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AECOM reports second quarter fiscal year 2020 results

May 5, 2020 6:55 AM

LOS ANGELES--(BUSINESS WIRE)-- AECOM (NYSE: ACM), the world’s premier infrastructure firm, today reported second quarter fiscal year 2020 results.

Second Quarter Fiscal 2020

First Half Fiscal 2020

(from Continuing Operations;

$ in millions, except EPS)

As Reported

Adjusted1

(Non-GAAP)

As Reported YoY % Change

Adjusted YoY % Change

As Reported

Adjusted1

(Non-GAAP)

As Reported YoY % Change

Adjusted YoY % Change

Revenue

$3,246

--

(5%)

--

$6,481

--

(4%)

--

Net Service Revenue (NSR)2

--

$1,560

--

(1%)3

--

$3,100

--

0%3

Operating Income

$110

$159

2%

23%

$197

$303

42%

27%

Net Income

$49

$88

(6%)

31%

$79

$162

(5%)

31%

Segment Operating Margin4 (NSR)

--

11.7%

--

+200 bps

--

11.7%

--

+210 bps

EBITDA

--

$182

--

16%

--

$356

--

21%

EPS (Fully Diluted)

$0.30

$0.55

(6%)

31%

$0.49

$1.01

(6%)

29%

Wins

$8,600

52%

Backlog

$41,611

--

14%5

--

Second Quarter and First Half 2020 Accomplishments:

COVID-19 Associated Impacts

AECOM’s Professional Services Business Possesses Inherent Advantages

Updated Fiscal 2020 Financial Guidance

“I am proud of AECOM’s strong second quarter and first half financial performance, which was highlighted by our sixth-consecutive quarter of substantial margin improvement in our Professional Services business, continued double-digit adjusted EBITDA growth, a record $9 billion of wins in the quarter and a new all-time high backlog level,” said Michael S. Burke, AECOM’s chairman and chief executive officer. “Our organization has responded well to the challenges posed by COVID-19 and I am thankful for our entire workforce’s devotion to our business and focus on delivering for our clients. As we look to the future, there are many uncertainties about the duration and long-term impacts from COVID-19. Importantly, with respect to what is within our control, the business has never been stronger or more resilient. In the near-term, our focus is on the health and safety of our people, on protecting jobs and on delivering for our clients. This is apparent in our industry-leading share of federal spending on COVID-19 related work thus far. Longer-term, we are engaging with our clients to help prepare for substantial planned stimulus, including an emphasis on infrastructure in our largest markets.”

“Our results over the past six quarters and, in particular the first half of this year, reinforce the value of our transformation to a higher-margin and lower-risk Professional Services business model,” said W. Troy Rudd, AECOM’s chief financial officer. “Our financial position is solid. We deployed the proceeds from the MS sale to repay all of our secured debt, resulting in substantially reduced net leverage of 1.2x. Today, we have a record level of liquidity and no substantial debt maturities for several years. We expect strong cash flow in the second half of the year to further enhance liquidity, providing us with additional flexibility as we navigate unprecedented market uncertainty with confidence.”

Wins and Backlog

Second quarter wins of $8.6 billion set a new record and resulted in a book-to-burn ratio6 of 2.5, which included a greater than 1 book-to-burn ratio in each segment. This performance included solid contributions across the business, highlighted by two multi-billion dollar wins in the Americas. Wins in the first half of fiscal 2020 were $12.0 billion, reflecting a 1.7 book-to-burn ratio. Total backlog increased by 14%5 over the prior year to $41.6 billion, which set a new record and provides for all-time high levels of visibility with more than 3 years of trailing twelve-month revenue in backlog.

Business Segments

AECOM is a Professional Services firm that delivers planning, design, engineering, consulting and construction management services to public- and private-sector clients worldwide in markets spanning transportation, buildings, water, governments, energy and the environment.

AECOM reports based on three segments: Americas, which consists of the Company’s business in the United States, Canada and Latin America; International, which consists of the Company’s business in Europe, the Middle East, Africa and the Asia-Pacific regions; and AECOM Capital.

In addition, the MS business, which was sold on January 31, 2020, and the at-risk, self-perform construction businesses that the Company intends to exit are reported as discontinued operations.

Americas

Revenue in the second quarter was $2.5 billion, a 4% decrease from the prior year, primarily due to the expected reduction in disaster recovery activity in the U.S. Virgin Islands.

