572			(2,949		)	NM
Income from operations	161,860			177,017			9.4	%	653,856			424,868			(35.0	)%

Other income	2,399			2,593			8.1	%	6,636			20,135			203.4	%
Interest expense	(54,325		)	(55,564		)	2.3	%	(231,310		)	(267,519		)	15.7	%
Income before income tax expense	109,934			124,046			12.8	%	429,182			177,484			(58.6	)%

Income tax expense (benefit)	6,150			18,719			204.4	%	7,706			(19,643		)	NM

Net income	103,784			105,327			1.5	%	421,476			197,127			(53.2	)%

Noncontrolling interests in income of consolidated subsidiaries, net of tax	(15,296		)	(21,350		)	39.6	%	(82,086		)	(60,659		)	(26.1	)%

Net income attributable to AECOM	$	88,488		$	83,977		(5.1	)%	$	339,390		$	136,468		(59.8	)%

Net income attributable to AECOM per share:
Basic	$	0.56		$	0.53		(5.4	)%	$	2.18		$	0.86		(60.6	)%
Diluted	$	0.55		$	0.52		(5.5	)%	$	2.13		$	0.84		(60.6	)%

Weighted average shares outstanding:
Basic	157,529			158,605			0.7	%	155,728			159,101			2.2	%
Diluted	161,076			161,765			0.4	%	159,135			162,261			2.0	%

Balance Sheet and Cash Flow Information

(in thousands)

	September 30, 2017		September 30, 2018
Balance Sheet Information:
Total cash and cash equivalents	$	802,362	$	886,733
Accounts receivable — net	5,127,743		5,468,821
Working capital	1,103,843		997,645
Total debt, excluding unamortized debt issuance costs	3,896,398		3,673,463
Total assets	14,396,956		14,681,131
Total AECOM stockholders’ equity	3,996,126		4,092,780

AECOM

Reportable Segments

(in thousands)

	Design & Consulting Services			Construction Services			Management Services			AECOM Capital			Corporate			Total
Three Months Ended September 30, 2018
Revenue	$	2,171,310		$	2,118,303		$	1,016,237		$	—		$	—		$	5,305,850
Cost of revenue	2,046,205			2,100,849			970,750			—			—			5,117,804
Gross profit	125,105			17,454			45,487			—			—			188,046
Equity in earnings of joint ventures	1,311			4,644			4,357			15,200			—			25,512
General and administrative expenses	—			—			—			(2,059		)	(33,682		)	(35,741		)
Loss on disposal activities	—			(800		)	—			—			—			(800		)
Income (loss) from operations	$	126,416		$	21,298		$	49,844		$	13,141		$	(33,682	)	$	177,017

Gross profit as a % of revenue	5.8		%	0.8		%	4.5		%	—			—			3.5		%

Three Months Ended September 30, 2017
Revenue	$	1,994,977		$	1,970,992		$	890,419		$	—		$	—		$	4,856,388
Cost of revenue	1,892,599			1,938,464			855,198			—			—			4,686,261
Gross profit	102,378			32,528			35,221			—			—			170,127
Equity in earnings of joint ventures	3,814			5,678			13,124			9,299			—			31,915
General and administrative expenses	—			—			—			(2,120		)	(34,762		)	(36,882		)
Acquisition and integration expenses	—			—			—			—			(3,300		)	(3,300		)
Income (loss) from operations	$	106,192		$	38,206		$	48,345		$	7,179		$	(38,062	)	$	161,860

Gross profit as a % of revenue	5.1		%	1.7		%	4.0		%	—			—			3.5		%

AECOM

Reportable Segments

(in thousands)

	Design & Consulting Services			Construction Services			Management Services			AECOM Capital			Corporate			Total
Twelve Months Ended September 30, 2018
Revenue	$	8,223,174		$	8,238,852		$	3,693,486		$	—		$	—		$	20,155,512
Cost of revenue	7,783,863			8,198,480			3,522,520			—			—			19,504,863
Gross profit	439,311			40,372			170,966			—			—			650,649
Equity in earnings of joint ventures	15,811			21,534			28,588			15,200			—			81,133
General and administrative expenses	—			—			—			(11,228		)	(124,559		)	(135,787		)
Loss on disposal activities	—			(2,949		)	—			—			—			(2,949		)
Impairment of assets held for sale, including goodwill	—			(168,178		)	—			—			—			(168,178		)
Income (loss) from operations	$	455,122		$	(109,221	)	$	199,554		$	3,972		$	(124,559	)	$	424,868

Gross profit as a % of revenue	5.3		%	0.5		%	4.6		%	—			—			3.2		%

Contracted backlog	$	9,133,465		$	9,333,822		$	3,395,460		$	—		$	—		$	21,862,747
Awarded backlog	7,525,817			7,144,572			14,577,130			—			—			29,247,519
Unconsolidated JV backlog	—			2,025,269			934,147			—			—			2,959,416
Total backlog	$	16,659,282		$	18,503,663		$	18,906,737		$	—		$	—		$	54,069,682

Twelve Months Ended September 30, 2017
Revenue	$	7,566,800		$	7,295,553		$	3,341,049		$	—		$	—		$	18,203,402
Cost of revenue	7,171,921			7,202,663			3,145,098			—			—			17,519,682
Gross profit	394,879			92,890			195,951			—			—			683,720
Equity in earnings of joint ventures	16,392			22,274			45,190			57,726			—			141,582
General and administrative expenses	—			—			—			(8,714		)	(124,595		)	(133,309		)
Acquisition and integration expenses	—			—			—			—			(38,709		)	(38,709		)
Gain on disposal activities	572			—			—			—			—			572
Income (loss) from operations	$	411,843		$	115,164		$	241,141		$	49,012		$	(163,304	)	$	653,856

Gross profit as a % of revenue	5.2		%	1.3		%	5.9		%	—			—			3.8		%

Contracted backlog	$	8,790,860		$	12,298,947		$	3,144,225		$	—		$	—		$	24,234,032
Awarded backlog	7,342,989			4,015,274			8,600,755			—			—			19,959,018
Unconsolidated JV backlog	—			2,344,320			1,012,506			—			—			3,356,826
Total backlog	$	16,133,849		$	18,658,541		$	12,757,486		$	—		$	—		$	47,549,876

AECOM

Regulation G Information

(in millions)

Reconciliation of Revenue to Amounts Provided by Acquired Companies

	Three Months Ended September 30, 2018						Twelve Months Ended September 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	$	5,305.9	$	77.5	$	5,228.4	$	20,155.5	$	489.6	$	19,665.9
Design & Consulting Services	2,171.3		—		2,171.3		8,223.2		—		8,223.2
Construction Services	2,118.3		77.5		2,040.8		8,238.9		489.6		7,749.3
Management Services	1,016.3		—		1,016.3		3,693.4		—		3,693.4

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

	Three Months Ended
	Sep 30, 2017			Jun 30, 2018			Sep 30, 2018

Net income attributable to AECOM	$	88.5		$	60.9		$	84.0
Income tax expense	6.2			33.1			18.8
Income attributable to AECOM before income taxes	94.7			94.0			102.8
Depreciation and amortization expense(1)	74.0			68.0			68.5
Interest income(2)	(1.8		)	(2.3		)	(2.1		)
Interest expense(3)	50.8			52.7			52.5
EBITDA	$	217.7		$	212.4		$	221.7

Non-core operating losses	3.7			18.7			17.5
Acquisition and integration related items	3.3			(6.5		)	(4.4		)
Loss on disposal activities	—			2.1			0.8
Depreciation expense included in non-core operating losses and acquisition and integration items above	—			(3.7		)	(2.2		)
Adjusted EBITDA	$	224.7		$	223.0		$	233.4

(1) Includes the amount for noncontrolling interests in consolidated subsidiaries

(2) Included in other income

(3) Excludes related amortization

	Fiscal Years Ended September 30,
	2014			2015			2016			2017			2018

Net income (loss) attributable to AECOM	$	229.9		$	(154.8	)	$	96.1		$	339.4		$	136.5
Income tax expense (benefit)	82.0			(80.2		)	(37.9		)	7.7			(19 6		)
Income (loss) attributable to AECOM before income taxes	311.9			(235.0		)	58.2			347.1			116.9
Depreciation and amortization expense(1)	95.4			607.0			414.5			280.0			281.0
Interest income(2)	(2.2		)	(4.8		)	(4.3		)	(5.5		)	(9.6		)
Interest expense(3)	38.5			282.5			225.8			212.4			249.4
EBITDA	$	443.6		$	649.7		$	694.2		$	834.0		637.7
Non-core operating losses	—			—			36.9			9.4			57.4
Impairment of assets held for sale, including goodwill	—			—			—			—			168.2
Acquisition and integration related items	27.3			398.4			213.6			38.7			(10.9		)
Loss (gain) on disposal activities	—			—			42.6			(0.6		)	2.9
FX gain from forward currency contract	—			—			—			—			(9.1		)
Depreciation expense included in non-core operating losses and acquisition and integration items above	—			(20.9		)	(28.8		)	(0.8		)	(9.7		)
Adjusted EBITDA	$	470.9		$	1,027.2		$	958.5		$	880.7		$	836.5

