AECOM (NYSE:ACM), the world’s #1-ranked engineering design firm, reported first-quarter revenue of $4.2 billion today. Operating incomeequaled $15 million, the net loss4 totaled $104 million, and the loss per share3 equaled $0.73. On an adjusted basis, diluted earnings per share1 were $0.71 for the quarter.
| First Quarter | |||||||||||||
| ($ in millions, except EPS) | Q1 FY14 | Q1 FY15 | YOY % | ||||||||||
| Revenue | $ | 1,954 | $ | 4,186 | 114.2 | % | |||||||
| Operating Income | $ | 90 | $ | 15 | (83.0 | %) | |||||||
| Net Income (Loss)4 | $ | 56 | ($104 | ) | NM | ||||||||
| Adjusted EPS1 | $ | 0.61 | $ | 0.71 | 16.4 | % | |||||||
| Operating Cash Flow | $ | 137 | $ | 283 | 105.7 | % | |||||||
| Free Cash Flow2 | $ | 117 | $ | 253 | 116.9 | % | |||||||
Note: All comparisons are year over year unless otherwise noted.
“AECOM delivered strong operating results and wins in the fiscal first quarter due to our widely diversified business model,” said Michael S. Burke, AECOM’s chief executive officer.
Burke added, “We are pleased with our organic growth as we focus on the successful integration of our acquisition of URS, which we completed in the quarter.”
“We started the year by delivering strong free cash flow,” added AECOM President and Chief Financial Officer Stephen M. Kadenacy. “We began to repay debt during the quarter and are on track to achieve our long-term leverage target.”
New Wins and Backlog
New wins in the quarter of $4.6 billion were driven by growth in the Americas, Asia-Pacific and the firm’s building construction business. After adjusting for acquisitions, total backlog increased 16 percent. The company’s book-to-burn ratio5 was 1.1 for the quarter, with total backlog at Dec. 31, 2014, of $41 billion.
Business Segments
In addition to providing consolidated financial results, AECOM reports separate financial information for its three segments: Design & Consulting Services (DCS), Construction Services (CS), and Management Services (MS).
Design & Consulting Services (DCS)
The DCS segment delivers planning, consulting, architectural and engineering design services to commercial and government clients worldwide in major end markets such as transportation, facilities, environmental, energy, water and government.
Revenue of $1.9 billion in the quarter increased 44 percent. Constant currency organic revenue declined 2 percent. Adjusted operating income6 was $83.2 million, a decrease of 8 percent. The growth rate in adjusted operating income was negatively impacted by the inclusion of a gain in the year-ago period from the consolidation of the AECOM Arabia joint venture.
Construction Services (CS)
The CS segment provides construction services for energy, commercial, industrial as well as public and private infrastructure clients.
Revenue in the quarter was $1.5 billion. On an organic basis, revenue increased 25 percent. Adjusted operating income6 was $69.3 million. Organic results were favorably impacted by strong performance in the building construction business.
Management Services (MS)
The MS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance and systems-integration services, primarily for agencies of the U.S. government, national governments around the world, and commercial customers.
Revenue increased 248 percent to $779 million in the quarter. On an organic basis, revenue declined 8 percent. Adjusted operating income6 was $96 million.
Tax Rate
Inclusive of the non-controlling interest deduction and excluding acquisition and integration related expenses, transaction costs related to financing reported in interest expense, and the amortization of intangible assets that were incurred during the first quarter, the effective tax rate was 25.9 percent.
Cash Flow
Cash flow from operations for the quarter was $283 million. Free cash flow2, which includes capital expenditures of $30 million in the quarter, was $253 million.
Balance Sheet
As of Dec. 31, 2014, AECOM had $735 million of total cash and cash equivalents, $4.98 billion of debt and $859 million in unused capacity under the $1.05 billion revolving credit facility.
Fiscal 2015 Outlook
AECOM is affirming adjusted EPS1 guidance for fiscal year 2015 of $2.75 to $3.35. The mid-point of the range assumes approximately $110 million of realized synergies from the URS combination.
In addition, the company expects full-year interest expense of approximately $220 million, capital expenditures of approximately $170 million, depreciation of approximately $210 million, a tax rate7 of 30 percent, and a full-year share count of 151 million shares.
Adjusted EPS guidance excludes the amortization of intangible assets and acquisition and integration expenses. In total, these items are expected to result in a pre-tax expense of approximately $560 million8.
