Market Overview

AECOM reports third quarter fiscal year 2018 results

Share:

AECOM (NYSE:ACM), a premier, fully integrated global infrastructure
firm, today reported third quarter revenue increased by 13% to $5.1
billion, which set a new quarterly all-time high. Net income and diluted
earnings per share were $61 million and $0.37 in the third quarter,
respectively. On an adjusted basis, diluted earnings per share1
was $0.62.

       
($ in millions, except EPS)     As Reported    

Adjusted
(Non-GAAP)

Revenue     $5,148     -
Operating Income     $161     $2021
Net Income     $61     $1011
EPS (Fully Diluted)     $0.37     $0.621
Operating Cash Flow     $72     -
Free Cash Flow     -     $482
Backlog $53,794 -
 

Third Quarter 2018 Accomplishments:

  • Organic4 revenue increased by 10% over the prior year,
    which marks the seventh consecutive quarter of positive organic
    growth, led by the higher-margin DCS and MS segments and growth in all
    three segments.
  • Adjusted EBITDA of $223 million increased by 15% year-over-year after
    adjusting for the large AECOM Capital gain in the prior-year quarter;
    sequential adjusted EBITDA growth of 11% was ahead of prior guidance
    for slight growth.
  • Total backlog reached a new record of $54 billion, a 16%3
    increase over the prior year, which includes a continued favorable mix
    shift to the higher-margin DCS and MS segments.
  • Wins of $9.4 billion also set a new record, resulting in a 1.7x
    book-to-burn5 ratio, and included solid performance across
    the business.
  • Delivered positive free cash flow2 for the 23rd
    time in the past 25 quarters, and total debt declined by $69 million;
    cash flow was impacted due to working capital used to support 13%
    revenue growth, primarily from increased storm recovery work in the
    Americas.

Prioritizing Stock Repurchases to Create Shareholder Value:

  • AECOM plans to commence its share repurchases ahead of its prior
    expectation by entering into a $150 million accelerated stock
    repurchase (ASR) once its trading window opens on August 9th
    due to confidence in the strength of its business and outlook for its
    markets.
  • The Company continues to believe its shares are undervalued and that
    repurchases represent a compelling avenue to generate long-term value
    for both AECOM and its shareholders.
  • Upon completion of the ASR, the Company intends to then deploy
    substantially all free cash flow towards ongoing debt reduction and
    repurchases under its $1 billion Board authorization.
  • The Company reiterates its target net leverage6 of 2.5x,
    which it expects to achieve through a combination of ongoing debt
    reduction and EBITDA growth.

Strategic Decisions Update:

  • On June 25th, the Company completed the sale of its
    Canadian Industrial Services Division and expects to complete the
    second non-core Oil & Gas business sale over the next several months.
  • Construction of the Alliant combined cycle gas power plant remains on
    schedule and budget.

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

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

Wins and Backlog

Wins were $9.4 billion, which set a new record for the Company, and
resulted in a book-to-burn ratio5 of 1.7x. Wins were
highlighted by strength across the business, including a 6.6x
book-to-burn ratio in the MS segment. Total backlog increased by 16%3
over the prior-year period to $54 billion and continued to reflect a
favorable mix shift to the higher-margin DCS and MS segments.

Business Segments

Design & Consulting Services (DCS)

The DCS segment delivers planning, consulting, architectural and
engineering design services to commercial and government clients
worldwide in markets such as transportation, facilities, environmental,
energy, water and government.

Revenue in the third quarter was $2.1 billion. Constant-currency organic4
revenue increased by 12% and included 17% growth in the Americas, which
was driven by strong growth in the Company's transportation and water
markets, including accelerating work related to storm recovery efforts
following last year's hurricane season in the Southeastern U.S. and
Caribbean.

Operating income was $120 million compared to $94 million in the
year-ago period. On an adjusted basis, operating income1 was
$128 million compared to $104 million in the year-ago period.
Profitability in the Americas and APAC regions was strong, which was
partially offset by slower growth and reduced profitability in the EMIA
region.

Construction Services (CS)

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

Revenue in the third quarter was $2.1 billion. Constant-currency organic4
revenue increased by 8%, led by double-digit growth in the Building
Construction business. This strength was partially offset by a decline
in the Power business due to the completion of a large project and the
Company's decision to exit the fixed-price combined-cycle gas power
plant construction market.