(1) Includes the amount for noncontrolling interests in consolidated subsidiaries

(2) Included in other income

(3) Excludes related amortization

AECOM

Regulation G Information

(in millions)

Reconciliation of Total Debt to Net Debt

	Balances at:
	Sep 30, 2017		Jun 30, 2018		Sep 30, 2018
Short-term debt	$	1.2	$	47.4	$	8.4
Current portion of long-term debt	140.8		125.6		134.7
Long-term debt, gross	3,754.4		3,756.7		3,530.4
Total debt, excluding unamortized debt issuance costs	3,896.4		3,929.7		3,673.5
Less: Total cash and cash equivalents	802.4		801.4		886.7
Net debt	$	3,094.0	$	3,128.3	$	2,786.8

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

	Three Months Ended
	Dec 31, 2016			Mar 31, 2017			Jun 30, 2017			Sep 30, 2017			Dec 31, 2017			Mar 31, 2018			Jun 30, 2018			Sep 30, 2018
Net cash provided by (used in) operating activities	$	77.5		$	(46.1	)	$	413.9		$	251.4		$	52.4		$	118.4		$	71.9		$	531.9
Capital expenditures, net	(21.0		)	(17.7		)	(19.8		)	(20.0		)	(18.5		)	(23.7		)	(23.5		)	(21.2		)
Free cash flow	$	56.5		$	(63.8	)	$	394.1		$	231.4		$	33.9		$	94.7		$	48.4		$	510.7

	Fiscal Years Ended September 30,
	2012			2013			2014			2015			2016			2017			2018
Net cash provided by operating activities	$	433.4		$	408.6		$	360.6		$	764.4		$	814.2		$	696.7		$	774.6
Capital expenditures, net	(62.9		)	(52.1		)	(62.8		)	(69.4		)	(136.8		)	(78.5		)	(86.9		)
Free cash flow	$	370.5		$	356.5		$	297.8		$	695.0		$	677.4		$	618.2		$	687.7

AECOM

Regulation G Information

(in millions, except per share data)

	Three Months Ended								Twelve Months Ended
	Sep 30, 2017		Jun 30, 2018			Sep 30, 2018			Sep 30, 2017			Sep 30, 2018
Reconciliation of Income from Operations to Adjusted Income from Operations
Income from operations	$	161.9	$	160.8		$	177.0		$	653.9		$	424.9
Non-core operating losses	3.7		18.5			17.5			9.4			57.2
Impairment of assets held for sale, including goodwill	—		—			—			—			168.2
Acquisition and integration related items	3.3		(7.9		)	(4.8		)	38.7			(12.7		)
Loss (gain) on disposal activities	—		2.1			0.8			(0.6		)	2.9
Amortization of intangible assets	30.1		28.4			27.4			113.6			116.4
Adjusted income from operations	$	199.0	$	201.9		$	217.9		$	815.0		$	756.9

Reconciliation of Income Before Income Taxes to Adjusted Income Before Income Taxes
Income before income tax expense (benefit)	$	110.0	$	108.2		$	124.1		$	429.2		$	177.5
Non-core operating losses	3.7		18.6			17.4			9.4			57.2
Impairment of assets held for sale, including goodwill	—		—			—			—			168.2
Acquisition and integration related items	3.3		(7.9		)	(4.8		)	38.7			(12.7		)
Loss (gain) on disposal activities	—		2.1			0.8			(0.6		)	2.9
Amortization of intangible assets	30.1		28.4			27.4			113.6			116.4
FX gain from forward currency contract	—		—			—			—			(9.1		)
Financing charges in interest expense	3.1		2.6			2.9			17.5			52.6
Adjusted income before income tax expense	$	150.2	$	152.0		$	167.8		$	607.8		$	553.0

AECOM

Regulation G Information

(in millions, except per share data)

	Three Months Ended							Twelve Months Ended
	Sep 30, 2017		Jun 30, 2018		Sep 30, 2018			Sep 30, 2017		Sep 30, 2018
Reconciliation of Income Taxes to Adjusted Income Taxes
Income tax expense (benefit)	$	6.2	$	33.1	$	18.7		$	7.7	$	(19.7	)
Tax effect of the above adjustments…	6.5		2.3		9.4			41.3		43.7
Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform	—		—		6.1			—		47.8
Valuation allowances	—		—		(25.0		)	—		(25.0		)
Adjusted income tax expense	$	12.7	$	35.4	$	9.2		$	49.0	$	46.8

† 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.

Reconciliation of Noncontrolling Interest to Adjusted Noncontrolling Interests
Noncontrolling interests in income of consolidated subsidiaries, net of tax	$	(15.3	)	$	(14.2	)	$	(21.4	)	$	(82.1	)	$	(60.7	)
Acquisition and integration related items, net of tax	—			1.4			0.4			—			1.8
Amortization of intangible assets included in NCI, net of tax	(2.6		)	(2.8		)	(3.3		)	(9.5		)	(11.9		)
Adjusted noncontrolling interests in income of consolidated subsidiaries, net of tax	$	(17.9	)	$	(15.6	)	$	(24.3	)	$	(91.6	)	$	(70.8	)

Reconciliation of Net Income Attributable to AECOM to Adjusted Net Income Attributable to AECOM
Net income attributable to AECOM	$	88.5		$	60.9		$	84.0		$	339.4		$	136.5
Non-core operating losses	3.7			18.5			17.5			9.4			57.2
Impairment of assets held for sale, including goodwill	—			—			—			—			168.2
Acquisition and integration related items	3.3			(6.5		)	(4.4		)	38.7			(10.9		)
Loss (gain) on disposal activities	—			2.1			0.8			(0.6		)	2.9
Amortization of intangible assets	30.1			28.4			27.4			113.6			116.4
FX gain from forward currency contract	—			—			—			—			(9.1		)
Financing charges in interest expense	3.1			2.6			2.9			17.5			52.6
Tax effect of the above adjustments…	(6.5		)	(2.3		)	(9.4		)	(41.3		)	(43.7		)
Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform	—			—			(6.1		)	—			(47.8		)
Valuation allowances	—			—			25.0			—			25.0
Amortization of intangible assets included in NCI, net of tax	(2.6		)	(2.8		)	(3.3		)	(9.5		)	(11.9		)
Adjusted net income attributable to AECOM	$	119.6		$	100.9		$	134.4		$	467.2		$	435.4

AECOM

Regulation G Information

(in millions, except per share data)

	Three Months Ended									Twelve Months Ended
	Sep 30, 2017			Jun 30, 2018			Sep 30, 2018			Sep 30, 2017			Sep 30, 2018
Reconciliation of Net Income per Diluted Share to Adjusted Net Income per Diluted Share
Net income attributable to AECOM — per diluted share	$	0.55		$	0.37		$	0.52		$	2.13		$	0.84
Per diluted share adjustments:
Non-core operating losses	0.02			0.11			0.11			0.06			0.35
Impairment of assets held for sale, including goodwill	—			—			—			—			1.04
Acquisition and integration related items	0.02			(0.04		)	(0.03		)	0.24			(0.07		)
Loss on disposal activities	—			0.01			—			—			0.02
Amortization of intangible assets	0.18			0.18			0.17			0.71			0.72
FX gain from forward currency contract	—			—			—			—			(0.06		)
Financing charges in interest expense	0.02			0.02			0.02			0.11			0.32
Tax effect of the above adjustments…	(0.03		)	(0.01		)	(0.06		)	(0.25		)	(0.27		)
Revaluation of deferred taxes and one-time tax repatriation charges associated with U.S. tax reform	—			—			(0.03		)	—			(0.29		)
Valuation allowances	—			—			0.15			—			0.15
Amortization of intangible assets included in NCI, net of tax	(0.02		)	(0.02		)	(0.02		)	(0.06		)	(0.07		)
Adjusted net income attributable to AECOM — per diluted share	$	0.74		$	0.62		$	0.83		$	2.94		$	2.68

Weighted average shares outstanding — diluted	161.1			163.2			161.8			159.1			162.3

