AECOM announces capital allocation policy and $1 billion stock repurchase authorization

Los Angeles — AECOM, a fully integrated global infrastructure firm, announced a formalized capital allocation policy that provides specificity on intended future uses of capital, including the authorization by the company’s Board of Directors of a new $1 billion stock repurchase program.

Key features of AECOM’s capital allocation policy include the following:

• Allocating substantially all free cash flow to debt reduction until achieving net debt-to-EBITDA of 2.5x, which is expected to occur by the end of fiscal year 2018;
• Upon achievement of 2.5x net leverage, the company intends to return substantially all free cash flow to investors through the new $1 billion stock repurchase authorization as part of the longer-term capital allocation framework; and
• Acquisitions are expected to be limited to strategic, niche targets that will not adversely impact the Company’s 2.5x net leverage target.

Additional details of the Company’s capital allocation policy will be provided on its fourth quarter earnings conference call and at its annual Investor Day in December.

“Our formalized capital allocation policy includes a new $1 billion stock repurchase program and reinforces our commitment to drive stockholder value, as well as our confidence in our strategy, fully integrated capabilities and the markets we serve,” said Michael S. Burke, AECOM’s chairman and chief executive officer. “We have made substantial progress with $1.4 billion of debt reduction over the past several years. We will continue to focus on debt reduction towards our 2.5x net leverage target, at which point we expect to return substantially all free cash flow to our investors under our new stock repurchase program. Returning capital through stock repurchases is a core tenet of our long-term capital allocation policy, which remains focused on maximizing stockholder value.”

“We have a track record of generating industry leading cash flow and consistent operating performance, including $1.9 billion of free cash flow over the past three years and a forecast for at least $3.5 billion of cumulative free cash flow from fiscal years 2017 through 2021,” said W. Troy Rudd, AECOM’s chief financial officer. “We are optimizing our capital structure through continued debt reduction, which will provide us with an improved cost of capital and enable us to return substantial cash to stockholders in the future.”