AECOM reports second-quarter fiscal year 2011 financial results

LOS ANGELES — AECOM Technology Corporation announced its financial results for the second quarter of fiscal year 2011, which ended March 31, 2011. AECOM reported net income from continuing operations of $58 million for the second quarter and diluted earnings per share (EPS) from continuing operations of 49 cents for the second quarter. This represents a decrease of 2 percent from net income from continuing operations of $59 million and a decrease of 4 percent from diluted earnings per share of 51 cents for the same period last year. During the quarter, the company ceased its operations in Libya, which had a negative $0.08 EPS impact. Operating income for the second quarter increased to $87 million, 5 percent higher than the same period last year.

Second-quarter revenue was $1.9 billion, a 21-percent increase from the second quarter of fiscal year 2010. AECOM’s gross revenue includes a significant amount of pass-through costs and, therefore, the company believes that revenue, net of other direct costs, which is a non-GAAP measure, also provides a valuable perspective on its business results. Second-quarter revenue, net of other direct costs, was $1.3 billion, representing a 23-percent increase over the same period last year. Excluding the impact of Libya, organic revenue, net of other direct costs, increased 4 percent year over year.

For the first six months of fiscal year 2011, AECOM reported net income of $115 million and operating income of $178 million, an increase of 10 percent and 19 percent, respectively, compared to the same period last year, despite the negative impact from Libya. For the first six months of fiscal 2011, AECOM reported revenue of $3.9 billion and revenue, net of other direct costs, of $2.5 billion, an increase of 26 percent and 24 percent, respectively, compared to the same period last year.

"We saw continued organic growth, both in revenue and backlog, during the second quarter," said John M. Dionisio, AECOM president and chief executive officer. "We are pleased that we were able to achieve solid results even with challenging external events, which we believe speaks to the resilience of our diversified business model and to the agility of our team around the world."

"We are poised for continued strong performance as we capitalize on organic-growth opportunities around the world and drive revenue and cost synergies from recent acquisitions. With the fiscal year 2011 federal budget now in place, we expect to see a meaningful increase in our U.S. government business during the second half of the year," Dionisio said.

Business Segments
In addition to providing consolidated financial results, AECOM reports separate financial information for its two segments: Professional Technical Services (PTS) and Management Support Services (MSS).

Professional Technical Services — The PTS segment delivers planning, consulting, architecture and engineering design, and program and construction management services to institutional, commercial and government clients worldwide. For the second quarter of fiscal year 2011, the PTS segment reported revenue of $1.6 billion and operating income of $92 million. This represents an increase of 25 percent from revenue of $1.3 billion for the same period last year and a decrease of 6 percent from operating income of $97 million for the same period last year. The company’s withdrawal from Libya negatively impacted PTS segment results. PTS revenue, net of other direct costs, increased 19 percent for the second quarter of fiscal year 2011, to $1.1 billion.

Management Support Services — The MSS segment provides facilities management and maintenance, training, logistics, consulting, technical assistance and systems integration services, primarily for agencies of the U.S. government. For the second quarter of fiscal year 2011, the MSS segment reported revenue of $291 million and operating income of $19 million. Revenues increased by 2 percent from the same period last year, while operating income increased 39 percent from $14 million in the same period last year. MSS revenue, net of other direct costs, increased 73 percent for the second quarter of fiscal year 2011, to $149 million.

Balance Sheet and Cash Flow
As of March 31, 2011, AECOM had $403 million of total cash and cash equivalents, $1.2 billion of debt and $600 million in committed bank facilities with $338 million in unused capacity. Cash flow from operations totaled $33 million in the quarter, an $85-million improvement from the prior year.

Backlog
AECOM announced backlog of $15.4 billion at March 31, 2011, a 56-percent increase year over year. Organically, backlog increased by 6 percent year over year and 10 percent excluding Libya.

Outlook
"Our significant organic backlog growth and increase in cash flow point to continued improvements in our markets," said Michael S. Burke, AECOM executive vice president and chief financial officer. "An improving global business environment and our exposure to high-growth emerging and natural resource-rich markets, provide us with confidence to increase our guidance for fiscal year 2011.”

Based on its results through the second quarter of the fiscal year, as well as its backlog, AECOM has raised its EPS outlook for fiscal year 2011 to $2.35-$2.40. In addition, the company expects that Q3 earnings will contribute approximately one quarter of the full year’s earnings.