Reconciliation of EBITDA to Adjusted Income from Operations
EBITDA(1)	$	217.7		$	212.4		$	221.7		$	834.0		$	637.7
Non-core operating losses	3.7			18.7			17.5			9.4			57.4
Impairment of assets held for sale, including goodwill	—			—			—			—			168.2
Acquisition and integration related items	3.3			(6.5		)	(4.4		)	38.7			(10.9		)
Loss (gain) on disposal activities	—			2.1			0.8			(0.6		)	2.9
FX gain from forward currency contract	—			—			—			—			(9.1		)
Depreciation expense included in non-core operating losses, acquisition and integration expenses above	—			(3.7		)	(2.2		)	(0.8		)	(9.7		)
Adjusted EBITDA	$	224.7		$	223.0		$	233.4		$	880.7		$	836.5
Other income	(2.4		)	(2.7		)	(2.6		)	(6.6		)	(20.1		)
FX gain from forward currency contract	—			—			—			—			9.1
Interest income(2)	1.8			2.3			2.1			5.5			9.6
Depreciation(3)	(43.0		)	(36.3		)	(39.3		)	(156.2		)	(149.0		)
Noncontrolling interests in income of consolidated subsidiaries, net of tax	15.3			14.2			21.4			82.1			60.7
Acquisition and integration related items included in NCI, net of tax	—			(1.4		)	(0.4		)	—			(1.8		)
Amortization of intangible assets included in NCI, net of tax	2.6			2.8			3.3			9.5			11.9
Adjusted income from operations	$	199.0		$	201.9		$	217.9		$	815.0		$	756.9

(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 expense

AECOM

Regulation G Information

(in millions, except per share data)

	Three Months Ended								Twelve Months Ended
	Sep 30, 2017		Jun 30, 2018			Sep 30, 2018			Sep 30, 2017			Sep 30, 2018

Reconciliation of Segment Income from Operations to Adjusted Income from Operations
Design & Consulting Services Segment:
Income from operations	$	106.1	$	120.4		$	126.4		$	411.8		$	455.1
Non-core operating losses	3.8		0.7			0.9			9.4			2.8
Gain on disposal activities	—		—			—			(0.6		)	—
Amortization of intangible assets	6.5		6.4			5.8			27.2			24.6
Adjusted income from operations	$	116.4	$	127.5		$	133.1		$	447.8		$	482.5

Construction Services Segment:
Income (loss) from operations	$	38.2	$	9.3		$	21.3		$	115.2		$	(109.2	)
Acquisition and integration related items	—		(7.9		)	(4.8		)	—			(12.7		)
Non-core operating losses	—		17.9			16.6			—			54.5
Impairment of assets held for sale, including goodwill	—		—			—			—			168.2
Loss on disposal activities	—		2.1			0.8			—			2.9
Amortization of intangible assets	10.6		12.3			11.7			34.4			52.6
Adjusted income from operations	$	48.8	$	33.7		$	45.6		$	149.6		$	156.3

Management Services Segment:
Income from operations	$	48.3	$	66.2		$	49.9		$	241.1		$	199.6
Amortization of intangible assets	13.1		9.7			9.9			52.1			39.2
Adjusted income from operations	$	61.4	$	75.9		$	59.8		$	293.2		$	238.8

AECOM

Regulation G Information

FY19 GAAP EPS Guidance based on Adjusted EPS Guidance

(all figures approximate)		Fiscal Year End 2019
GAAP EPS Guidance		$1.72 to $2.07
Adjusted EPS Excludes:
Amortization of intangible assets		$0.55
Acquisition and integration related items		($0.09)
FY19 restructuring		$0.50 to $0.55
Financing charges in interest expense		$0.06
Tax effect of the above items*		($0.28)
Tax expense associated with U.S. tax reform		$0.09
Adjusted EPS Guidance		$2.60 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.

FY19 GAAP Net Income Guidance based on Adjusted EBITDA Guidance

(in millions, all figures approximate)		Fiscal Year End 2019
GAAP Net Income Attributable to AECOM Guidance*		$277 to $332
Adjusted Net Income Attributable to AECOM Excludes:
Amortization of intangible assets, net of NCI		$88
Acquisition and integration related items		($15)
FY19 restructuring		$80 to $90
Financing charges in interest expense		$10
Tax effect of the above items**		($45)
Tax expense associated with U.S. tax reform		$15
Adjusted Net Income Attributable to AECOM		$442
Adjusted EBITDA Excludes:
Interest Expense		$204
Interest Income		($4)
Depreciation		$150
Taxes		$148
Adjusted EBITDA Guidance		$920 to $960

*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.

FY19 GAAP Tax Rate Guidance based on Adjusted Tax Rate Guidance

(all figures approximate)	Fiscal Year End 2019
GAAP Tax Rate Guidance	24	%
Tax rate impact from adjustments to GAAP earnings	(2	)%
Tax rate impact from inclusion of NCI deduction	3	%
Effective Tax Rate for Adjusted Earnings Guidance	25	%

FY19 GAAP Interest Expense Guidance based on Adjusted Interest Expense Guidance

(in millions, all figures approximate)	Fiscal Year End 2019
GAAP Interest Expense Guidance	$	214
Financing charge in interest expense	$	10
Interest income	$	4
Adjusted Interest Expense Guidance	$	200

Exhibit 99.2

Event Name: Q4 2018 AECOM Earnings Call

Event Date: 2018-11-12T17:00:00 UTC

P: Operator

C: Michael S. Burke; AECOM; Chairman of the Board & CEO

C: Randall A. Wotring; AECOM; COO

C: W. Troy Rudd; AECOM; Executive VP & CFO

C: Will Gabrielski; AECOM; VP of IR

P: Alan Matthew Fleming; Citigroup Inc, Research Division; VP

P: Andrew John Wittmann; Robert W. Baird & Co. Incorporated, Research Division; Senior Research Analyst

P: Anna Kaminskaya; BofA Merrill Lynch, Research Division; VP

P: Chad Dillard; Deutsche Bank AG, Research Division; Research Associate

P: Jamie Lyn Cook; Crédit Suisse AG, Research Division; MD, Sector Head of United States Capital Goods Research, and Analyst

P: Michael Stephan Dudas; Vertical Research Partners, LLC; Partner

P: Steven Fisher; UBS Investment Bank, Research Division; Executive Director and Senior Analyst

P: Tahira Afzal; KeyBanc Capital Markets Inc., Research Division; MD, Associate Director of Equity Research, and Equity Research Analyst

+++ presentation

Operator^ Good morning, and welcome to the AECOM Fourth Quarter 2018 Earnings Conference Call. I would like to inform all participants, this call is being recorded at the request of AECOM. This broadcast is the copyrighted property of AECOM. Any rebroadcast of this information in whole or part without the prior written permission of AECOM is prohibited. As a reminder, AECOM is also simulcasting this presentation with slides at the Investors section at www.aecom.com (Operator Instructions) I would like to turn the call over to Will Gabrielski, Vice President, Investor Relations.

Will Gabrielski^ Thank you, operator. I would like to direct your attention to the safe harbor statement on Page 1 of today’s presentation. Today’s discussion contains forward-looking statements about future business and financial expectations. Actual results may differ significantly from those projected in today’s forward-looking statements due to various risks and uncertainties, including the risks described in our periodic reports filed with the SEC. Except as required by law, we take no obligation to update our forward-looking statements.

We are using non-GAAP financial measures in our presentation. The appropriate GAAP financial reconciliations are incorporated into our presentation, which is posted on our website. Please note that all percentages refer to year-over-year progress, except as noted.

Our discussion of earnings results and guidance and adjusted for noncore businesses and asset dispositions, gains and losses on disposals and assets held for sale, acquisition and integration-related items, financing charges, interest expense, amortization of intangible assets, the revaluation of deferred taxes and tax effects and discrete act tax items associated with U.S. tax reform unless otherwise noted. Today’s discussion of organic growth is on a year-over-year and constant currency basis and is adjusted to exclude impacts of noncore businesses. Beginning today’s presentation is Mike Burke, AECOM’s Chairman and Chief Executive Officer. Mike?

Michael S. Burke^ Thank you, Will. Welcome, everyone. Joining me today are Troy Rudd, our Chief Financial Officer; and Randy Wotring, our Chief Operating Officer. I will begin with an overview of AECOM’s results and discuss the trends across our business. Then Troy will review our financial performance and outlook in greater detail before turning the call over for a question-and-answer session.

Please turn to Slide 3. We delivered record revenue, wins and backlog in fiscal 2018, which position us well for continued growth in 2019 and beyond. Organic growth accelerated in the second half of the year led by 17% and 12% growth, respectively, in our higher margin Americas design and MS businesses. As a result, we set a new high for annual revenue at over $20 billion and we expect to deliver another year of growth in 2019. Full year wins of more than $28 billion represent a 23% increase over the prior year, resulting in a record $54 billion backlog. Fourth quarter wins increased by 25% to $6.1 billion. Our momentum continued into the first quarter with more than $7 billion of large CS and MS project wins in October.