Operating income was $9 million compared to operating income of $33
million in the year-ago period. On an adjusted basis, operating income1
was $34 million compared to $42 million in the year-ago period,
reflecting a decline in the Power business, as anticipated, and strong
underlying performance in the Building Construction business.

Management Services (MS)

The MS segment provides program and facilities management and
maintenance, training, logistics, consulting, technical assistance and
systems-integration services and information technology services,
primarily for agencies of the U.S. government, national governments
around the world and commercial customers.

Revenue in the third quarter was $936 million. Organic4
revenue increased by 9%, which was driven by solid conversion on the
Company's recent significant wins.

Operating income was $66 million, which was effectively unchanged from
the year-ago period. On an adjusted basis, operating income1
was $76 million compared to $79 million in the year-ago period. This
performance included a benefit from an anticipated recovery on a federal
project.

Tax Rate

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

Cash Flow

Operating cash flow for the third quarter was $72 million and free cash
flow2 was $48 million. The Company expects to achieve at
least $600 million of free cash flow in fiscal 2018.

Balance Sheet

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

Financial Outlook

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

   
Fiscal Year 2018 Outlook
Adjusted EBITDA1     $880 million
Adjusted EPS1     $2.50 – $2.90
Free Cash Flow2     $600+ million
Interest Expense

(excluding amortization of deferred financing fees)

    $210 million
Amortization8     $105 million
Full-Year Share Count     162 million
Effective Tax Rate for Adjusted Earnings7     ~17%
Capital Expenditures9 $100 million
 

Conference Call

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

 
1 Excluding acquisition and integration related items,
financing charges in interest expense, foreign exchange gains, the
amortization of intangible assets, financial impacts associated with
expected and actual dispositions of non-core businesses and assets,
and the revaluation of deferred taxes and one-time tax repatriation
charge associated with U.S. tax reform. If an individual adjustment
has no financial impact then the individual adjustment is not
reflected in the Regulation G Information tables. See Regulation G
Information for a reconciliation of Non-GAAP measures.
2 Free cash flow is defined as cash flow from operations
less capital expenditures net of proceeds from disposals.
3 On a constant-currency basis.
4 Organic growth is year-over-year at constant currency
and excludes revenue associated with actual and planned non-core
asset and business dispositions. Results expressed in constant
currency are presented excluding the impact from changes in currency
exchange rates.
5 Book-to-burn ratio is defined as the amount of wins
divided by revenue recognized during the period, including revenue
related to work performed in unconsolidated joint ventures.
6 Net debt-to-EBITDA is comprised of EBITDA as defined in
the Company's credit agreement, which excludes stock-based
compensation, and net debt as defined as total debt on the Company's
financial statements, net of cash and cash equivalents.
7 Inclusive of non-controlling interest deduction and
adjusted for acquisition and integration expenses, financing charges
in interest expense, the amortization of intangible assets and
financial impacts associated with actual and planned dispositions of
non-core businesses and assets.
8 Amortization of intangible assets expense includes the
impact of amortization included in equity in earnings of joint
ventures and non-controlling interests.
9 Capital expenditures, net of proceeds from disposals.
 

About AECOM

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

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

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

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

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

 
AECOM
Consolidated Statements of Income
(unaudited - in thousands, except per share data)
 
  Three Months Ended   Nine Months Ended

June 30,
2017

  June 30,
2018
 

%
Change

June 30,
2017
  June 30,
2018
 

%
Change

 
Revenue $ 4,561,467 $ 5,147,920 12.9% $ 13,347,014 $ 14,849,662 11.3%
Cost of revenue 4,386,291   4,962,741   13.1% 12,833,421   14,387,059   12.1%
Gross profit 175,176 185,179 5.7% 513,593 462,603 (9.9)%
 
Equity in earnings of joint ventures 66,458 12,863 (80.6)% 109,667 55,621 (49.3)%
General and administrative expenses (33,944 ) (35,159 ) 3.6% (96,427 ) (100,046 ) 3.8%
Impairment of assets held for sale, including goodwill (168,178 ) NM
Acquisition & integration expenses (35,409 ) (100.0)%
(Loss) gain on disposal activities   (2,149 ) NM 572   (2,149 ) (475.7)%
Income from operations 207,690 160,734 (22.6)% 491,996 247,851 (49.6)%
 
