AECOM (NYSE:ACM), the world’s premier infrastructure firm, will
hold its Investor Day in New York City today at which the Company
will affirm its commitment to a strategic transformation into a
higher-returning and lower-risk Professional Services business,
unveil fiscal 2021 financial guidance, and lay the foundation to
achieve industry-leading long-term financial targets. The strategic
transformation and financial objectives build on the momentum in
AECOM’s fiscal 2019 performance, and the continued commitment to
investing in the industry’s brightest people, advancing innovations
to solve clients’ most complex challenges and delivering superior
financial performance.
AECOM is reiterating its financial targets for fiscal 2020,
including a plan to achieve 12% adjusted EBITDA1 growth in its pro
forma Professional Services2 business. The Company is also
initiating 2021 guidance for pro forma Professional Services2
adjusted EBITDA1 of $825 million to $865 million, which would
reflect 14% year-over-year adjusted EBITDA1 growth at the mid-point
of the range. This forecast is supported by expected low-to-mid
single digit organic revenue and net service revenue (NSR)3 growth
including expected double-digit growth in the Construction
Management business, the annualized benefit of restructuring
actions taken in fiscal 2020, and ongoing efforts to further
enhance profitability. Achievement of this plan would result in
industry-leading margins and a substantial increase in return on
invested capital (ROIC)4.
AECOM is also setting long-term financial targets that challenge
the Company to continue to pursue a best-in-class cost structure
while investing in higher-returning businesses, markets and
innovation. On an NSR3 basis, the Company is targeting a long-term
adjusted operating margin1 of greater than 15% for the DCS and
Construction Management businesses combined, and enterprise ROIC4
of greater than 15%, both of which would exceed the industry. The
Company also expects to continue to deliver industry-leading cash
flow, including unlevered free cash flow conversion5 of at least
75% of adjusted EBITDA in the pro forma Professional Services2
business on a normalized6 basis.
Accordingly, AECOM’s pro forma Professional Services2 financial
targets include the following:
FY’20E
FY’21E
Long-Term Target
Adjusted Operating Margin1 (NSR3,
including DCS and Construction Management)
~11.7%
12.9 - 13.4%
15%+
Adjusted EBITDA1 (millions)
$720 - $760
$825 - $865
--
Normalized6 Unlevered Free Cash Flow
Conversion5
75%+
75%+
75%+
Return on Invested Capital (ROIC)4
--
--
15%+
In addition to the above financial targets for AECOM’s pro forma
Professional Services2, the Company also reiterated its guidance
for fiscal 2020 enterprise adjusted EBITDA1 of between $1,040 and
$1,080 million. Reflecting timing-related sources and uses of cash
flow resulting from the timing of the sale of the Management
Services business, the Company expects fiscal 2020 free cash flow7
to be between $100 and $300 million. Importantly, as noted above,
on a normalized6 basis, unlevered free cash flow conversion5 is
expected to be greater than 75% of pro forma Professional Services2
adjusted EBITDA1.
“Our strong execution in fiscal 2019 demonstrates the commitment
of our people to deliver on key financial and strategic
objectives,” said Mike Burke, AECOM’s chairman and chief executive
officer. “The organization is energized by the many successes we
had in fiscal 2019 and to deliver on our longer-term targets.”
“Our many successes in fiscal 2019, including delivering 25%
adjusted EBITDA1 growth, record DCS adjusted operating margins and
19% backlog growth in our Professional Services business, provide
us tremendous momentum towards achieving our financial targets,”
said W. Troy Rudd, AECOM’s chief financial officer. “The Management
Services sale is expected to close in the fiscal second quarter,
which will result in a transformed balance sheet and capital for
share repurchases under our existing $1 billion Board
authorization. We are focused on delivering against our strategic
and financial commitments, and we are challenging the organization
to achieve our long-term financial targets through the execution of
our strategy and continued innovation.”
A live webcast of today’s Investor Day will begin at 10 a.m.
Eastern Time. The webcast and accompanying presentation slides are
available online at https://investors.aecom.com. The webcast will
be available for replay following the meeting.
1 Excludes the impact of non-operating items, such as
acquisition and integration-related items, transaction-related
expenses and restructuring costs and other items. See Regulation G
Information for a complete reconciliation of Non-GAAP measures. 2 A
non-GAAP measure comprised of the Company’s Design & Consulting
Services, Construction Management and AECOM Capital businesses, and
excludes expected stranded costs associated with planned
separations and divestitures that are expected to be eliminated. 3
Revenue, net of subcontract costs. 4 Return on invested capital, or
ROIC, is calculated as the sum of adjusted net income as presented
in the Company’s Regulation G Information and interest expense, net
of interest income, divided by invested capital as defined as the
sum of attributable shareholder’s equity and total debt, less cash
and cash equivalents. 5 Unlevered free cash flow is derived by
adding back after-tax adjusted interest expense at a 25% tax rate
and is after distributions to non-controlling interests. 6
Normalized unlevered free cash flow excludes unusual events, such
as transformational restructuring and other factors that are
expected to impact free cash flow in fiscal 2020. 7 Free cash flow
is defined as cash flow from operations less capital expenditures
net of proceeds from disposals.
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.