We also delivered a quarterly record $511 million of free cash flow in the fourth quarter, which contributed to a fourth straight year of greater than $600 million of free cash flow. As a result, we continue to pay down debt and we executed $150 million accelerated share repurchase under our $1 billion authorization, which reduced our shares outstanding by approximately 3%. However, EBITDA was below our expectations due to 3 factors, including execution challenges on a handful of projects in the CS segment, a timing-related shortfall in AECOM Capital and volume- related underperformance in the U.K. These items masked the underlying strength of our performance across most other areas of the business, specifically, the Americas design business exceeded our growth and profit expectations for the year and the MS segment delivered another solid performance.

Importantly, to maximize the profitability of our record $54 billion backlog, we are executing 3 strategic actions. First, following a review of our cost structure, we are implementing a plan to reduce our annual G&A by $225 million with most of the actions taking place in the first half of the fiscal year. The G&A savings will primary benefit the DCS segment, where we expect the adjusted operating margin to exceed 7% in fiscal 2019 with further improvements in 2020 and beyond. Importantly, all of our segments will benefit from a more efficient cost structure as we compete for work and deliver our backlog.

Second, we have changed the leadership in our CS segment. Though the vast majority of our projects have met or exceeded our expectations and more broadly our execution track record remains stellar, the issues that impacted fiscal 2018 were avoidable and unacceptable. In addition to the leadership change, we have conducted a thorough portfolio review and identified the root causes of the challenges we encountered to ensure we execute with greater certainty in the future.

Finally, we are currently evaluating a plan to exit more than 30 countries. This is part of an ongoing review of our geographic exposure with a focus on prioritizing our investments and attention towards our largest and highest growth markets where our competitive advantages are greatest. All of these actions hone our focus on our most profitable end markets, reduce our risk profile and enhance the consistency of our financial performance, including our industry-leading cash flow.

Please turn to Slide 4 for a discussion of our business trends. Beginning in the DCS segment. We had significant accomplishments in our design business in 2018. We delivered our highest growth rate in several years in Americas, our largest geography, including 17% growth in both the third and fourth quarters. Our leadership position in transportation and water markets resulted in double-digit growth in these markets. Strong economic growth, funding from the more than $200 billion of ballot measures that passed in 2016 and the visibility created by the FAST Act contribute to this growth. In addition, last week, voters in California, our largest state by revenue, reaffirmed their overwhelming support for infrastructure by voting to maintain a $0.12 gas tax, which will provide over $50 billion of transportation-specific funding over the next decade. Voters in 30 other states also demonstrated support with over $30 billion of transportation infrastructure investments approved. And hopes for a federal infrastructure bill in DC were buoyed by leadership of both parties in expressing the need for a comprehensive infrastructure. As a result, we expect very favorable market conditions to persist over the next several years.

During the year, we also mobilized quickly to provide critical services to aid in the storm recovery efforts in the U.S. Virgin Islands, Puerto Rico and Texas. Our success in the storm recovery effort reflects the advantages of our scale and the agility of our leadership team to quickly capitalize on emerging opportunities. We are making further investments in our capabilities to ensure we remain a leader in this effort.

In international markets, trends remain mixed. In the Asia Pacific region, we delivered 7% growth for the year which was led by a continued strength in the Australian transportation market. In the fourth quarter, we won a substantial contract as part of Melbourne’s Metro tunnel project, which adds to our visibility. The Greater China market also remains robust. In Hong Kong, infrastructure demand is strong, and funding from ongoing budget surpluses support our positive long-term outlook. We are also benefiting from the breadth and depth of the capabilities we have developed in Hong Kong, which is driving strong growth in Mainland China.

Turning to the EMEA region. Volumes in our largest market, the U.K., were below our expectations. Uncertainty around the mid and long-range impacts of Brexit continue to impact the market ahead of the key March 29 separation date from the European Union. We have taken decisive actions to prepare for this slowdown. As a result, we have a better cost structure today and we have maintained the key capabilities to respond as market conditions improve.

Turning to the Management Services segment. We delivered 14% growth in the fourth quarter, which contributed to double-digit growth for the full year. This performance is a testament to our leading position across our key DoD and DoE markets and reflects a high return on our growth investments and continued high win rates. As a result, MS backlog has increased by nearly 120% since the start of fiscal 2017, and we exited the year at a near-record level. This growth has included a substantial expansion of our classified work. Today, more than 50% of our MS backlog is for classified programs. We have a large base of employees with security clearance, which provides us with a competitive advantage. The budget for the U.S. DoD remains at historic highs, and we continue to pursue substantial opportunities for further growth. In addition, we have a strong DoE pipeline of remediation opportunities and are actively expanding our capabilities in this market. In fact, in the first quarter, we were selected for a $500 million Defense contract. As we look across our $30 billion pipeline, which includes nearly $15 billion of bids under client evaluation, we are confident that this momentum will continue.

Pivoting to Construction Services. I am pleased to report to that we continue to make strong progress on the Alliant gas power plant. We are approximately 80% complete and remain on schedule and on budget. Our confidence in a successful outcome remains high. However, execution challenges across CS impacted our results, including write-downs in the fourth quarter on a handful of projects. We have changed the leadership of the business and conducted a thorough review of our portfolio of projects. Importantly, with new leadership in place, we are optimistic for the future.

In Building Construction, we achieved our ambitious target for our fourth consecutive year of double-digit organic revenue growth led by our core New York and Los Angeles Metro markets. Total wins for the year doubled from fiscal 2017 and backlog increased by 12%. After the quarter ended, an AECOM and Walsh joint venture was selected for the $7 billion redevelopment of terminal 1 at JFK Airport in New York City, which will increase our Building Construction backlog to a new record. With none of our top 10 projects set to end in 2019 and a strong pipeline of pursuits, we continue to have substantial visibility.

The Civil Construction business performed to our expectations and has been a solid contributor over the past year. Demand in our core West Coast market is driving better as-sold margins and more favorable terms and conditions. As a result, we are being highly selective on the work we are pursuing.

Finishing with AECOM Capital. We achieved a tremendous milestone this quarter with the first financial close on our new third-party real estate investment joint venture with Canyon Partners. When we started AECOM Capital in 2013, our goal was to prove out the concept and to manage third-party capital given the size of the opportunity and investment limits of our balance sheet. The new fund will provide us with management fees that will support cost, allowing us to fully benefit from the upside of our gains. Across our business, we are positioned for continued success. We are winning work in a record rate and market trends continue to support several years of growth. With more efficient and focused operations, we are confident in our ability to drive strong performance over the next several years.

I will now turn the call over to Troy, who will discuss the quarter in more detail.

W. Troy Rudd^ Thanks Mike. Please turn to Slide 6. We delivered strong results on a number of key metrics. Importantly, we delivered strong cash flow, including a record in the fourth quarter, which enabled continued debt reduction and the repurchase of approximately 4.6 million shares of our stock. As Mike emphasized, we had several accomplishments in the year, which sets a solid foundation for the future. To fully capitalize on this foundation, we have implemented margin enhancement initiatives primarily through a more efficient operating model and G&A reductions. We’ve made substantial progress in our targeted G&A reductions already and expect to realize approximately $85 million of savings in fiscal 2019. Generating the planned G&A savings and delivering on a record backlog are key components of the 12% EBITDA growth we expect in fiscal 2019. As a result, we are confident in our ability to drive sustained long-term earnings growth and to create value for our shareholders.

Let’s turn to Slide 7. Revenue in the DCS segment increased by 11% in the fourth quarter and 8% in the full year. The Americas grew by 17% in the second half of the year and 11% for the full year. This growth was driven by strong performance in our core transportation and water markets as well as improved results in our environment business. In addition, we are executing a growing portfolio of storm recovery work, where we are pursuing a multibillion-dollar pipeline of opportunities. As a result, we expect growth to continue in fiscal 2019.

The adjusted operating margin was 6.1% for the quarter, which is a 30 basis point improvement over the prior year and reflects the positive momentum in the business. While we delivered strong performance in our Americas and Asia Pacific regions, lower levels of activity in the U.K. and ongoing cost to align that business with market conditions offset these strengths. Importantly, we are on a path to deliver substantial margin improvement with our planned G&A reductions. As a result, we expect the adjusted operating margin to increase by at least 110 basis points to more than 7% in fiscal 2019 with a further improvement expected in fiscal 2020 as you realize the full annual benefit of our G&A actions.

Please turn to Slide 8. Revenue in the MS segment increased by 14% in the quarter and 11% for the full year. This was ahead of our expectations. Revenue is accelerating as a result of the approximately 120% backlog growth since the start of fiscal 2017. The full year adjusted operating margin was 6.5%, which was mostly consistent with expectations. As we pivot to fiscal 2019, we expect our adjusted operating margin to approximate 6%. With an increasing percentage of our revenue coming from projects where we are in the prime position, an increasing share of revenue on these projects will run through our books and dilute the margin percentage. With our robust backlog and pipeline, including strong wins already in the first quarter, we are confident in the positive trajectory of the business.