Net service revenue2 was $933 million in the second quarter and was mostly unchanged over the prior year on a constant-currency organic3 basis. Excluding the impact of the U.S. Virgin Islands activity in the prior-year period, NSR increased by 2% in the Company’s design business, reflecting continued strength across its core markets.

Operating income was $141 million compared to $129 million in the year-ago period. On an adjusted basis1, operating income was $146 million compared to $132 million in the year-ago period. The adjusted operating margin on an NSR2 basis of 15.6% was a 160 basis point increase over the prior year, and reflects the benefits of the many strategic actions taken to enhance margins as well as solid execution against a record level of backlog.

International

Revenue in the second quarter was $770 million, a decrease of 8% from the prior year.

Net service revenue2 was $626 million in the second quarter, a 2% decrease from the prior year on a constant-currency organic3 basis, reflecting continued growth in Australia-New Zealand, stable performance in the U.K. and declines in Asia as the business experienced headwinds associated with COVID-19.

Operating income was $36 million compared to $22 million in the year-ago period. On an adjusted basis1, operating income was $37 million compared to $23 million in the year-ago period. The adjusted operating margin on an NSR2 basis increased by 240 basis points over the prior year to 5.9%. This increase is due to improved profitability in the U.K. and investments to deliver increased utilization and overhead efficiencies through expanded use of the Company’s global shared services and design centers, as well as the benefit from actions to consolidate the Company’s geographic and real estate footprint. In addition, despite the impacts of COVID-19 in Asia that resulted in 10 lost working days in mainland China, the business delivered performance consistent with its financial plan for the first half of the year.

AECOM Capital

The AECOM Capital segment invests in and develops real estate projects. Revenue in the second quarter was $0.5 million and operating income was $3.8 million. The Company reiterated its expectation for approximately $10 million of AECOM Capital earnings in fiscal 2020.

Discontinued Operations

Second quarter results of discontinued operations included an approximately $147 million gain with respect to the sale of the Management Services business and an $89 million non-cash impairment of goodwill and intangible assets on certain Oil & Gas-related businesses as a result of lower oil prices. The Company remains committed to its goal of achieving zero self-perform, at-risk construction exposure.

Tax Rate

The effective tax rate was 28.7% in the second quarter. On an adjusted basis, the effective tax rate was 26.7%. The adjusted tax rate was derived by re-computing the annual effective tax rate on earnings from adjusted net income.9 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 second quarter was ($299) million and free cash flow8 was ($313) million. Underlying cash performance was mostly consistent with expectations and included several noteworthy items:

Balance Sheet

As of March 31, 2020, inclusive of discontinued operations, AECOM had $1.3 billion of total cash and cash equivalents, $2.2 billion of total debt, $900 million of net debt and was undrawn under its $1.35 billion revolving credit facility.

Restructuring Update

AECOM continues to progress its previously announced restructuring actions that are expected to deliver continued substantial margin improvement and efficiencies that result in a more agile organization. As a result, the Company continues to expect in fiscal 2020 to incur restructuring expenses of between $160 million and $190 million, and total cash restructuring costs of between $185 million to $205 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 https://investors.aecom.com. The webcast will be available for replay following the call.

1 Excludes the impact of non-operating items, such as non-core operating losses and transaction-related expenses, restructuring costs and other items. See Regulation G Information for a complete reconciliation of Non-GAAP measures.

2 Revenue, net of subcontractor and other direct costs.

3 Organic growth is year-over-year at constant currency and reflects revenue associated with continuing operations. Results expressed in constant currency are presented excluding the impact from changes in currency exchange rates.

4 Reflects segment operating performance, excluding AECOM Capital.

5 On a constant-currency basis.

6 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.

7 Net debt-to-EBITDA, or net leverage, is comprised of EBITDA as defined in the Company’s credit agreement dated October 17, 2014, as amended, which excludes stock-based compensation, and net debt as defined as total debt on the Company’s financial statements, net of total cash and cash equivalents.

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

9 Inclusive of non-controlling interest deduction and adjusted for financing charges in interest expense, the amortization of intangible assets and is based on continuing operations.

