AECOM reports third quarter results

 LOS ANGELES — AECOM Technology Corporation announced its financial results for the third quarter of fiscal year 2011, which ended June 30, 2011. AECOM reported net income from continuing operations of $74 million for the third quarter, or diluted earnings per share (EPS) of 62 cents. These results represent an increase of 14 percent over net income of $65 million — and an increase of 11 percent over diluted EPS of 56 cents — for the same period last year. Operating income for the third quarter increased to $110 million, 19 percent higher than the same period last year.

AECOM’s third-quarter revenue, net of other direct costs, increased to $1.3 billion, 24 percent higher than the same period last year. Organic revenue, net of other direct costs, increased 4 percent year over year. Third-quarter gross revenue increased to $2.0 billion, 25 percent higher than the third quarter of fiscal year 2010.

For year-to-date fiscal year 2011, AECOM reported net income from continuing operations of $188 million and operating income of $288 million, an increase of 11 percent and 19 percent, respectively, compared to the same period last year. For year-to-date fiscal year 2011, AECOM reported revenue, net of other direct costs, of $3.8 billion and revenue of $5.9 billion, an increase of 24 percent and 25 percent, respectively, compared to the same period last year.

"We had a solid third quarter, posting 11 percent earnings growth, driven by gains in organic and acquisitive net service revenue," said John M. Dionisio, AECOM president and CEO. "We also recorded $2.7 billion in new wins, up from $2.2 billion in the second quarter, and organic backlog increased 18 percent year over year, the largest increase in over two years.

"Organic growth in the third quarter was led by strong results in Australia, Asia, and the Middle East. AECOM’s expanding presence in these high-growth markets, in combination with our integrated platform, position us to capitalize on the full scope of infrastructure opportunities around the world."

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).

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 third quarter of fiscal year 2011, the PTS segment reported revenue of $1.8 billion and operating income of $115 million, compared to revenue of $1.3 billion and operating income of $108 million for the same period during fiscal year 2010. This represents a 33 percent increase in revenue and a 6 percent increase in operating income year over year. PTS revenue, net of other direct costs, increased 21 percent year over year to $1.2 billion.

The MSS 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. For the third quarter of fiscal year 2011, the MSS segment reported gross revenue of $274 million and revenue, net of other direct costs, of $144 million, compared to revenue of $297 million, and revenue, net of other direct costs, of $98 million for the same period during fiscal year 2010. This represents an 8 percent decrease in revenue contrasted by a 48 percent increase in revenue, net of other direct costs, highlighting a change in the mix of the business. In addition, the MSS segment reported operating income of $19 million compared to $13 million for the same period during fiscal year 2010, which represents a 48 percent year-over-year increase.

AECOM announced backlog totaling $16.0 billion at June 30, 2011, a 66 percent increase year over year. Organically, backlog increased by 18 percent year over year.

At June 30, 2011, the company had $381 million of total cash and cash equivalents, $1.2 billion of debt and $600 million in committed bank facilities with $293 million in unused capacity. Subsequent to the close of the quarter, the company announced a new five-year revolving credit facility agreement with total borrowing capacity of $1.05 billion.

"We are pleased to have closed our new revolving credit facility, which substantially increases our borrowing capacity on more favorable terms," said Michael S. Burke, AECOM executive vice president and chief financial officer. "We believe this demonstrates the credit market’s confidence in our financial strength and provides us with increased financial flexibility to execute on our growth strategy."

Outlook
"Improvements in organic growth and a significant increase in new wins and backlog during the third quarter give us confidence in our long-term earnings growth target of 15 percent," Burke said. "However, continued challenges in our Western European business have led us to evaluate actions to reduce our cost structure, which may negatively impact our earnings by approximately $0.05 in the fourth quarter." As a result, AECOM’s EPS outlook for fiscal year 2011 is $2.30-$2.35.