AECOM is hosting a conference call today at 12 p.m. EST, 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 www.aecom.com. The webcast will be available for replay following the call.
| 1 | Defined as attributable to AECOM excluding acquisition and integration related expenses, transaction costs related to financing reported in interest expense, and the amortization of intangible assets. | |
| 2 | Free cash flow is defined as cash flow from operations less capital expenditures and is a non-GAAP measure. | |
| 3 | Defined as attributable to AECOM, basic. | |
| 4 | Defined as attributable to AECOM. | |
| 5 | Book-to-burn ratio is defined as the amount of wins divided by revenue recognized during the period. | |
| 6 | Excluding intangible amortization. | |
| 7 | Inclusive of the non-controlling interest deduction and excluding acquisition and integration related expenses, transaction costs related to financing reported in interest expense, and the amortization of intangible assets. | |
| 8 | Amortization of intangible assets expense includes the impact of amortization included in equity in earnings of joint ventures and non-controlling interests. |
About AECOM
AECOM is a premier, fully integrated professional and technical services firm positioned to design, build, finance and operate infrastructure assets around the world for public- and private-sector clients. With nearly 100,000 employees — including architects, engineers, designers, planners, scientists and management and construction services professionals — serving clients in over 150 countries around the world, AECOM is ranked as the #1 engineering design firm by revenue in Engineering News-Record magazine’s annual industry rankings. The company is a leader in all of the key markets that it serves, including transportation, facilities, environmental, energy, oil and gas, water, high-rise buildings and government. AECOM provides a blend of global reach, local knowledge, innovation and technical excellence in delivering customized and creative solutions that meet the needs of clients’ projects. A Fortune 500 firm, AECOM companies, including URS Corporation and Hunt Construction Group, had revenue of approximately $19 billion during the 12 months ended Dec. 31, 2014. More information on AECOM and its services can be found at www.aecom.com.
Forward-Looking Statements: All statements in this press release other than statements of historical fact are “forward looking statements” for purposes of federal and state securities laws, including any projections of earnings, revenue, cash flows, share count, amortization, acquisition and integration costs, or other financial items; any statements of the plans, strategies and objectives for future operations; and any statements regarding future economic conditions or performance. Although we believe that the expectations reflected in our forward looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward looking statements.
Important factors that could cause our actual results, performance and achievements, or industry results to differ materially from estimates or projections contained in forward-looking statements include: uncertainties related to global economic conditions and funding, audits, modifications and termination of long-term government contracts; losses under fixed-price contracts; limited control over operations run through our joint venture entities; misconduct by our employees or consultants or our failure to comply with laws or regulations; failure to successfully execute our merger and acquisition strategy; the failure to retain and recruit key technical and management personnel; and unexpected adjustments and cancellations related to our backlog. Additional factors that could cause actual results to differ materially from our forward looking statements are 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 adjusted EPS, adjusted operating income, organic revenue growth, 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 are also providing additional non-GAAP financial measures to reflect the impact of the URS acquisition. This 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 the company’s results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies.