About AECOM

AECOM (NYSE: ACM) is the world’s premier infrastructure firm, delivering professional services across the project lifecycle – from planning, design and engineering to consulting and construction management. We partner with our clients in the public and private sectors to solve their most complex challenges and build legacies for generations to come. On projects spanning transportation, buildings, water, governments, energy and the environment, our teams are driven by a common purpose to deliver a better world. AECOM is a Fortune 500 firm with revenue of approximately $20.2 billion during fiscal year 2019. See how we deliver what others can only imagine at aecom.com and @AECOM.

Forward-Looking Statements

All statements in this communication other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including any statements of the plans, strategies and objectives for future operations, profitability, strategic value creation, coronavirus impacts, risk profile and investment strategies, any statements regarding future economic conditions or performance, the expected financial and operational results of AECOM. 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; impacts caused by the coronavirus and the related economic instability and market volatility, including the reaction of governments to the coronavirus, including any prolonged period of travel, commercial or other similar restrictions, the delay in commencement, or temporary or permanent halting of construction, infrastructure or other projects, requirements that we remove our employees or personnel from the field for their protection, and delays in planned initiatives by our governmental or commercial clients or potential clients; losses under fixed-price contracts; limited control over operations run through our joint venture entities; liability for misconduct by our employees or consultants; failure to comply with laws or regulations applicable to our business; maintaining adequate surety and financial capacity; high leverage and potential inability to service our debt and guarantees; exposure to Brexit; exposure to political and economic risks in different countries; currency exchange rate fluctuations; retaining and recruiting key technical and management personnel; legal claims; inadequate insurance coverage; environmental law compliance and adequate nuclear indemnification; unexpected adjustments and cancellations related to our backlog; partners and third parties who may fail to satisfy their legal obligations; AECOM Capital real estate development projects; managing pension cost; cybersecurity issues, IT outages and data privacy; risks associated with the benefits and costs of the Management Services transaction, including the risk that the expected benefits of the Management Services transaction or any contingent purchase price will not be realized within the expected time frame, in full or at all, or that any purchase price adjustments could be less favorable or result in lower aggregate cash proceeds than expected; the risk that costs of restructuring transactions and other costs incurred in connection with the Management Services transaction will exceed our estimates or otherwise adversely affect our business or operations; 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. Any forward-looking statements are made as of the date hereof. We do not intend, and undertake no obligation, to update any forward-looking statement.

Non-GAAP Financial Information

This press release contains financial information calculated other than in accordance with U.S. generally accepted accounting principles (“GAAP”). The Company believes that non-GAAP financial measures such as adjusted EPS, adjusted EBITDA, adjusted net/operating income, adjusted tax rate, organic revenue, net service revenue and free cash flow provide a meaningful perspective on its business results as the Company utilizes this information to evaluate and manage the business. We use adjusted EBITDA, adjusted EPS, adjusted net/operating income and adjusted tax rate to exclude the impact of non-operating items, such as amortization expense, taxes and non-core operating losses to aid investors in better understanding our core performance results. We use free cash flow to represent the cash generated after capital expenditures to maintain our business. We present constant currency information, such as organic revenue, to help assess how our underlying businesses performed excluding the effect of foreign currency rate fluctuations to aid investors in better understanding our international operational performance. We present net service revenue to exclude subcontractor costs from revenue to provide investors with a better understanding of our operational performance.

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 adjusted EBITDA 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 the length, high variability, complexity and low visibility associated with the non-GAAP expectation projected against the multi-year forecast which could significantly impact the GAAP measure.

AECOM

Consolidated Statements of Income

(unaudited - in thousands, except per share data)

Three Months Ended

Six Months Ended

March 31,
2019

March 31,
2020

%
Change

March 31,
2019

March 31,
2020

%
Change

Revenue

$

3,412,605

$

3,245,737

(4.9)%

$

6,768,943

$

6,481,347

(4.2)%

Cost of revenue

3,267,768

3,076,924

(5.8)%

6,500,710

6,146,734

(5.4)%

Gross profit

144,837

168,813

16.6 %

268,233

334,613

24.7 %

Equity in earnings of joint ventures

16,600

13,505

(18.6)%

23,232

23,433

0.9 %

General and administrative expenses

(37,426

)

(41,037

)

9.6 %

(73,333

)

(84,651

)

15.4 %

Restructuring costs

(15,875

)

(31,213

)

96.6 %

(79,170

)

(76,138

)

(3.8)%

Income from operations

108,136

110,068

1.8 %

138,962

197,257

42.0 %

Other income

3,761

2,430

(35.4)%

6,746

6,438

(4.6)%

Interest expense

(41,407

)