Other income 2,136 2,752 28.8% 4,237 17,542 314.0%
Interest expense (61,547 ) (55,213 ) (10.3)% (176,985 ) (211,955 ) 19.8%
Income before income tax expense (benefit) 148,279 108,273 (27.0)% 319,248 53,438 (83.3)%
 
Income tax expense (benefit) 12,205   33,131   171.5% 1,556   (38,362 ) NM
 
Net income 136,074 75,142 (44.8)% 317,692 91,800 (71.1)%
 
Noncontrolling interests in income of consolidated subsidiaries, net
of tax
(34,747 ) (14,232 ) (59.0)% (66,790 ) (39,309 ) (41.1)%
 
Net income attributable to AECOM $ 101,327   $ 60,910   (39.9)% $ 250,902   $ 52,491   (79.1)%
 
Net income attributable to AECOM per share:
Basic $ 0.65   $ 0.38   (41.5)% $ 1.62   $ 0.33   (79.6)%
Diluted $ 0.64   $ 0.37   (42.2)% $ 1.58   $ 0.32   (79.7)%
 
Weighted average shares outstanding:
Basic 155,763 160,395 3.0% 155,128 159,266 2.7%
Diluted 158,820 163,213 2.8% 158,488 162,426 2.5%
 

NM — not meaningful

 
 
Balance Sheet and Cash Flow Information
(unaudited - in thousands)
 

September 30, 2017

June 30, 2018

Balance Sheet Information:
Total cash and cash equivalents $ 802,362 $ 801,419
Accounts receivable – net 5,127,743 5,447,985
Working capital 1,103,843 1,153,772
Total debt, excluding unamortized debt issuance costs 3,896,398 3,929,758
Total assets 14,396,956 14,727,417
Total AECOM stockholders' equity 3,996,126 4,077,732
 
AECOM
Reportable Segments
(unaudited - in thousands)
           

 

Design &
Consulting
Services
Construction
Services
Management
Services
AECOM
Capital
Corporate Total
Three Months Ended June 30, 2018
Revenue $ 2,105,219 $ 2,106,720 $ 935,981 $ - $ - $ 5,147,920
Cost of revenue   1,989,093     2,097,586     876,062     -     -     4,962,741  
Gross profit 116,126 9,134 59,919 - - 185,179
Equity in earnings of joint ventures 4,275 2,276 6,312 - - 12,863
General and administrative expenses - - - (3,682 ) (31,477 ) (35,159 )
Loss on disposal activities   -     (2,149 )   -     -     -     (2,149 )
Income (loss) from operations $ 120,401   $ 9,261   $ 66,231   $ (3,682 ) $ (31,477 ) $ 160,734  
 
Gross profit as a % of revenue 5.5 % 0.4 % 6.4 % - - 3.6 %
 
Three Months Ended June 30, 2017
Revenue $ 1,863,475 $ 1,841,620 $ 856,372 $ - $ - $ 4,561,467
Cost of revenue   1,772,240     1,815,467     798,584     -     -     4,386,291  
Gross profit 91,235 26,153 57,788 - - 175,176
Equity in earnings of joint ventures 2,371 7,022 8,638 48,427 - 66,458
General and administrative expenses   -     -     -     (2,147 )   (31,797 )   (33,944 )
Income (loss) from operations $ 93,606   $ 33,175   $ 66,426   $ 46,280   $ (31,797 ) $ 207,690  
 
Gross profit as a % of revenue 4.9 % 1.4 % 6.7 % - - 3.8 %
 
Nine Months Ended June 30, 2018
Revenue $ 6,051,864 $ 6,120,549 $ 2,677,249 $ - $ - $ 14,849,662
Cost of revenue   5,737,658     6,097,631     2,551,770     -     -     14,387,059  
Gross profit 314,206 22,918 125,479 - - 462,603
Equity in earnings of joint ventures 14,500 16,890 24,231 - - 55,621
General and administrative expenses - - - (9,169 ) (90,877 ) (100,046 )
Loss on disposal activities - (2,149 ) - - - (2,149 )
Impairment of assets held for sale, including goodwill   -     (168,178 )   -     -     -     (168,178 )
Income (loss) from operations $ 328,706   $ (130,519 ) $ 149,710   $ (9,169 ) $ (90,877 ) $ 247,851  
 