| AECOM | ||||||||||
| Consolidated Statements of Operations | ||||||||||
| (unaudited - in thousands, except per share data) | ||||||||||
| Three Months Ended | ||||||||||
| December 31, 2013 | December 31, 2014 | % Change | ||||||||
| Revenue | $ | 1,953,875 | $ | 4,186,035 | 114.2 | % | ||||
| Cost of revenue | 1,875,677 | 4,021,812 | 114.4 | % | ||||||
| Gross profit | 78,198 | 164,223 | 110.0 | % | ||||||
| Equity in earnings of joint ventures | 36,083 | 23,924 | (33.7 | %) | ||||||
| General and administrative expenses | (23,845 | ) | (34,338 | ) | 44.0 | % | ||||
| Acquisition and integration expenses | — | (138,463 | ) | 0.0 | % | |||||
| Income from operations | 90,436 | 15,346 | (83.0 | %) | ||||||
| Other income | 17 | 2,579 | 15,070.6 | % | ||||||
| Interest expense | (10,427 | ) | (118,698 | ) | 1,038.4 | % | ||||
| Income before income tax expense | 80,026 | (100,773 | ) | (225.9 | %) | |||||
| Income tax expense (benefit) | 23,485 | (20,443 | ) | (187.0 | %) | |||||
| Net income (loss) | 56,541 | (80,330 | ) | (242.1 | %) | |||||
| Noncontrolling interest in income of consolidated subsidiaries, net of tax | (145 | ) | (23,173 | ) | 15,881.4 | % | ||||
| Net income (loss) attributable to AECOM | $ | 56,396 | $ | (103,503 | ) | (283.5 | %) | |||
| Net income (loss) attributable to AECOM per share: | ||||||||||
| Basic | $ | 0.59 | $ | (0.73 | ) | (223.7 | %) | |||
| Diluted | $ | 0.58 | $ | (0.73 | ) | (225.9 | %) | |||
| Weighted average shares outstanding: | ||||||||||
| Basic | 96,302 | 141,892 | 47.3 | % | ||||||
| Diluted | 97,590 | 141,892 | 45.4 | % | ||||||
| AECOM | |||||||
| Balance Sheet and Cash Flow Information | |||||||
| (unaudited - in thousands) | |||||||
| September 30, 2014 | December 31, 2014 | ||||||
| Balance Sheet Information: | |||||||
| Total cash and cash equivalents | $ | 574,188 | $ | 734,648 | |||
| Accounts receivable – net | 2,654,976 | 4,873,911 | |||||
| Working capital | 978,344 | 1,687,708 | |||||
| Working capital, net of cash and cash equivalents | 404,156 | 953,060 | |||||
| Total debt | 1,003,978 | 4,977,824 | |||||
| Total assets | 6,123,377 | 14,253,269 | |||||
| Total AECOM stockholders’ equity | 2,186,517 | 3,550,220 | |||||
Three Months Ended | |||||||
December 31, 2013 | December 31, 2014 | ||||||
Cash Flow Information: | |||||||
Net cash provided by operating activities | $ 137,387 | $ 282,642 | |||||
Capital expenditures | (20,771 | ) | (29,733 | ) | |||
Free cash flow | $ 116,616 | $ 252,909 | |||||
| AECOM | ||||||||||||||||||||
| Reportable Segments | ||||||||||||||||||||
| (unaudited - in thousands) | ||||||||||||||||||||
| Design & Consulting Services | Construction | Management | Corporate | Total | ||||||||||||||||
| Three Months Ended December 31, 2014 | ||||||||||||||||||||
| Revenue | $ | 1,877,013 | $ | 1,530,383 | $ | 778,639 | $ | - | $ | 4,186,035 | ||||||||||
| Cost of revenue | 1,827,743 | 1,477,464 | 716,605 | - | 4,021,812 | |||||||||||||||
| Gross profit | 49,270 | 52,919 | 62,034 | - | 164,223 | |||||||||||||||
| Equity in earnings of joint ventures | 1,492 | 5,862 | 16,570 | - | 23,924 | |||||||||||||||
| General and administrative expenses | - | - | - | (34,338 | ) | (34,338 | ) | |||||||||||||
| Acquisition and integration expenses | - | - | - | (138,463 | ) | (138,463 | ) | |||||||||||||
| Operating income (loss) | $ | 50,762 | $ | 58,781 | $ | 78,604 | $ | (172,801 | ) | $ | 15,346 | |||||||||
| Gross profit as a % of revenue | 2.6 | % | 3.5 | % | 8.0 | % | - | 3.9 | % | |||||||||||
| Contracted backlog | $ | 8,862,445 | $ | 8,677,757 | $ | 4,019,766 | $ | - | $ | 21,559,968 | ||||||||||