(37,111

)

(10.4)%

(80,832

)

(77,488

)

(4.1)%

Income before income tax expense (benefit)

70,490

75,387

6.9 %

64,876

126,207

94.5 %

Income tax expense (benefit)

12,218

21,604

76.8 %

(30,317

)

37,510

(223.7)%

Income from continuing operations

58,272

53,783

(7.7)%

95,193

88,697

(6.8)%

Discontinued operations, net of tax

35,247

(130,749

)

(471.0)%

63,412

(112,569

)

(277.5)%

Net income (loss)

93,519

(76,966

)

(182.3)%

158,605

(23,872

)

(115.1)%

Net income attributable to noncontrolling interests
from continuing operations

(6,898

)

(5,243

)

(24.0)%

(11,838

)

(9,290

)

(21.5)%

Net income attributable to noncontrolling interests
from discontinued operations

(8,776

)

(3,917

)

(55.4)%

(17,403

)

(12,360

)

(29.0)%

Net income attributable to noncontrolling interests

(15,674

)

(9,160

)

(41.6)%

(29,241

)

(21,650

)

(26.0)%

Net income attributable to AECOM from continuing operations

51,374

48,540

(5.5)%

83,355

79,407

(4.7)%

Net income (loss) attributable to AECOM from discontinued operations

26,471

(134,666

)

(608.7)%

46,009

(124,929

)

(371.5)%

Net income (loss) attributable to AECOM

$

77,845

$

(86,126

)

(210.6)%

$

129,364

$

(45,522

)

(135.2)%

Net income (loss) attributable to AECOM
per share:

Basic

Continuing operations

$

0.33

$

0.31

(6.1)%

$

0.53

$

0.50

(5.7)%

Discontinued operations

0.17

(0.85

)

(600.0)%

0.30

(0.79

)

(363.3)%

Basic earnings (loss) per share

$

0.50

$

(0.54

)

(208.0)%

$

0.83

$

(0.29

)

(134.9)%

Diluted

Continuing operations

$

0.32

$

0.30

(6.3)%

$

0.52

$

0.49

(5.8)%

Discontinued operations

0.17

(0.84

)

(594.1)%

0.29

(0.77

)

(365.5)%

Diluted earnings (loss) per share

$

0.49

$

(0.54

)

(210.2)%

$

0.81

$

(0.28

)

(134.6)%

Weighted average shares outstanding:

Basic

156,621

158,550

1.2 %

156,519

157,941

0.9 %

Diluted

158,416

160,718

1.5 %

159,010

160,687

1.1 %

Balance Sheet Information

(unaudited - in thousands)

September 30, 2019

March 31, 2020

Balance Sheet Information:

Total cash and cash equivalents

$

885,639

$

1,135,061

Accounts receivable and contract assets – net

4,451,022

4,655,315

Working capital

1,072,891

1,390,716

Total debt, excluding unamortized debt issuance costs

3,352,464

2,153,618

Total assets

14,550,908

13,115,346

Total AECOM stockholders’ equity

3,690,576

3,531,502

AECOM
Reportable Segments
(unaudited - in thousands)

Americas

International

AECOM
Capital

Corporate

Total

Three Months Ended March 31, 2020

Revenue

$

2,475,694

$

769,535

$

508

$

-

$

3,245,737

Cost of revenue

2,340,061

736,863

-

-

3,076,924

Gross profit

135,633

32,672

508

-

168,813

Equity in earnings of joint ventures

5,341

3,148

5,016

-

13,505

General and administrative expenses

-

-

(1,759

)

(39,278

)

(41,037

)

Restructuring costs

-

-

-

(31,213

)

(31,213

)

Income (loss) from operations

$

140,974

$

35,820

$

3,765

$

(70,491

)

$

110,068

Gross profit as a % of revenue

5.5%

4.2%

--

--

5.2%

Three Months Ended March 31, 2019

Revenue

$

2,576,474

$

834,644

$

1,487

$

-

$

3,412,605

Cost of revenue

2,449,775

817,993

-

-

3,267,768

Gross profit

126,699

16,651

1,487

-

144,837

Equity in earnings of joint ventures

1,840

5,039

9,721

-

16,600

General and administrative expenses

-

-

(1,681

)

(35,745

)

(37,426

)

Restructuring costs

-

-

-

(15,875

)

(15,875

)