Let’s turn to Slide 9. Revenue in the CS segment increased by 5% in the fourth quarter and 7% in the full year. We achieved our ambitious goal of delivering a fourth consecutive year of double-digit organic growth in our Building Construction business. And with the substantial wins in the first quarter that Mike spoke to, we are well positioned for continued growth. Our full year operating margin was 1.9%, which was slightly below our expectations. While performance was strong across most of the portfolio, as Mike mentioned, poor performance on a handful of projects negatively impacted results. Importantly, we’ve conducted a thorough review of our portfolio and changed the leadership to improve accountability. We expect our margins will approximate 2% in fiscal 2019.

Let’s turn to Slide 10. Fiscal 2018 underscores our industry-leading track record of strong cash generation. Operating cash flow in the year was $775 million and free cash flow was $688 million, both of which were 11% improvements over prior year. We’ve now generated $2.7 billion of free cash flow over the past 4 years. Our ability to consistently convert earnings to cash flow has enabled our shareholder-focused capital allocation actions. During the year, we allocated capital to the highest and best use, including continued debt reduction and a $150 million accelerated share repurchase. Going forward, our capital allocation priorities remain unchanged under our commitment to return substantially all free cash flow to shareholders, including the $850 million remaining on our $1 billion repurchase authorization. With our stock continuing to trade at a price below what we believe is the long-term value, we intend to be in the market buying shares. We will, of course, balance the repurchase volumes with cash flows, which are typically second half weighted in our business.

Please turn to Slide 11. We have initiated guidance for fiscal 2019 that calls for adjusted EBITDA of between $920 million and $960 million and adjusted EPS of between $2.60 and $2.90. Our EPS growth in 2019 is 24% at the midpoint after adjusting for our better-than-expected 2018 tax performance. At the midpoint of our EBITDA range, we are expecting 12% growth, which includes $85 million of realized benefits from our G&A reduction plan and underlying growth in the business. As I noted, with the majority of the savings benefit realized in the DCS segment, we expect DCS margins to exceed 7%.

In addition, we expect fiscal 2020 EBITDA will improve further, driven by the annual benefit of our G&A reductions and from revenue growth. Importantly, with the outsized growth we expect in 2019 and our record backlog, we are reiterating our expectation for a 7% EBITDA CAGR from fiscal 2018 to 2022.

With respect to the impacts of the G&A reduction plan, we expect to incur approximately $80 million to $90 million of restructuring costs. Majority of these costs will be incurred in the first half of the year with the benefit phasing in as the year progresses. Total cash cost for the restructuring are expected to be between $60 million and $70 million.

We anticipate first quarter EBITDA will account for approximately 21% of our full year guidance. Of note, however, is the timing of the AECOM Capital realizations. Today, we expect to realize most of the anticipated $13 million included at the midpoint of our guidance during the first half of the year. We expect to deliver cash flow between $600 million and $800 million for the full year and remain committed to our plan to deliver at least $3.5 billion of free cash flow from 2018 through 2022.

With that, I will turn the call over to for Q&A. Operator, we’re now ready for questions.

+++ q-and-a

Operator^ (Operator Instructions) Alan Fleming from Citi is on the line with a question.

Alan Matthew Fleming^ Mike, it seems like the AECOM strategy, at least in DCS for a long time, was to kind of be everywhere around the world and essentially establish outposts, either organically or inorganically regardless of cost, and then kind of growth through those outposts. Today’s announcement almost seems like a reversal of that strategy. So why shouldn’t the $140 million of cost savings kind of just be the starting point for DCS profitability improvement? And maybe why couldn’t it happen faster than the FY ‘20 or ‘21 time frame that you’re talking about?

Michael S. Burke^ Well, first of all, that strategy is evident in this — that change in strategy is evident in the strategic announcement we made, where we will retrench from about 30 countries where we had less than 1% of our revenue but we had breakeven or slightly negative results. And — but what’s more important is that we’re taking the energies away from the — management time away from those 30 countries and focusing on markets that present greater opportunity. So the return on investment, both in the capital we had deployed and the return on investment of the management’s time will be much greater by retrenching from those 30 markets. But the impact — I think the second part of your question was the impact on the DCS margins. And maybe, Troy, do you want to stand on that?

W. Troy Rudd^ Yes. So in the first — again, in the first year, we expect to drive between $80 million and $90 million of savings. So of the run rate, $140 million savings that we expect to drive, the bulk of that is coming in the first year. And more importantly, that’s been driven by actions that were taken in the first half of the year. We expect to be 80% complete with those actions at the end of the first quarter and 90% at the end of Q2. So we — really, what we meant was when we said we had most of it behind it, we really will, at the end of the first quarter, have the bulk of that behind us and be generating those savings through the year and exiting the year at $110 million. And then in the first half of ‘20, there are some actions to take there as well. So we’ll be exiting at that run rate really halfway through 2020.

Michael S. Burke^ Yes. And I think, Alan, just it’s important to point out what that means for the margins where we’ve had DCS margins at 6%.

With this restructuring and streamlined cost structure, we will have 7% margins in the DCS business. And so what that means is that the growth that we had in the DCS business, you heard us mention the double-digit organic growth in the second half of the year in DCS, the $54 billion of backlog overall. What it means is that we will be able to extract more profit from that $54 billion of backlog because of the restructuring and the higher margins that we now expect. And I think, we should point out that, that 7% margin puts us in the upper quartile of our peers in this sector.

Alan Matthew Fleming^ Okay. I appreciate that, Mike. Maybe as a follow- up, can I ask about the organic growth in DCS? Is there any way to quantify how much the U.K. and maybe the Middle East were a drag on organic growth in the quarter? And maybe talk about the puts and takes as you’re thinking about FY ‘19 from a growth perspective. Are you — I would assume your forecasting a continued strength or strong growth in Americas offset by decline in the U.K. and the Middle East. And do you think that this slowdown in the U.K. is a temporary cooling off? Or is this a more — are you prepared for a more prolonged slowdown in that part of the world?

Michael S. Burke^ So I’ll let Troy talk about those organic growth trends in those 3 regions.

W. Troy Rudd^ Yes. So just — I’ll first cover the pass-through, then I’ll talk about what we see in the future. So this past year, again, we had very strong growth in the Americas business in the second half of the year, 17%. There was a significant amount of that growth driven by, what I’m going to call, our storm recovery work that we provided for clients. Our Asia Pacific business grew mid-single digits during the year, and then our EMEA business declined, in particular, in the fourth quarter, our Middle East business shrunk year-over-year by about 5%. So moving forward, we see strong growth in our Americas business. Although coming off significant growth in this year, I think, we’re being conservative and we are viewing this as modest growth in the Americas in the coming years. So mid-single digits. When we look at Asia Pacific, we see the growth opportunities being consistent with this past year in the Asia Pacific business. And in the Middle East and our Europe business, we actually see that business being flat and possibly modest growth. But more importantly, the actions that we took in the course of this year and some of the restructuring we’re taking in this next year to exit some of those smaller countries has put us in a position where even if that business doesn’t grow, we believe we have healthy operating margins in a healthy operating business. So in summary, I think, we’re forecasting modest growth across the DCS business this coming year. And most of that growth is coming in our largest market, particularly the Americas business.

Michael S. Burke^ And I think, to add a little color to one part of your question there on what do we portend for the Europe and Middle East business, we’ve got — obviously, got the Brexit decision coming up in March. I think getting that uncertainty behind us gives us more upside than not. In the other part across the Middle East, with the expectation of higher oil prices, there’ll be more money for public expenditure across that region. So I think, our sense is that the outlook in both Europe, U.K. and Middle East looks better in the future than it did for the past 12 months.

Operator^ Your next question is from Jamie Cook with Credit Suisse.

Jamie Lyn Cook^ I guess, a couple of questions. One, I found the restructuring interesting and understanding that the DCS margins can go considerably higher. But — I mean, if we just look, DCS has been the one business that, for the most part, has been achieving their targeted margin forecast. Whereas if we look at Construction Services and Management Services, you haven’t been achieving your sort of targeted margins. So why aren’t the restructuring actions focused more towards those 2 businesses, I guess, relative to DCS? My second question is, Mike, when you think about the Construction Services business and the low profitability or execution issues you’re having, why is that a good business still to be in longer term? And then my third question is for you, Troy. Understanding there’s always seasonality in your cash flow and the cash flow is generally seasonally better in the back half of the year, you did point that out in your prepared comments and in the press releases. Is there anything in particular we should be reading about — thinking about for cash flow in 2019 and the back half? Is it more back- end loaded than usual?