| Awarded backlog | 5,108,675 | 9,225,932 | 4,799,072 | - | 19,133,679 | |||||||||||||||
| Total backlog | $ | 13,971,120 | $ | 17,903,689 | $ | 8,818,838 | $ | - | $ | 40,693,647 | ||||||||||
| Three Months Ended December 31, 2013 | ||||||||||||||||||||
| Revenue | $ | 1,301,433 | $ | 428,693 | $ | 223,749 | $ | - | $ | 1,953,875 | ||||||||||
| Cost of revenue | 1,247,520 | 424,624 | 203,533 | - | 1,875,677 | |||||||||||||||
| Gross profit | 53,913 | 4,069 | 20,216 | - | 78,198 | |||||||||||||||
| Equity in earnings of joint ventures | 32,758 | 1,385 | 1,940 | - | 36,083 | |||||||||||||||
| General and administrative expenses | - | - | - | (23,845 | ) | (23,845 | ) | |||||||||||||
| Operating income (loss) | $ | 86,671 | $ | 5,454 | $ | 22,156 | $ | (23,845 | ) | $ | 90,436 | |||||||||
| Gross profit as a % of revenue | 4.1 | % | 0.9 | % | 9.0 | % | - | 4.0 | % | |||||||||||
| Contracted backlog | $ | 6,144,2591 | $ | 2,143,895 | $ | 562,874 | $ | - | $ | 8,851,028 | ||||||||||
| Awarded backlog | 3,717,637 | 4,194,220 | 1,684,768 | - | 9,596,625 | |||||||||||||||
| Total backlog | $ | 9,861,896 | $ | 6,338,115 | $ | 2,247,642 | $ | - | $ | 18,447,653 | ||||||||||
AECOM | |||||||||
Regulation G Information | |||||||||
(unaudited - in millions) | |||||||||
| Reconciliation of amounts provided by acquired companies | |||||||||
| Three Months Ended Dec 31, 2014 | |||||||||
| Total | Provided by | Excluding Effect | |||||||
| Revenue: | |||||||||
| AECOM consolidated | $ | 4,186.0 | $ | 2,210.0 | $ | 1,976.0 | |||
| Design & Consulting Services | 1,877.0 | 643.2 | 1,233.8 | ||||||
| Construction Services | 1,530.4 | 993.4 | 537.0 | ||||||
| Management Services | 778.6 | 573.4 | 205.2 | ||||||
| Reconciliation of EBITDA to net income attributable to AECOM | |||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||
Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Jun 30, | Sep 30, | Dec 31, | ||||||||||||||||||||||||
| EBITDA | $ | 102.5 | $ | 135.1 | $ | 144.5 | $ | 111.5 | $ | 89.0 | $ | 115.9 | $ | 127.2 | $ | 95.5 | |||||||||||||||
| Less: Interest expense1 | (11.3 | ) | (11.0 | ) | (9.6 | ) | (9.8 | ) | (10.0 | ) | (9.2 | ) | (9.5 | ) | (115.4 | ) | |||||||||||||||
| Add: Interest income2 | 0.5 | 0.4 | 0.4 | 0.4 | 0.3 | 0.6 | 0.9 | 1.6 | |||||||||||||||||||||||
| Less: Depreciation and amortization3 | (23.9 | ) | (23.6 | ) | (23.0 | ) | (22.2 | ) | (23.9 | ) | (24.4 | ) | (24.9 | ) | (105.6 | ) | |||||||||||||||
| Income (loss) attributable to AECOM before income taxes | 67.8 | 100.9 | 112.3 | 79.9 | 55.4 | 82.9 | 93.7 | (123.9 | ) | ||||||||||||||||||||||
| Less: Income tax expense (benefit) | 14.0 | 30.1 | 35.8 | 23.5 | 15.2 | 13.7 | 29.6 | (20.4 | ) | ||||||||||||||||||||||
| Net income (loss) attributable to AECOM | $ | 53.8 | $ | 70.8 | $ | 76.5 | $ | 56.4 | $ | 40.2 | $ | 69.2 | $ | 64.1 | $ | (103.5 | ) | ||||||||||||||
1 Excludes related amortization | |||||||||||||||||||||||||||||||
| Reconciliation of total debt to net debt | ||||||||
| Balances at | ||||||||
| Dec 31, 2013 | Sep 30, 2014 | Dec 31, 2014 | ||||||
| Short-term debt | $ | 33.5 | $ | 23.9 | $ | 49.6 | ||
| Current portion of long-term debt | 57.1 | 40.5 | 152.8 | |||||
| Long-term debt | 1,113.4 | 939.6 | 4,775.4 | |||||
| Total debt | 1,204.0 | 1,004.0 | 4,977.8 | |||||
| Less: Total cash and cash equivalents | 681.7 | 574.2 | 734.6 | |||||
| Net debt | $ | 522.3 | $ | 429.8 | $ | 4,243.2 | ||
| Reconciliation of net cash provided by operating activities to free cash flow | |||||||||||
| Three Months Ended | |||||||||||
Dec 31, | Sep 30, | Dec 31, | |||||||||
| Net cash provided by operating activities | $ | 137.4 | $ | 174.9 | $ | 282.6 | |||||
| Capital expenditures | (20.8 | ) | (13.2 | ) | (29.7 | ) | |||||
| Free cash flow | $ | 116.6 | $ | 161.7 | $ | 252.9 | |||||
AECOM | |||||||||
Regulation G Information | |||||||||
($ in millions, except per share data) | |||||||||