Income (loss) from operations

$

128,539

$

21,690

$

9,527

$

(51,620

)

$

108,136

Gross profit as a % of revenue

4.9%

2.0%

--

--

4.2%

Six Months Ended March 31, 2020

Revenue

$

4,927,676

$

1,552,630

$

1,041

$

-

$

6,481,347

Cost of revenue

4,652,611

1,494,123

-

-

6,146,734

Gross profit

275,065

58,507

1,041

-

334,613

Equity in earnings of joint ventures

11,770

5,984

5,679

-

23,433

General and administrative expenses

-

-

(4,178

)

(80,473

)

(84,651

)

Restructuring costs

-

-

-

(76,138

)

(76,138

)

Income (loss) from operations

$

286,835

$

64,491

$

2,542

$

(156,611

)

$

197,257

Gross profit as a % of revenue

5.6%

3.8%

-

-

5.2%

Contracted backlog

$

13,512,174

$

3,518,306

$

-

$

-

$

17,030,480

Awarded backlog

22,907,354

897,933

-

-

23,805,287

Unconsolidated JV backlog

775,275

-

-

-

775,275

Total backlog

$

37,194,803

$

4,416,239

$

-

$

-

$

41,611,042

Six Months Ended March 31, 2019

Revenue

$

5,136,875

$

1,626,648

$

5,420

$

-

$

6,768,943

Cost of revenue

4,902,955

1,597,755

-

-

6,500,710

Gross profit

233,920

28,893

5,420

-

268,233

Equity in earnings of joint ventures

8,104

7,892

7,236

-

23,232

General and administrative expenses

-

-

(3,408

)

(69,925

)

(73,333

)

Restructuring costs

-

-

-

(79,170

)

(79,170

)

Income (loss) from operations

$

242,024

$

36,785

$

9,248

$

(149,095

)

$

138,962

Gross profit as a % of revenue

4.6%

1.8%

--

--

4.0%

Contracted backlog

$

13,282,229

$

3,852,880

$

-

$

-

$

17,135,109

Awarded backlog

17,496,446

869,693

-

-

18,366,139

Unconsolidated JV backlog

1,249,891

-

-

-

1,249,891

Total backlog

$

32,028,566

$

4,722,573

$

-

$

-

$

36,751,139

AECOM

Regulation G Information

($ in millions)

Reconciliation of Revenue to Revenue, Net of Subcontractor and Other Direct Costs (NSR)

Three Months Ended

Six Months Ended

Mar 31,
2019

Mar 31,
2020

Mar 31,
2019

Mar 31,
2020

Americas

Revenue

$

2,576.5

$

2,475.7

$

5,136.9

$

4,927.7

Less: Subcontractor and other direct costs

1,636.0

1,542.5

3,321.4

3,089.0

Revenue, net of subcontractor and other direct costs

$

940.5

$

933.2

$

1,815.5

$

1,838.7

International

Revenue

$

834.6

$

769.5

$

1,626.6

$

1,552.6

Less: Subcontractor and other direct costs

180.3

143.2

335.3

292.6

Revenue, net of subcontractor and other direct costs

$

654.3

$

626.3

$

1,291.3

$

1,260.0

Segment Performance (excludes ACAP)

Revenue

$

3,411.1

$

3,245.2

$

6,763.5

$

6,480.3

Less: Subcontractor and other direct costs

1,816.3

1,685.7

3,656.7

3,381.6

Revenue, net of subcontractor and other direct costs

$

1,594.8

$

1,559.5

$

3,106.8

$

3,098.7

Consolidated

Revenue

$

3,412.6

$

3,245.7

$

6,768.9

$

6,481.3

Less: Subcontractor and other direct costs

1,816.3

1,685.7

3,656.7

3,381.6

Revenue, net of subcontractor and other direct costs

$

1,596.3

$

1,560.0

$

3,112.2

$

3,099.7

Reconciliation of Total Debt to Net Debt

Balances at:

Mar 31, 2019

Dec 31, 2019

Mar 31, 2020

Short-term debt

$

48.4

$

55.0

$

27.2

Current portion of long-term debt

80.8

56.6

25.2

Long-term debt, gross

3,708.1

3,392.1

2,101.2

Total debt excluding unamortized debt issuance costs

3,837.3

3,503.7

2,153.6

Less: Total cash and cash equivalents

666.1

725.4

1,135.1

Net debt

$

3,171.2

$

2,778.3

$

1,018.5

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

Three Months Ended

Six Months Ended

Mar 31,
2019

Dec 31,
2019

Mar 31,
2020

Mar 31,
2019

Mar 31,
2020

Net cash provided by (used in) operating activities

$

107.4

$

(206.9

)