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, operating income, EBITDA, cash flows, tax rate,
return on invested capital or other financial items, any statements
of the plans, strategies and objectives for future operations,
profitability, strategic value creation, exposure to self-perform
at-risk construction, risk profile and investment strategies, any
statements regarding future economic conditions or performance and
any statements with respect to the proposed sale of the Management
Services business.
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; long-term government
contracts and subject to uncertainties related to government
contract appropriations; government shutdowns; governmental
agencies may modify, curtail or terminate our contracts; government
contracts are subject to audits and adjustments of contractual
terms; 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
business laws and regulations; maintaining adequate surety and
financial capacity; high leveraged and potential inability to
service our debt and guarantees; exposure to Brexit and tariffs;
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; uncertainties as to the timing and
completion of the proposed sale of our Management Services business
or whether it will be completed; risks associated with the impact
or terms of the proposed sale; risks associated with the benefits
and costs of the proposed sale of our Management Services business,
including the risk that the expected benefits of the proposed sale
or any contingent purchase price will not be realized within the
expected time frame, in full or at all, and the risk that
conditions to the proposed sale will not be satisfied and/or that
the proposed sale will not be completed within the expected time
frame, on the expected terms or at all; the risk that any consents
or regulatory or other approvals required in connection with the
proposed sale of our Management Services business will not be
received or obtained within the expected time frame, on the
expected terms or at all; the risk that the financing intended to
fund the proposed sale of our Management Services business may not
be obtained; the risk that costs of restructuring transactions and
other costs incurred in connection with the proposed sale of our
Management Services business will exceed our estimates or otherwise
adversely affect our business or operations; the impact of the
proposed sale of our Management Services business on our businesses
and the risk that consummating the proposed sale may be more
difficult, time-consuming or costly than expected; 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”). We believe that non-GAAP financial measures
such as adjusted EBITDA, adjusted operating income, return on
invested capital, net service revenue, and pro forma Professional
Services provide a meaningful perspective on our business results
as we utilize this information to evaluate and manage our business.
For example, we use adjusted EBITDA and operating income to exclude
the impact of non-operating items, such as acquisition and
integration expenses and non-core operating losses to aid investors
in better understanding our core performance results. 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
Our presentation of pro forma Professional Services metrics
includes the results of the DCS, Construction Management and AECOM
Capital businesses, and excludes the Management Services business
and at-risk, self-perform businesses within the Construction
Services segment, which the Company intends to divest. Pro forma
Professional Services also excludes expected stranded costs
associated with planned separations and divestitures that are
expected to be eliminated. The pro forma Professional Services
metrics reflect our current estimates based on information
available as of this release. The pro forma Professional Services
financial metrics may differ materially from the presented amounts
due to future dispositions or divestures of our Management Service
business and our at-risk, self-perform construction businesses and
other unexpected developments or adjustments that may arise. We
believe this information helps provide additional insight into the
underlying trends of our business when comparing current
performance against prior periods and the expected impact of the
future dispositions or divestures of our Management Service
business and our at-risk, self-perform construction businesses.
When we provide our long term projections for pro forma
Professional Services, adjusted operating income, net service
revenue, adjusted EBITDA, normalized free cash flow and return on
invested capital 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
Regulation G
Information
(in millions, except per share
data)
Reconciliation of Net Income
Attributable to AECOM to EBITDA, Adjusted EBITDA and Pro Forma
Professional Services Adjusted EBITDA
Twelve Months Ended
Sep 30, 2018
Sep 30, 2019
Net income (loss) attributable to
AECOM
$
136.5
$
(261.1
)
Income tax expense (benefit)
(19.6
)
(0.1
)
Income (loss) attributable to AECOM before
income taxes
116.9
(261.2
)
Depreciation and amortization expense1
281.0
292.1
Interest income2
(9.6
)
(12.4
)
Interest expense3
249.4
215.2
EBITDA
637.7
233.7
Noncore operating losses & transaction
related expenses
57.4
35.8
Impairment of long-lived assets, including
goodwill
168.2
615.4
Acquisition and integration-related
items
(10.9
)
(15.3
)
Restructuring costs
-
95.4
Loss on disposal activities
2.9
10.4
FX gain from forward currency contract
(9.1
)
-
Depreciation expense included in noncore
operating losses and acquisition and integration-related items
(9.7
)
(27.8
)
Adjusted EBITDA
836.5
947.6
MS & at-risk, self-perform
construction
308.8
286.1
Pro forma Professional Services adjusted
EBITDA
$
527.7
$
661.5
Reconciliation of Segment Income from
Operations to Adjusted Income from Operations
Twelve Months Ended
Sep 30, 2018
Sep 30, 2019
Design & Consulting Services
Segment:
Income from operations
$
455.1
$
552.3
Noncore operating losses & transaction
related expenses
2.8
(3.9
)
Impairment of long-lived assets, including
goodwill
-
15.2
Gain on disposal activities
-
(3.6
)
Amortization of intangible assets
24.6
24.1
Adjusted income from operations
$
482.5
$
584.1
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191210005224/en/
Investors: Will Gabrielski Vice President, Investor
Relations 213.593.8208 William.Gabrielski@aecom.com
Media: Brendan Ranson-Walsh Vice President, Global
Communications & Corporate Responsibility 213.996.2367
Brendan.Ranson-Walsh@aecom.com
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