Reconciliation of reported amounts to
adjusted amounts excluding acquisition and integration expenses, | |||||||||
| Three Months Ended | |||||||||
| Dec 31, 2013 | Sep 30, 2014 | Dec 31, 2014 | |||||||
| Income from operations | $ | 90.4 | $ | 102.5 | $ | 15.3 | |||
| Acquisition and integration expenses | - | 19.5 | 138.5 | ||||||
| Amortization of intangible assets | 5.1 | 6.6 | 60.3 | ||||||
| Adjusted income from operations | $ | 95.5 | $ | 128.6 | $ | 214.1 | |||
| Income (loss) before income tax expense | $ | 80.0 | $ | 94.3 | $ | (100.8 | ) | ||
| Acquisition and integration expenses | - | 19.5 | 138.5 | ||||||
| Amortization of intangible assets | 5.1 | 6.6 | 60.3 | ||||||
| Acquisition-related financing expenses reported in interest expense | - | - | 68.0 | ||||||
| Adjusted income before income tax expense | $ | 85.1 | $ | 120.4 | $ | 166.0 | |||
| Income tax expense (benefit) | $ | 23.5 | $ | 29.7 | $ | (20.5 | ) | ||
| Tax effect of the above adjustments | 1.5 | 6.4 | 56.2 | ||||||
| Adjusted income tax expense | $ | 25.0 | $ | 36.1 | $ | 35.7 | |||
| Noncontrolling interests in income of consolidated subsidiaries, net of tax | $ | (0.1 | ) | $ | (0.6 | ) | $ | (23.2 | ) |
| Amortization of intangible assets included in NCI, net of tax | - | (0.7 | ) | (4.9 | ) | ||||
| Adjusted noncontrolling interests in income of consolidated subsidiaries, net of tax | $ | (0.1 | ) | $ | (1.3 | ) | $ | (28.1 | ) |
| Net income (loss) attributable to AECOM | $ | 56.4 | $ | 64.0 | $ | (103.5 | ) | ||
| Acquisition and integration expenses | - | 19.5 | 138.5 | ||||||
| Amortization of intangible assets | 5.1 | 6.6 | 60.3 | ||||||
| Acquisition-related financing expenses reported in interest expense | - | - | 68.0 | ||||||
| Tax effect of the above adjustments | (1.5 | ) | (6.4 | ) | (56.2 | ) | |||
| Amortization of intangible assets included in NCI, net of tax | - | (0.7 | ) | (4.9 | ) | ||||
| Adjusted net income attributable to AECOM | $ | 60.0 | $ | 83.0 | $ | 102.2 | |||
| Net income (loss) attributable to AECOM - per diluted share | $ | 0.58 | $ | 0.64 | $ | (0.73 | )* | ||
| Per diluted share adjustments: | |||||||||
| Acquisition and integration expenses | - | 0.19 | 0.97 | ||||||
| Amortization of intangible assets | 0.05 | 0.07 | 0.42 | ||||||
| Acquisition-related financing expenses reported in interest expense | - | - | 0.47 | ||||||
| Tax effect of the above adjustments | (0.02 | ) | (0.06 | ) | (0.39 | ) | |||
| Amortization of intangible assets included in NCI, net of tax | - | (0.01 | ) | (0.03 | ) | ||||
| Adjusted net income attributable to AECOM - per diluted shares | $ | 0.61 | $ | 0.83 | $ | 0.71* | |||
*Basic and dilutive GAAP EPS calculations use the same share count
because of a Q1-FY2015 net loss to avoid any antidilutive effect; | |||||||||
| EBITDA | $ | 111.5 | $ | 127.2 | $ | 95.5 | |||
| Acquisition and integration expenses | - | 19.5 | 138.5 | ||||||
| Adjusted EBITDA | $ | 111.5 | $ | 146.7 | $ | 234.0 | |||
| Design & Consulting Services: | |||||||||
| Income from operations | $ | 86.7 | $ | 109.5 | $ | 50.8 | |||
| Amortization of intangible assets | 3.6 | 4.5 | 32.4 | ||||||
| Adjusted income from operations | $ | 90.3 | $ | 114.0 | $ | 83.2 | |||
| Construction Services: | |||||||||
| Income from operations | $ | 5.5 | $ | 16.6 | $ | 58.8 | |||
| Amortization of intangible assets | 0.8 | 1.6 | 10.5 | ||||||
| Adjusted income from operations | $ | 6.3 | $ | 18.2 | $ | 69.3 | |||
| Management Services: | |||||||||
| Income from operations | $ | 22.2 | $ | 11.5 | $ | 78.6 | |||
| Amortization of intangible assets | 0.6 | 0.5 | 17.4 | ||||||
| Adjusted income from operations | $ | 22.8 | $ | 12.0 | $ | 96.0 | |||
NR 15-0204
Contacts:
Media:
Paul Dickard, 646-432-8473
VP, Chief
Communications Officer
Paul.Dickard@aecom.com
or
Investors:
Will
Gabrielski, 213-593-8208
VP, Investor Relations
William.Gabrielski@aecom.com
