AECOM Reports Mixed Results in Q3 Fiscal Year 2020

LOS ANGELES (August 4, 2020)—AECOM recently reported third quarter fiscal year 2020 results. 

Q3 2020 Highlights:

• Revenue in the third quarter was $3.2 billion, and net service revenue was unchanged compared to the prior year on an organic basis, reflecting 2% organic growth in the Americas segment, growth in the Asia-Pacific region and a decline in the Europe, Middle East and Africa (EMEA) region.
• Operating income in the third quarter was $119 million.
• Net income was $91 million and diluted earnings per share was $0.56; on an adjusted basis, diluted earnings per share was $0.55.
• Third quarter adjusted EBITDA increased by 18% over the prior year to $187 million; year-to-date adjusted EBITDA of $542 million increased by 20% over the prior year.
• Operating cash flow in the third quarter was $186 million and free cash flow was $272 million, which was consistent with expectations and reflected strong collection trends as the cash generative nature of the company’s business remains firmly intact; free cash flow included the receipt of $122 million as a result of a previously announced favorable net working capital purchase price adjustment associated with the sale of the Management Services business.
• Third quarter wins of $3.2 billion included a greater than 1 book-to-burn ratio⁷ in the Company’s design businesses and resulted in 16%⁶ backlog growth to $41.5 billion, which remains at near-record levels; contracted backlog increased by 13% and set a new record.
• The company increased its full year adjusted EBITDA guidance to between $720 million and $740 million, or 11% year-over-year growth at the mid-point; this guidance includes an approximately $20 million headwind from changes in foreign exchange rates as compared to the company’s initial guidance for the year.

AECOM’s Americas Results

• Revenue in the third quarter was $2.5 billion, a 4% decrease from the prior year.
• Net service revenue was $923 million in the third quarter, a 2% increase from the prior year on a constant-currency organic basis, which was highlighted by double-digit growth in the Construction Management business.
• Operating income was $161 million compared to $128 million in the year-ago period. On an adjusted basis, operating income was $165 million compared to $132 million in the year-ago period. 

COVID-19 Associated Impacts & Market Outlook

• The majority of AECOM’s work is either essential or critical, which minimized disruption to the business.
• The company rapidly transitioned to a greater than 90% remote workforce while continuing to support its clients; utilization across the business remains above pre-COVID levels.
• While stay-at-home orders have eased in many of the company’s larger markets, the majority of employees continue to work remotely.
• The company is confident that despite economic pressures in certain United States and international markets, strong backlog growth and high win rates on key pursuits are resulting in market share gains that position the Company to outperform.
• During the third quarter, the company benefited from government subsidies of approximately $12 million, which were received under various programs related to retaining employees.

“I am proud of the organization’s efforts amidst unprecedented challenges and as we further our transformation to an industry-leading Professional Services business,” said Michael S. Burke, AECOM’s chairman and chief executive officer. “We have accomplished much over the past several years, and the company is better positioned than ever to deliver on its vision to build a better world.”

“Our third quarter performance is a testament to our industry-leading teams and the dedication of our professionals who have delivered through unprecedented challenges,” said W. Troy Rudd, AECOM’s chief financial officer. “Our commitment to creating value is underscored by 250 basis points of margin expansion in the quarter, a seventh consecutive quarter of double-digit adjusted EBITDA growth and our stronger balance sheet. As a result, we are raising our adjusted EBITDA guidance range and now expect to deliver 11% year-over-year growth at the mid-point. Our demonstrated resiliency this year instills a great deal of confidence in our ability to continue delivering for our clients, generating strong returns for our shareholders and positions us to deliver increased profitability in fiscal 2021.”