Los Angeles — AECOM reported second-quarter revenue of $4.5 billion. Net income and earnings per share were flat. On an adjusted basis, diluted earnings per share were $0.58 for the quarter.
“We delivered strong organic revenue growth and made substantial progress on our integration priorities,” said Michael S. Burke, AECOM’s chairman and chief executive officer. “The solid results we delivered today reflect our global leadership position and the complementary skill sets we have integrated over time. We are on track with our vision to become the world’s premier fully integrated infrastructure services firm, and our addressable market opportunity has never been greater.”
“We generated strong free cash flow through the first half of the fiscal year,” added AECOM’s President and Chief Financial Officer Stephen M. Kadenacy. “This cash generation drove our debt reduction as we build on our track record of disciplined capital allocation.”
New wins and backlog
New wins in the quarter of $4.6 billion were driven by growth in the company’s Europe, Middle East, Africa, and India region and its building construction business. After adjusting for acquisitions, total backlog grew 6 percent organically. The company’s book-to-burn ratio was 1x for the quarter, with total backlog at March 31, 2015, of $40.7 billion.
In addition to providing consolidated financial results, AECOM reports separate financial information for its three segments: Design & Consulting Services (DCS), Construction Services (CS), and Management Services (MS).
Design & Consulting Services (DCS) — The DCS segment delivers planning, consulting, architectural and engineering design services to commercial and government clients worldwide in major end markets such as transportation, facilities, environmental, energy, water and government.
Revenue of $2 billion in the quarter increased 56 percent. Constant-currency organic revenue increased 1 percent. Adjusted operating income was $108 million, an increase of 34 percent.
Construction Services (CS) — The CS segment provides construction services for energy, commercial, industrial as well as public and private infrastructure clients.
Revenue in the quarter was $1.6 billion. On an organic basis, revenue increased 62 percent. Adjusted operating income was $26 million. Results were favorably impacted by strong performance in the building construction business.
Management Services (MS) — The MS segment provides program and facilities management and maintenance, training, logistics, consulting, technical assistance and systems-integration services, primarily for agencies of the U.S. government, national governments around the world, and commercial customers.
Revenue increased 266 percent to $829 million in the quarter. Adjusted operating income was $105 million, benefiting from the strength of the acquired operations and strong execution.
Fiscal 2015 outlook
AECOM is increasing adjusted EPS guidance for fiscal year 2015 to $3.15 to $3.55. The increase reflects business trends that are consistent with the firm’s prior outlook and includes the expected $0.30 net positive impact to EPS from acquisition-related accounting items. The mid-point of the range assumes approximately $110 million of realized cost-synergy benefits from the URS combination.
In addition, the company continues to expect full-year interest expense of approximately $220 million, capital expenditures of approximately $160 million, depreciation of approximately $210 million, a tax rate of 30 percent, and a full-year share count of 151 million shares.
Adjusted EPS guidance for fiscal year 2015 excludes the amortization of intangible assets, financing charges in interest expense, and acquisition and integration expenses. In total, these items are expected to result in a pre-tax expense of approximately $810 million for the year.