Michael S. Burke^ Okay. There’s a lot of questions in there. Troy, do you want to take the margin piece?

W. Troy Rudd^ Yes. So just focusing on the, first of all, on the CS business. A couple of points there. Number one is we are taking some actions in the CS business, in particular around our Power business. And with respect to this past year, when we made that decision in the second quarter to exit combined cycle power plant construction, we were delivering some projects in that business. We have the one Alliant project, which we’re finishing, which is, I’m happy to say, 80% complete, on time and on schedule. But what that means for that Power business as we reposition it, that we’re burning off some backlog in that business. And so we’re going to see that business come down year-over-year. So when we look at the restructuring in that business and when we look at CS overall, we expect margins in that business to be consistent with the current year. The other thing I’ll say about our Building Construction business in terms of margins is that we do talk about it as being a 2% margin business, but it really is a lot more like a construction management business. And if you looked at the self perform work, that business actually has margins that are in the 10% range where we deliver that work with almost no working capital. So it has almost an infinite return on our invested capital in that business. So I think, it’s distinguished that from the rest of our Construction Services business. In our DCS business, as you pointed out, the most significant impact we have in that business is driving those margins to improvement, partially through growth, but really through our own actions, self-help, to get margins that are going to be exceeding 7% for this next year. In Management Services, we have been very successful winning a significant amount of work over the course of this last year and a lot of it has been with the Department of Defense. That Department of Defense business has lower margins than we typically see in our DoE business. And also, because we’ve been winning work as a prime instead of a member of a joint venture, we actually see the margins in that business being economically the same. But in terms of the overall margin, because we have now more revenue coming through our P&L, margins look like they’re down. I’m going to let Randy talk a little bit more about the MS business and the margins as well as we move forward.

Randall A. Wotring^ Yes, Jamie. And we’re very bullish about the MS business going forward. As Troy indicated, because of the bidding activity we had over the last couple of years, most were on very large DoD contracts that were cost reimbursable. So by their very nature, they were lower in margin than you would see a normal fixed-price contracting in the government business. However, looking forward, because of the large nature of the DoE, the Department of Energy contracts, they’re more lumpy in the bidding activity. We see $30 billion of opportunities over the next 3 to 4 years. So looking forward, we still see great opportunities to not only grow our backlog but grow in the higher-margin DoE business.

Michael S. Burke^ Yes. Jamie, let me just come back to the strategic question you asked about CS, and I think Troy covered most of it. But just to underscore that business, there’s a wide variety of businesses within our Construction Services segment. First of all, we have, over the past 8 months or so, we have very carefully analyzed that business and have been derisking that portfolio by extracting ourselves from the fixed-price combined cycle EPC market in Power. That’s created a $50 million headwind for FY ‘19, but we believe it was a good derisking of that portfolio. We have also been derisking the portfolio by selling off one piece of our oil and gas business, and we’re currently in the due diligence phase to close another segment of it. And also, to point to the Building Construction market when we talk about margins, people like to focus on the 2% margins. But because of the pass-through cost in Building Construction, it’s more appropriate to look at that on a net service revenue basis. On a net service revenue basis, the margins are 18% in the Building Construction management business, requiring negative net working capital so our returns on invested capital are infinite. And I think when you look at the growth in that business, we had $10 billion of wins in the building structure segment in the last 4 months alone. So when I look at the growth in the business, I look at the infinite return on invested capital and the 18% net service revenue margins, we like that business. Now we continue to evaluate our portfolio, as we have for the past 8 months, to identify where we really want to place our bets going forward and what markets might present asymmetrical risk that we don’t like anymore. So we’re not prepared to go into a lot more detail on that today, but we have had a lot of feedback from our shareholders on different aspects of Construction Services that they like and don’t like, and we’ll continue to evaluate that.

Jamie Lyn Cook^ And then just on the cash flow?

W. Troy Rudd^ Yes. With respect to cash flow, as we move forward, I don’t see anything different in terms of timing cash flow. Typically, they’ve been 20% of our free cash flow in the first half of the year, 80% in the second half of the year. That’s not going to change even with the cash restructuring costs that we’re incurring in the first half of this year. And I’ll make the point that even beyond ‘18, when I look forward to ‘19, I actually see the profile of the business being similar with the exception that we won’t be incurring similar cash restructuring charges. So I actually see some upside in terms of our cash flow range in fiscal ‘20. So beyond ‘19.

Operator^ Our next question comes from Andrew Wittmann from Baird.

Andrew John Wittmann^ Let’s just keep going with cash flow a little bit here, guys. Where do I want to start? I guess, the — can you talk, Troy, about the sources of the free cash flow, which was obviously very good here in this quarter? Was it payables that were extended here? Was there any factoring in the quarter? Maybe give us some of the characteristics that maybe drove the cash flow.

W. Troy Rudd^ Sure, sure. We actually, during the course of this year, converted our cash from — the cash comes from earnings. So really, when you look at the P&L, you’re going to see that the earnings were converted to cash. If you remember, we do have depreciation, being in excess of CapEx. We had a tax headwind during the course of the year, and then we do have some equity provided to employees. All of that puts us in a position where we’re able to convert our earnings to cash and generate free cash flow consistent the way we did this past year. There was no factoring. The impact in the quarter was 0 from factoring. And in terms of our working capital management, we actually had our DSOs decline 2 days quarter-over-quarter. And a lot of the growth that we took on in our design business, in particular our construction business, in those businesses where we don’t use working capital. So you will see that while AR in those businesses increased with growth, so does AP based on the nature of the underlying work that we perform. So really nothing unusual year-over-year. We just have converted — we’ve converted our earnings to cash as we have in the past.

Andrew John Wittmann^ Okay. So then with the guidance, as we look at fiscal ‘19 here, I’m trying to reconcile this one. With earnings and cash being tied to each other here, it looks like your net income is implied at $442 million. You’re going to have some more in the $65 million of cash restructuring costs, yet you’re still forecasting free cash flow in excess of the $600 million. How do you reconcile the high level of cash with the relatively lower level of earnings in ‘19?

W. Troy Rudd^ Yes. So think about this. There are a couple of different items in that particular bridge. So again, depreciation being greater than CapEx is planned for the year. We will also have stock-based compensation that we provide to employees again this year, which is part of that bridge. Then our NCI is consistent year-over-year, as it has been in the past. And then we still have our cash taxes being lower than our P&L taxes that we’re forecasting for the year. And there’s a couple of other smaller items that go into that, but all of that gets you into — near the midpoint of the range in terms of free cash flow for the year.

Andrew John Wittmann^ Okay. Helpful. Then just, Mike, I guess, as I look across the, let’s say, engineering and government services space, there’s been plenty of companies who have deemphasized construction in the last couple of years. Stantec most recently, Tetra Tech before that. CH2M was doing it before they got bought up by Jacobs. But Jacobs is derisking the portfolio, doing less construction type stuff with the announcement that they’ve exited that business. You guys still have talked about your DBFO strategy as kind of who you are and who you’re going to be. You talk about derisking the portfolio kind of broadly through the restructuring actions that you’re taking here. As you look forward, is DBFO still the right thing to do, recognizing that others have gotten burned doing a lot of that construction or more risky type of work?

Michael S. Burke^ Yes. I mean, I think, as we’ve been talking about for a while, we have been very carefully focused on derisking the portfolio. We’ve taken a number of actions in the past 8 months. We are still deeply analyzing and in the process of continuing to derisk the portfolio. And you will not see us play in certain parts of the market where we think there’s asymmetrical risk. And so I fully understand the decisions that some of our competitors have taken and I applaud them for that and we’re analyzing the exact same issues. So that’s about what we’re prepared to say today is it’s a continuing process. We’ve taken a number of actions, and there’s more to come.

Operator^ Our next question comes from Steven Fisher from UBS.

Steven Fisher^ Wondering if you could just help us a little bit more on the segment assumptions for profitability growth, profit growth in 2019. It seems like the majority of the growth could be coming from the DCS segment. I was just trying to do the math on the margins and make assumptions of revenue growth within CS and MS. I mean, it sounds like there could be a decline in Construction Services. Maybe you could quantify that for us. And then how do we think about the puts and takes? I mean, is the profit in Management Services basically going to be flat with the growth in revenues but the decline in the margin?