Gross profit as a % of revenue 5.2 % 0.4 % 4.7 % - - 3.1 %
 
Contracted backlog $ 9,326,176 $ 10,558,903 $ 3,212,884 $ - $ - $ 23,097,963
Awarded backlog 7,338,587 4,935,679 15,284,218 - - 27,558,484
Unconsolidated JV backlog   -     2,190,808     946,732     -     -     3,137,540  
Total backlog $ 16,664,763   $ 17,685,390   $ 19,443,834   $ -   $ -   $ 53,793,987  
 
Nine Months Ended June 30, 2017
Revenue $ 5,571,823 $ 5,324,561 $ 2,450,630 $ - $ - $ 13,347,014
Cost of revenue   5,279,322     5,264,199     2,289,900     -     -     12,833,421  
Gross profit 292,501 60,362 160,730 - - 513,593
Equity in earnings of joint ventures 12,578 16,596 32,066 48,427 - 109,667
General and administrative expenses - - - (6,594 ) (89,833 ) (96,427 )
Acquisition & integration expenses - - - - (35,409 ) (35,409 )
Gain on disposal activities   572     -     -     -     -     572  
Income (loss) from operations $ 305,651   $ 76,958   $ 192,796   $ 41,833   $ (125,242 ) $ 491,996  
 
Gross profit as a % of revenue 5.2 % 1.1 % 6.6 % - - 3.8 %
 
Contracted backlog $ 8,523,849 $ 11,650,567 $ 3,376,912 $ - $ - $ 23,551,328
Awarded backlog 6,738,345 4,696,196 8,395,977 - - 19,830,518
Unconsolidated JV backlog   -     2,023,084     995,820     -     -     3,018,904  
Total backlog $ 15,262,194   $ 18,369,847   $ 12,768,709   $ -   $ -   $ 46,400,750  
 
 
AECOM
Regulation G Information
($ in millions)
 

Reconciliation of Revenue to Amounts
Provided by Acquired Companies

 
  Three Months Ended June 30, 2018     Nine Months Ended June 30, 2018
Total  

Provided by
Acquired
Companies

 

Excluding
Effect of
Acquired
Companies

Total  

Provided by
Acquired
Companies

 

Excluding
Effect of
Acquired
Companies

 
Revenue:
AECOM Consolidated $ 5,148.0 $ 129.0 $ 5,019.0 $ 14,849.7 $ 412.1 $ 14,437.6
Design & Consulting Services 2,105.4 - 2,105.4 6,052.0 - 6,052.0
Construction Services 2,106.7 129.0 1,977.7 6,120.5 412.1 5,708.4
Management Services 935.9 - 935.9 2,677.2 - 2,677.2
 
 

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

   
Three Months Ended Nine Months Ended
Jun 30,   Mar 31,   Jun 30, Jun 30,   Jun 30,
2017 2018 2018 2017 2018
 
Net income (loss) attributable to AECOM $ 101.3 $ (119.7 ) $ 60.9 $ 250.9 $ 52.5
Income tax expense (benefit)   12.1     (24.4 )   33.1     1.5     (38.4 )
Income (loss) attributable to AECOM before income taxes 113.4 (144.1 ) 94.0 252.4 14.1
Depreciation and amortization expense1 67.4 81.0 68.0 206.0 212.5
Interest income2 (1.7 ) (3.4 ) (2.3 ) (3.7 ) (7.5 )
Interest expense3   58.5     90.9     52.7     161.6     196.9  
EBITDA $ 237.6   $ 24.4   $ 212.4   $ 616.3   $ 416.0  
Non-core operating losses 3.2 21.2 18.7 5.7 39.9
Loss on assets held for sale, including goodwill - 168.2 - - 168.2
Acquisition and integration related items - - (6.5 ) 35.4 (6.5 )
Loss (gain) on disposal activities - - 2.1 (0.6 ) 2.1
FX gain from forward currency contract - (9.1 ) - - (9.1 )
Depreciation expense included in non-core operating losses and
acquisition and integration items above
  -     (3.8 )   (3.7 )   (0.8 )   (7.5 )
Adjusted EBITDA $ 240.8   $ 200.9   $ 223.0   $ 656.0   $ 603.1  

_____________________

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

 
 

Reconciliation of Total Debt to Net Debt

 
Balances at:
Jun 30, 2017   Mar 31, 2018   Jun 30, 2018
Short-term debt $ 1.7 $ 9.8 $ 47.4
Current portion of long-term debt 155.4 123.9 125.6
Long-term debt, gross   3,809.2   3,865.4   3,756.7
Total debt excluding unamortized debt issuance costs 3,966.3 3,999.1 3,929.7
Less: Total cash and cash equivalents   812.5   867.2   801.4
Net debt $ 3,153.8 $ 3,131.9 $ 3,128.3
 
 

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

 
  Three Months Ended
Sep 30,   Dec 31,   Mar 31,   Jun 30,   Sep 30,   Dec 31,   Mar 31,   Jun 30,
2016 2016 2017 2017 2017 2017 2018 2018
Net cash provided by (used in) operating activities $ 362.9 $ 77.5 $ (46.1 ) $ 413.9 $ 251.4 $ 52.4 $ 118.4 $ 71.9
Capital expenditures, net   (36.9 )   (21.0 )   (17.7 )   (19.8 )   (20.0 )   (18.5 )   (23.7 )   (23.5 )
Free cash flow $ 326.0   $ 56.5   $ (63.8 ) $ 394.1   $ 231.4   $ 33.9   $ 94.7   $ 48.4  
    Fiscal Years Ended Sep 30,
  2012       2013       2014       2015       2016       2017  
Net cash provided by operating activities $ 433.4 $ 408.6 $ 360.6 $ 764.4 $ 814.2 $ 696.7
Capital expenditures, net   (62.9 )   (52.1 )   (62.8 )   (69.4 )   (136.8 )   (78.5 )
Free cash flow $ 370.5   $ 356.5   $ 297.8   $ 695.0   $ 677.4   $ 618.2  
 
   
AECOM
Regulation G Information
(in millions, except per share data)
 
  Three Months Ended Nine Months Ended
Jun 30,   Mar 31,   Jun 30, Jun 30, Jun 30,
2017 2018 2018 2017 2018
 

Reconciliation of Income from Operations
to Adjusted Income from Operations

 
Income (loss) from operations $ 207.7 $ (44.1 ) $ 160.8 $ 492.0 $ 247.9
Non-core operating losses 3.2 21.2 18.5 5.7 39.7
Impairment of assets held for sale, including goodwill - 168.2 - - 168.2
Acquisition and integration related items - - (7.9 ) 35.4 (7.9 )
Loss (gain) on disposal activities - - 2.1 (0.6 ) 2.1
Amortization of intangible assets   28.4     33.7     28.4     83.5     89.0  
Adjusted income from operations $ 239.3   $ 179.0   $ 201.9   $ 616.0   $ 539.0  
 

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

 
Income (loss) before income tax benefit $ 148.2 $ (132.1 ) $ 108.2 $ 319.2 $ 53.4
Non-core operating losses 3.2 21.2 18.6 5.7 39.8
Impairment of assets held for sale, including goodwill - 168.2 - - 168.2
Acquisition and integration related items - - (7.9 ) 35.4 (7.9 )
Loss (gain) on disposal activities - - 2.1 (0.6 ) 2.1
Amortization of intangible assets 28.4 33.7 28.4 83.5 89.0
FX gain from forward currency contract - (9.1 ) - - (9.1 )
Financing charges in interest expense   2.9     44.2     2.6     14.4     49.7  
Adjusted income before income tax expense (benefit) $ 182.7   $ 126.1   $ 152.0   $ 457.6   $ 385.2  
 

Reconciliation of Income Taxes to
Adjusted Income Taxes

 
Income tax expense (benefit) $ 12.1 $ (24.4 ) $ 33.1 $ 1.5 $ (38.4 )

Tax effect of the above adjustments

10.5 26.6 2.3 34.8 34.3
Revaluation of deferred taxes and one-time tax repatriation charges
associated with U.S. tax reform
  -     -     -     -     41.7  
Adjusted income tax expense $ 22.6   $ 2.2   $ 35.4   $ 36.3   $ 37.6  

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

 

Reconciliation of Noncontrolling
Interests to Adjusted Noncontrolling Interests

 
Noncontrolling interests in income of consolidated subsidiaries, net
of tax
$ (34.8 ) $ (12.0 ) $ (14.2 ) $ (66.8 ) $ (39.3 )
Acquisition and integration related items, net of tax - - 1.4 - 1.4
Amortization of intangible assets included in NCI, net of tax   (2.1 )   (3.3 )   (2.8 )   (6.9 )   (8.6 )

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

$ (36.9 ) $ (15.3 ) $ (15.6 ) $ (73.7 ) $ (46.5 )
 

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

 
Net income (loss) attributable to AECOM $ 101.3 $ (119.7 ) $ 60.9 $ 250.9 $ 52.5
Non-core operating losses 3.2 21.2 18.5 5.7 39.7
Impairment of assets held for sale, including goodwill - 168.2 - - 168.2
Acquisition and integration related items - - (6.5 ) 35.4 (6.5 )
Loss (gain) on disposal activities - - 2.1 (0.6 ) 2.1
Amortization of intangible assets 28.4 33.7 28.4 83.5 89.0
FX gain from forward currency contract - (9.1 ) - - (9.1 )
Financing charges in interest expense 2.9 44.2 2.6 14.4 49.7

Tax effect of the above adjustments

(10.4 ) (26.6 ) (2.3 ) (34.8 ) (34.3 )
Revaluation of deferred taxes and one-time tax repatriation charges
associated with U.S. tax reform
- - - - (41.7 )
Amortization of intangible assets included in NCI, net of tax   (2.1 )   (3.3 )   (2.8 )   (6.9 )   (8.6 )
Adjusted net income attributable to AECOM $ 123.3   $ 108.6   $ 100.9   $ 347.6   $ 301.0  

 

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

 
Net income (loss) attributable to AECOM – per diluted share $ 0.64 $ (0.75 ) $ 0.37 $ 1.58 $ 0.32
Per diluted share adjustments:
Non-core operating losses 0.02 0.13 0.11 0.04 0.24
Impairment of assets held for sale, including goodwill - 1.04 - - 1.04
Acquisition and integration related items - - (0.04 ) 0.22 (0.04 )
Loss on disposal activities - - 0.01 - 0.01
Amortization of intangible assets 0.18 0.21 0.18 0.53 0.55
FX gain from forward currency contract - (0.06 ) - - (0.06 )
Financing charges in interest expense 0.02 0.27 0.02 0.09 0.31

Tax effect of the above adjustments

(0.07 ) (0.15 ) (0.01 ) (0.23 ) (0.21 )
Revaluation of deferred taxes and one-time tax repatriation charges
associated with U.S. tax reform
- - - - (0.26 )
Amortization of intangible assets included in NCI, net of tax   (0.01 )   (0.02 )   (0.02 )   (0.04 )   (0.05 )
Adjusted net income attributable to AECOM – per diluted share $ 0.78   $ 0.67   $ 0.62   $ 2.19   $ 1.85  
Weighted average shares outstanding – diluted 158.8 162.2 163.2 158.5 162.4
 

Reconciliation of EBITDA to Adjusted
Income from Operations

 
EBITDA(1) $ 237.6 $ 24.4 $ 212.4 $ 616.3 $ 416.0
Non-core operating losses 3.2 21.2 18.7 5.7 39.9
Impairment of assets held for sale, including goodwill - 168.2 - - 168.2
Acquisition and integration related items - - (6.5 ) 35.4 (6.5 )
Loss (gain) on disposal activities - - 2.1 (0.6 ) 2.1
FX gain from forward currency contract - (9.1 ) - - (9.1 )
Depreciation expense included in non-core operating losses and
acquisition and integration expenses above
  -     (3.8 )   (3.7 )   (0.8 )   (7.5 )
Adjusted EBITDA $ 240.8   $ 200.9   $ 223.0   $ 656.0   $ 603.1  
Other income (2.1 ) (12.5 ) (2.7 ) (4.2 ) (17.5 )
FX gain from forward currency contract - 9.1 - - 9.1
Interest income(2) 1.7 3.4 2.3 3.7 7.5
Depreciation(3) (38.0 ) (37.2 ) (36.3 ) (113.2 ) (109.7 )
Noncontrolling interests in income of consolidated subsidiaries, net
of tax
34.8 12.0 14.2 66.8 39.3
Acquisition and integration related items included in NCI, net of tax - - (1.4 ) - (1.4 )
Amortization of intangible assets included in NCI, net of tax   2.1     3.3     2.8     6.9     8.6  
Adjusted income from operations $ 239.3   $ 179.0   $ 201.9   $ 616.0   $ 539.0  

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

 
     
AECOM
Regulation G Information
(in millions, except per share data)
 
  Three Months Ended Nine Months Ended
Jun 30,
2017
Mar 31,
2018
  Jun 30,
2018
Jun 30,
2017
  Jun 30,
2018
 

Reconciliation of Segment Income from
Operations to Adjusted Income from Operations

 
Design & Consulting Services Segment:
Income from operations $ 93.7 $ 123.0 $ 120.4 $ 305.7 $ 328.7
Non-core operating losses 3.1 1.2 0.7 5.6 1.9
Gain on disposal activities - - - (0.6 ) -
Amortization of intangible assets   6.8   6.2     6.4     20.7     18.8  
Adjusted income from operations $ 103.6 $ 130.4   $ 127.5   $ 331.4   $ 349.4  
 
Construction Services Segment:
Income (loss) from operations $ 33.2 $ (180.3 ) $ 9.3 $ 77.0 $ (130.5 )
Acquisition and integration related items - - (7.9 ) - (7.9 )
Non-core operating losses - 20.0 17.9 - 37.9
Impairment of assets held for sale, including goodwill - 168.2 - - 168.2
Loss on disposal activities - - 2.1 - 2.1
Amortization of intangible assets   8.7   17.8     12.3     23.8     40.9  
Adjusted income from operations $ 41.9 $ 25.7   $ 33.7   $ 100.8   $ 110.7  
 
Management Services Segment:
Income from operations $ 66.4 $ 43.4 $ 66.2 $ 192.8 $ 149.7
Amortization of intangible assets   12.9   9.7     9.7     39.0     29.3  
Adjusted income from operations $ 79.3 $ 53.1   $ 75.9   $ 231.8   $ 179.0  
 
 
AECOM
Regulation G Information
 

FY18 GAAP EPS Guidance based on Adjusted
EPS Guidance

 

Fiscal Year End 2018
 
GAAP EPS Guidance $0.84 to $1.24
Adjusted EPS Excludes:
Amortization of intangible assets $0.65
Acquisition and integration related items ($0.07)
Foreign exchange gain ($0.06)
Financing charges in interest expense $0.33
Loss on disposal $0.01
Year-to-date non-core operating losses $0.25
Tax effect of the above items* ($0.23)
Loss on assets held for sale, including goodwill $1.04
Revaluation of deferred taxes and one-time tax repatriation charges
associated with U.S. tax reform
($0.26)
Adjusted EPS Guidance $2.50 to $2.90
 
*The adjusted tax expense differs from the GAAP tax expense based on
the deductibility and tax rate applied to each of the adjustments.
 
 

FY18 GAAP Net Income Guidance based on
Adjusted EBITDA Guidance

 
Fiscal Year End 2018
(in millions)
GAAP Net Income Attributable to AECOM Guidance* $171
Adjusted Net Income Attributable to AECOM Excludes:
Amortization of intangible assets, net of NCI $105
Acquisition and integration related items ($11)
Foreign exchange gain ($9)
Financing charges in interest expense $53
Loss on disposal $2
Year-to-date non-core operating losses $40
Tax effect of the above items** ($37)
Loss on assets held for sale, including goodwill $168
Revaluation of deferred taxes and one-time tax repatriation charges
associated with U.S. tax reform
($42)
Adjusted Net Income Attributable to AECOM $440
Adjusted EBITDA Excludes:
Interest Expense $210
Interest Income ($8)
Depreciation $145
Taxes $92
Adjusted EBITDA Guidance $880
 
*Calculated based on the mid-point of AECOM's fiscal year 2018 EPS
guidance.
**The adjusted tax expense differs from the GAAP tax expense based
on the deductibility and tax rate applied to each of the adjustments.
Note: the components in this table may not sum to the total due to
rounding.
 
 

FY18 GAAP Tax Rate Guidance based on
Adjusted Tax Rate Guidance

 

Fiscal Year End 2018

 
GAAP Tax Rate Guidance 5%
Tax rate impact from adjustments to GAAP earnings 10%
Tax rate impact from inclusion of NCI deduction 2%
Effective Tax Rate for Adjusted Earnings Guidance 17%
 
 

FY18 GAAP Interest Expense Guidance based
on Adjusted Interest Expense Guidance

 

Fiscal Year End 2018

(in millions)
GAAP Interest Expense Guidance $263
Financing charge in interest expense $53
Adjusted Interest Expense Guidance $210
 

View Comments and Join the Discussion!