$

(299.1

)

$

(93.0

)

$

(506.0

)

Capital expenditures, net

(22.5

)

(31.1

)

(13.4

)

(44.4

)

(44.5

)

Free cash flow

$

84.9

$

(238.0

)

$

(312.5

)

$

(137.4

)

$

(550.5

)

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

Three Months Ended

Six Months Ended

Mar 31,
2019

Dec 31,
2019

Mar 31,
2020

Mar 31,
2019

Mar 31,
2020

Reconciliation of Income from Operations to Adjusted Income from Operations

Income from operations

$

108.2

$

87.2

$

110.1

$

139.0

$

197.3

Non-core operating losses & transaction related expenses

(1.2

)

5.6

-

8.2

5.6

Accelerated depreciation of project management tool

-

-

11.3

-

11.3

Restructuring costs

15.9

44.9

31.2

79.2

76.1

Amortization of intangible assets

6.3

6.1

6.2

12.6

12.3

Adjusted income from operations

$

129.2

$

143.8

$

158.8

$

239.0

$

302.6

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

Income before income tax expense (benefit)

$

70.5

$

50.8

$

75.4

$

64.9

$

126.2

Non-core operating losses & transaction related expenses

(1.2

)

5.6

-

8.2

5.6

Accelerated depreciation of project management tool

-

-

11.3

-

11.3

Restructuring costs

15.9

44.9

31.2

79.2

76.1

Amortization of intangible assets

6.3

6.1

6.2

12.6

12.3

Financing charges in interest expense

2.4

2.0

0.9

4.8

2.9

Adjusted income before income tax expense

$

93.9

$

109.4

$

125.0

$

169.7

$

234.4

Reconciliation of Income Taxes to Adjusted Income Taxes

Income tax expense (benefit)

$

12.2

$

15.9

$

21.6

$

(30.3

)

$

37.5

Tax effect of the above adjustments*

6.5

15.2

11.4

28.9

26.6

Valuation allowances and other tax only items

1.1

(0.4

)

(1.1

)

34.7

(1.5

)

Adjusted income tax expense

$

19.8

$

30.7

$

31.9

$

33.3

$

62.6

____________________

* 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.

Reconciliation of Noncontrolling Interests to Adjusted Noncontrolling Interests

Noncontrolling interests in income of consolidated subsidiaries, net of tax

$

(6.9

)

$

(4.0

)

$

(5.3

)

$

(11.8

)

$

(9.3

)

Amortization of intangible assets included in NCI, net of tax

(0.2

)

(0.1

)

(0.1

)

(0.3

)

(0.2

)

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

$

(7.1

)

$

(4.1

)

$

(5.4

)

$

(12.1

)

$

(9.5

)

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

Net income attributable to AECOM

$

51.4

$

30.9

$

48.5

$

83.4

$

79.4

Non-core operating losses & transaction related expenses

(1.2

)

5.6

-

8.2

5.6

Accelerated depreciation of project management tool

-

-

11.3

-

11.3

Restructuring costs

15.9

44.9

31.2

79.2

76.1

Amortization of intangible assets

6.3

6.1

6.2

12.6

12.3

Financing charges in interest expense

2.4

2.0

0.9

4.8

2.9

Tax effect of the above adjustments*

(6.5

)

(15.2

)

(11.5

)

(28.9

)

(26.7

)

Valuation allowances and other tax only items

(1.1

)

0.4

1.1

(34.7

)

1.5

Amortization of intangible assets included in NCI, net of tax

(0.2

)

(0.1

)

(0.1

)

(0.3

)

(0.2

)

Adjusted net income attributable to AECOM

$

67.0

$

74.6

$

87.6

$

124.3

$

162.2

____________________

* 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.

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

Three Months Ended

Six Months Ended

Mar 31,
2019

Dec 31,
2019

Mar 31,
2020

Mar 31,
2019

Mar 31,
2020

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

Net income attributable to AECOM – per diluted share

$

0.32

$

0.19

$

0.30

$

0.52

$

0.49

Per diluted share adjustments:

Non-core operating losses & transaction related expenses

(0.01

)

0.03

-

0.05

0.03

Accelerated depreciation of project management tool

-

-

0.07

-

0.07

Restructuring costs

0.10

0.28

0.19

0.50

0.47

Amortization of intangible assets

0.04

0.04

0.04

0.08

0.08

Financing charges in interest expense

0.02

0.01

0.01

0.03

0.02

Tax effect of the above adjustments*

(0.04

)

(0.09

)

(0.07

)

(0.18

)

(0.16

)

Valuation allowances and other tax only items

(0.01

)

-

0.01

(0.22

)

0.01

Adjusted net income attributable to AECOM – per diluted share

$

0.42

$

0.46

$

0.55

$

0.78

$

1.01

Weighted average shares outstanding – diluted

158.4

160.7

160.7

159.6

160.7

____________________

* 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 Net Income Attributable to AECOM to EBITDA to Adjusted EBITDA and to Adjusted Income from Operations

Net income attributable to AECOM

$

51.4

$

30.9

$

48.5

$

83.4

$

79.4

Income tax expense (benefit)

12.2

15.9

21.6

(30.3

)

37.5

Income attributable to AECOM

63.6

46.8

70.1

53.1

116.9

Depreciation and amortization expense

43.3

41.1

48.7

83.3

89.8

Interest income1

(2.9

)

(3.4

)

(3.6

)

(5.1

)

(7.0

)

Interest expense2

41.3

40.3

37.1

80.7

77.4

Amortized bank fees included in interest expense

(2.4

)

(2.0

)

(1.3

)

(4.8

)

(3.3

)

EBITDA

$

142.9

$

122.8

$

151.0

$

207.2

$

273.8

Non-core operating losses & transaction related expenses

(1.2

)

5.6

-

8.2

5.6

Restructuring costs

15.9

45.0

31.2

79.2

76.2

Adjusted EBITDA

$

157.6

$

173.4

$

182.2

$

294.6

$

355.6

Other income

(3.8

)

(4.0

)

(2.4

)

(6.8

)

(6.4

)

Depreciation3

(34.7

)

(33.1

)

(30.0

)

(66.1

)

(63.1

)

Interest income1

2.9

3.4

3.6

5.1

7.0

Noncontrolling interests in income of consolidated subsidiaries, net of tax

7.0

4.1

5.3

12.0

9.4

Amortization of intangible assets included in NCI,
net of tax

0.2

-

0.1

0.2

0.1

Adjusted income from operations

$

129.2

$

143.8

$

158.8

$

239.0

$

302.6

____________________

1 Included in other income; 2 Excludes related amortization; 3 Excludes depreciation from non-core operating losses, and accelerated depreciation of project management tool;

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

Three Months Ended

Six Months Ended

Mar 31,
2019

Dec 31,
2019

Mar 31,
2020

Mar 31,
2019

Mar 31,
2020

Reconciliation of Segment Income from Operations to Adjusted Income from Operations

Americas Segment:

Income from operations

$

128.5

$

145.9

$

141.0

$

242.0

$

286.9

Non-core operating losses & transaction related expenses

(1.2

)

-

-

8.2

-

Amortization of intangible assets

4.8

4.7

4.8

9.6

9.5

Adjusted income from operations

$

132.1

$

150.6

$

145.8

$

259.8

$

296.4

International Segment:

Income from operations

$

21.7

$

28.7

$

35.8

$

36.8

$

64.5

Non-core operating losses & transaction related expenses

-

(0.1

)

-

-

(0.1

)

Amortization of intangible assets

1.6

1.4

1.4

3.1

2.8

Adjusted income from operations

$

23.3

$

30.0

$

37.2

$

39.9

$

67.2

Segment Performance (excludes ACAP):

Income from operations

$

150.2

$

174.6

$

176.8

$

278.8

$

351.4

Non-core operating losses & transaction related expenses

(1.2

)

(0.1

)

-

8.2

(0.1

)

Amortization of intangible assets

6.4

6.1

6.2

12.7

12.3

Adjusted income from operations

$

155.4

$

180.6

$

183.0

$

299.7

$

363.6

Investor Contact:

Will Gabrielski

Senior Vice President, Investor Relations

213.593.8208

[email protected]

Media Contact:

Brendan Ranson-Walsh

Vice President, Global Communications & Corporate Responsibility

213.996.2367

[email protected]

Source: AECOM

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