W. Troy Rudd^ Yes. So Steve, let me just — let me kind of walk through the business. As you pointed out in DCS, we are expecting the margins — as the business grows and the margins move from 5.9% to over 7%. We expect significant growth in the operating margin or operating income in that business. In Construction Services, we do see improved performance from the oil and gas business, our O&M business, and we do see our Building Construction business being I’ll say flat year-over-year. I think, as we’ve already mentioned, Building Construction has had a phenomenal year, second half of the year and first quarter in terms of winning work in our core markets. But the way that work is delivered, you typically only see 5% of the operating income coming through in the first year in that business as you’re doing the preconstruction work. And you see that coming in later in the project. So the work that we’ve won in the second half of this year and the first part of this year will have a modest impact on ‘19. But it really means that it ramps up in ‘20 and ‘21. And then the decision we made around the Power business, that strategic decision will cause a decline in our Power business year-over-year which reposition it. All that leading to the CS business will have a

modest decline year-over-year in terms of operating income. In Management Services, we do see that business growing year-over-year in terms of its operating profit. If you recall this past year, in the third quarter, we had a claim that we picked up in the third quarter of about $15 million. So while that business looks like it’s flat year-over-year, we see it actually improving its profitability by about $15 million. That is sort of a walk through the businesses.

Steven Fisher^ Yes. That’s helpful, Troy. And then just continuing this discussion on some of the strategic action, things you’re considering. When I think about AECOM, and really, in the last 4 years since the URS deal, the business did become very broad and complex and maybe even difficult to manage. I guess, some of the last few questions have really been about derisking, but I guess I’m just thinking about simplifying — the potential to simplify the business to make it easier to manage. I just want to make sure I understood clearly what you’re commenting to Jamie and Andy, they’re about — it sounds like you’re looking to get out of some further businesses in the construction segment. Is that what you’re suggesting? And then once you do that and with these 30 countries that you’re exiting, does that get you to a simpler business that you think will be easier to manage going forward?

Michael S. Burke^ Yes, that’s exactly what we’ve been in the process of doing through this restructuring. We’ve been working on this since the spring of this year. We’ve been working with Bain to deeply analyze the entire organization. That 30 countries allows us to hone our focus on the markets where we realize is in markets where we have incredible focus and deploy our best resources, we’re having the greatest growth. You — Troy mentioned the significant growth in the second half of the year in DCS Americas. But even for the full year, we had double-digit growth, 11% growth in DCS Americas over the past year. So allowing us to hone our focus, get out of countries where we just don’t think the opportunities are going to give us the right returns, taking our — certain pieces of our business throughout this year, whether it be oil and gas or Power or others that we’re exploring, again, to refocus on the markets to present the best opportunities for growth. That present the best opportunities for margin and that have a lower risk profile is what we’ve been focusing on and the execution that’s taken place so far has helped us down that path. The strategic restructuring I mention today will allow us to further refine that focus and we’ll continue to look at opportunities of that sort all while at the same time, our backlog is growing significantly, up double digits again this year. In the first month of the fiscal year here in October, You’ve seen another $7 billion of wins come in just the month of October alone. So all of this gives us a lot of confidence in both ‘19 and beyond. And I think one of the things that I — Troy touched on the growth in Building Construction. As you know, in this business, a lot of these wins, you don’t have a lot of profitability in your first year of the win because you’re in the preconstruction phase. But then growth starts to accelerate after that. So while we feel pretty good about a 12% growth in EBITDA at the midpoint of the range for FY ‘19, we feel even better about what that means for 2020.

Steven Fisher^ Great. And just a quick clarification. The 6% margin in MS, is that a temporary floor here? It sounds like Randy said he got more DoE work picking back up. So is this sort of a temporary 6% and it goes back up or should we just be sort of setting an expectation of 6% going forward or maybe even lower depending on what the mix is?

Randall A. Wotring^ Yes. Looking forward, we see a lot of opportunities in the Department of Energy market that are just from a timing standpoint, so $30 billion of opportunities to be bid over the next 3 to 4 years. And they give us great opportunities for margin expansion. In addition, we see — always have some performance incentives, and we continue to perform very, very well in the DOE markets. So our performance is good, and so there’s always an opportunity to overachieve on performance milestones.

Operator^ Our next question comes from Tahira Afzal from KeyBanc.

Tahira Afzal^ Mike, if you look in the past, I remember when you realigned your business in Australia. And obviously, we’ve been following what happened in oil and gas. Things have taken a little longer than you thought. So any learning curve that you’ve incorporated in the time line that you presented to us?

Michael S. Burke^ Yes. Tahira, like I said earlier, we currently - speed matters in this effort. We have been underway with this project for several months now, and what’s important, I think, Troy mentioned it earlier that 80% of the decisions on cost takeouts will happen in Q1, with 90% of them being done by the end of Q2. So clearly — and when I say 80% done in Q1, most of those actions have already taken place in the first month of this fiscal year with respect to cost restructuring. So we’re moving, I believe, at the pace that this requires to ensure that we achieve the $110 million run rate by the end of FY ‘19. But of course, also $85 million of those savings being in the EBITDA for FY ‘19.

Tahira Afzal^ Got it. Okay, Mike. And I guess, obviously, we’ll find out the details from the countries where you’re streamlining your operations as time goes by. But perhaps you can give us a sort of higher overarching viewpoint of the DSOs, the remaining operations you’re looking at. Was that one of the factors being took into consideration? I believe there are some countries where a lot of [UNCs] operate where the DSOs have stretched out to twice as high in other areas and really, some of the labor laws in the countries they’re remaining on because it seems like by the time you’re done, we might be headed into a trickier economic climate.

Michael S. Burke^ So these countries that we’re talking about here are less than 1% of our revenue. The DSOs are not an enormous factor. The most important factor is a return on the investment that we have in those countries and return on the investment of management’s time. We have — resources, of course, are limited, as always. And making sure that we have those right resources focused on the real growth markets and not being distracted by an additional 30 countries where we don’t see the growth prospects in the out years. So it’s more of a return on management time as well as some capital deployed but it’s not a big DSO number.

Tahira Afzal^ Got it. Okay. And in terms of labor laws, are you — I guess, it’s not big enough again to really move the needle as you look forward.

Michael S. Burke^ No, it’s not big enough to move the needle. We’ve factored in the labor laws in the countries that we have identified and it’s all baked into the estimates of the restructuring cost and the timing of it.

Operator^ Our next question comes from Chad Dillard from Deutsche Bank.

Chad Dillard^ So I just wanted to spend some time on capital allocation. Just as you go into 2019, I mean, how are you thinking about balancing between buybacks and debt reduction? And how are you thinking about your leverage targets when making those decisions? And then secondly, over to your restructuring and simplification, just trying to understand what milestones as investors we should be looking at. And then also, correct me if I’m wrong on this, but if DCS is mainly a cost reimbursable business, I guess, how do you plan to retain those savings rather than giving them back just given that there’s a margin on top of your work?

W. Troy Rudd^ Yes. Chad, it’s Troy. So first, just on the repurchase plan. So again, in this past quarter, we did the $150 million ASR and we were able to repurchase a little more than 4.5 million shares. As we move into this next year, we — consistent with what we said in the past, we expect to be in the market to buy our shares. It’s our intention to continue to buy shares and return capital to shareholders, as we said. But of course, we’re going to do that in a way that’s consistent with the cash flow phasing of the business. The other point about leverage ratio is we did finish the year with a net leverage ratio of 2.8x. And had we not done $150 million ASR or been a little more aggressive, we would have ended the year at 2.6x. So over the course of this next year, just through earnings growth, we are going to get to that 2.5x net leverage ratio target, giving us the ability to continue to buy back shares. But again, we’ll manage that over the course of the year based on price and cash flow.

Michael S. Burke^ And Troy, one thing we just ought to point out. Just to emphasize what Troy said on us being in the market on capital allocation, we expect to be in the market starting tomorrow at certain prices for our stock - that we like the price of our stock at this price. We plan to be aggressive in purchasing throughout this year, and you’ll see the results of that shortly.

W. Troy Rudd^ And Chad, with respect to your second question, absolutely. In our DCS business, there’s a certain component of costs plus work that we do for clients, and that is already factored into the numbers that we gave you. So that — the $85 million will fall to the bottom line after we’ve netted out effectively the impact of cost plus work we do for clients and same with $110 million run rate. Those are net numbers.

Randall A. Wotring^ And with regard to milestones, just understand that restructuring plan is in place, so there’s no more planning. It’s execution mode at this point, and we’re well ahead of our execution plans at this point in time.

Chad Dillard^ That’s helpful. And just to follow up on your comment about $30 billion of MS opportunities over the next couple of years. Maybe we can zoom in and understand what’s coming ahead over the next 12 months, and what’s the mix between recompete versus new work bid and any other details you can provide there.

Randall A. Wotring^ Yes. Most of these opportunities are for DoE environmental management programs. There’s 5 opportunities that will be bid in FY ‘20 and one in FY ‘21, they’re all in the environmental management program. In all those cases, there’ll be expanded work. There is one recompete, but the others will be new work for us outside of this. Savannah River is still ongoing and one other recompete. The others will be all new work or expanded.

Michael S. Burke^ I think, it’s important to recognize that the win rates we’ve had in that. I think, as you know, our backlog has grown by 120% since we started FY ‘17, but importantly, our win rate has been around 50% of the bids we’ve pursued. And we’ve had $18 billion of wins over that last 2 years. So the track record on these bids is pretty darn good.

W. Troy Rudd^ And on the DoD bids, it gives us great visibility on revenue moving forward for a number of years, and it’s extremely low risk work and they are all cost reimbursable contracts with good clients and good programs that will help leverage into other bidding activities.

Operator^ Our next question comes from Michael Dudas with Vertical Research.

Michael Stephan Dudas^ You mentioned in your prepared remarks about changes at CS and, Randy, maybe you put more [emphasizes] there. What are some of the things — is there any business model changes throughout the organization that’s encompassed with this restructuring with either targeting end markets or maybe reporting-wise how you run the business in conjunction with this?

Michael S. Burke^ Well, we did replace the leader of our Construction Services business this year because of a few small handful of execution issues that we had. We have changed the markets in which we are pursuing projects, so we will pursue projects in core markets where we have strength and will not be pursuing projects in random markets where we don’t have the years of experience and resources on the ground. So that’s part of our derisking. And I previously mentioned all the other derisking work that we had done on combined cycle, EPC work, oil and gas work. And other than that, there’s no other changes in the business model that we’re prepared to talk about today.

Michael Stephan Dudas^ I appreciate that. And Mike, when you’re thinking about — you’ve had tremendous book-to-bill and great backlog growth across the board, but looking forward, is it — given with the restructuring and reemphasizing profitability and such and being a little bit more selective, is there ability to maybe to pull back a little bit

maybe because of higher bidding expenses? Or just you got a lot on your plate and just trying to be more selective in what’s coming through the business because you have such a tremendous backlog but still working through the level of generating that profitability to generate from that backlog?

Michael S. Burke^ So couple of things. First of all, when we started looking at the size of the backlog growth, we wanted to ensure that we were going to extract the maximum value from that backlog, which is what got us focused on this project 6 months ago with Bain consulting to help ensure that we had the right cost structure to maximize that. That’s what drove our margins in DCS for instance from 6% to 7%. So it’s not — we are not in any way scaling back on our business development costs, our selling costs, but we also realized that in certain markets like the 30 countries that I mentioned earlier, it is much more expensive to pursue business in markets where you don’t have significant scale. And so your return on business development dollars in core markets where you have strength is much greater. And so we do not see any of the restructuring efforts impacting the backlog growth, the revenue growth that we’ve had over the past couple of years.

Michael Stephan Dudas^ And just my final thought for you, Mike. The — it’s been admittedly a terrible week in California with all the tragedies and with the fire. A couple of things. Any early indication or read on how that could impact business flows and opportunities through California? And then follow up with that with some of the ballot initiatives, do you see any real visibility on some of — the one that passed in California that can add to your business win opportunities here in ‘19 and into ‘20?

Michael S. Burke^ So we don’t see any real impact from the fires in California on our business. Of course, we have some employees that were affected, including Troy was evacuated from his house, but his house is somewhat safe. But — so other than that, we don’t see us having an impact on our business either to the negative or the upside in rebuilding, there will be some P&D type work that have to be done. But not a lot of it affects our business like we see from the disaster recovery in the southeastern U.S. To the second part of your question, we actually feel pretty good about everything we’ve seen recently. Voters in California rejected Prop 6, which would have repealed the gas tax. That is a $50 billion transportation-specific funding over the next decade, having another $50 billion in transportation, which is our strongest market in our home state is really good. That’s coming on the heels of Measure M and that we have in the city of Los Angeles that creates $120 billion fund. So nationwide, on November 6, voters in 31 states showed their support for transportation infrastructure investments. And so everything is heading in the right direction to provide more revenue for our clients in this space. And then on top of that, we see renewed excitement in Washington after the midterm elections that both sides right now again are talking about broad bipartisan support for an infrastructure bill. So the supply side is looking pretty good for us.

Operator^ Our next question comes from Anna Kaminskaya, Bank of America.

Anna Kaminskaya^ Maybe let’s start with AECOM Capital. A, if you can provide more color on what happened to the project that slipped into, I guess, the first half of 2019 and remind us of what’s kind of remaining in your existing AECOM Capital. And you also announced the JV with Canyon Partners. Is it a change to your strategy how you redeploy capital in AECOM Capital? It’s just a different way of, I guess, reporting the same equity co-investment. If you can just provide broad details on what it means.

Michael S. Burke^ Yes, sure. As we mentioned, 1/3 of our miss to guidance in Q4 was due to that AECOM Capital project being moved out. The simple explanation to that is that we have an asset that we built, completed, leased up, had for sale. We expected it to complete. We had a firm offer and our partner had a right to top that offer. They did top the offer, but it also meant that extended out the closing period past the end of the year. It’s still an incredibly valuable asset with a nice gain that we will realize in FY ‘19. With respect to our change in strategy, there are a couple of things there. We had always intended to go out and raise third-party capital, and our partnership with Canyon Partners to raise third-party capital is underway. We had our first closing on that fund so we have now outside capital to invest. That is a — I don’t want to call it a change in strategy because it’s been our strategy all along. But it means we will not have to deploy money off of our own balance sheet to support the growth of AECOM Capital. What’s also important to note is that now that we have outside capital, we will be receiving fees that will help support the business so it will not be in a negative operating position, and we will only have the upside from potential gains on those projects going forward, both the revenue on the construction side but any gains on — through the carry interest in that fund going forward. So this has been a process that we have planned all along, to build up our expertise, build up the credibility, realize gains and then raise outside money to invest capital in projects that’s not coming off our balance sheet.

Anna Kaminskaya^ And as you look at your existing book in AECOM Capital, is there kind of a risk to pricing in some of the projects? Again, I’m just thinking the large exposure to New York, some on the multifamily homes. Any risk on some of the existing assets that you’ve already built?

Michael S. Burke^ No. We feel good about the built-in gains in the assets that we have remaining that are in the process of completion. We have had an incredible track record of higher double-digit returns on every one of the assets that we’ve developed so far and nothing has changed on any of those. So we feel like we have a good number of built-in-gains assets that will be realized into the future.

Anna Kaminskaya^ Great. And then my final question on the DCS backlog. I think if I look at just book backlog for the business, and as the new awards have been trending down, and by my calculation, book-to-bill is sub one times, kind of like any more color on how I reconcile your positive comments on your end market growth relative to backlog that’s been kind of sequentially trending down?

W. Troy Rudd^ Yes. Anna, it’s Troy. Our book-to-bill across DCS was 1.1 or 1.1x this past year. And more importantly, in our Americas business, it was 1.3x. So we’re actually seeing the book-to-bill be better than 1, and we’re actually seeing it in our growth, our highest growth opportunities in our Americas business where we, of course, have the highest margins especially post restructuring.

Anna Kaminskaya^ And is that both selected and not booked or just selected backlog? I’m just looking at backlog last quarter was 9.3 and this quarter, it’s 9.1, so (inaudible)

W. Troy Rudd^ Yes. So you’re looking at our contracted backlog. Again, during the course of a quarter, there are changes between awards, and that’s the timing of putting some of the contracts in place. The other thing I will point out to is that there has been an FX impact year-over- year on our non-U.S. or non-Americas backlog.

Michael S. Burke^ Anna, it’s important to point out that to see backlog growing while you had double-digit organic growth during the year is pretty incredible. So I just don’t want to lose sight of the fact that 11% growth on the revenue line in the Americas and we still grew the backlog in total.

Operator^ We have no further questions at this time. I will now turn the call back over to Mike Burke for closing comments.

Michael S. Burke^ Thank you, operator. So before we conclude the call today, I wanted to just underscore a few points. First of all, we exited fiscal 2018 with a great foundation for growth. We delivered record revenue wins and backlog and also generated the highest ever quarterly free cash flow. And second, we’re taking real proactive steps here to maximize our profitability for the enterprise. Our G&A reductions and our plans to hone our focus in the highest growth markets put us on a path for substantial margin enhancement. As you can see from our guidance for FY ‘19, we’re guiding to an EBITDA growth of 12% growth at the midterm. And then finally, through our long-term earnings growth and our industry- leading track record of generating cash, we will continue to create substantial value for our shareholders through prudent capital allocation that I mentioned earlier. In fiscal 2018, we reduced our debt. We executed on the $150 million accelerated share repurchase. And with our stock price remaining at attractive levels, as I said, you can expect us to remain in the market buying our stock. So I look forward to seeing you at our annual Investor Day in December, and thank you for spending the last hour with us.

Operator^ Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect.