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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

(Mark One)

   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022

OR

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to           

Commission File Number 000-52423

AECOM

(Exact name of registrant as specified in its charter)

Delaware

    

61-1088522

State or Other Jurisdiction Of

Incorporation or Organization

I.R.S. Employer Identification Number

13355 Noel Road

Dallas, Texas

75240

Address of Principal Executive Offices

Zip Code

(972) 788-1000

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

    

Trading Symbol(s)

    

Name of each exchange on which registered

 

Common Stock, $0.01 par value

ACM

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  No 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes  N

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  No 

As of May 5, 2022, 141,038,478 shares of the registrant’s common stock were outstanding.

AECOM

INDEX

PART I.

FINANCIAL INFORMATION

Item 1.

Financial Statements

1

Consolidated Balance Sheets as of March 31, 2022 (unaudited) and September 30, 2021

1

Consolidated Statements of Operations for the Three and Six Months Ended March 31, 2022 (unaudited) and March 31, 2021 (unaudited)

2

Consolidated Statements of Comprehensive Income for the Three and Six Months Ended March 31, 2022 (unaudited) and March 31, 2021 (unaudited)

3

Consolidated Statements of Stockholders’ Equity for the Three and Six Months Ended March 31, 2022 (unaudited) and March 31, 2021 (unaudited)

4

Consolidated Statements of Cash Flows for the Six Months Ended March 31, 2022 (unaudited) and March 31, 2021 (unaudited)

6

Notes to Consolidated Financial Statements (unaudited)

7

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

26

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

40

Item 4.

Controls and Procedures

40

PART II.

OTHER INFORMATION

41

Item 1.

Legal Proceedings

41

Item 1A.

Risk Factors

41

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

42

Item 3.

Defaults Upon Senior Securities

42

Item 4.

Mine Safety Disclosure

42

Item 5.

Other Information

42

Item 6.

Exhibits

43

SIGNATURES

44

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AECOM

Consolidated Balance Sheets

(unaudited - in thousands, except share data)

March 31, 

September 30, 

    

2022

    

2021

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$

829,719

$

1,120,790

Cash in consolidated joint ventures

 

135,351

 

108,406

Total cash and cash equivalents

 

965,070

 

1,229,196

Accounts receivable—net

 

2,450,085

 

2,619,491

Contract assets

1,391,380

1,369,031

Prepaid expenses and other current assets

 

753,727

 

739,044

Current assets held for sale

77,662

139,426

Income taxes receivable

 

59,252

 

77,355

TOTAL CURRENT ASSETS

 

5,697,176

 

6,173,543

PROPERTY AND EQUIPMENT—NET

 

391,564

 

398,876

DEFERRED TAX ASSETS—NET

 

361,319

 

360,260

INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES

 

341,452

 

328,906

GOODWILL

 

3,490,544

 

3,502,499

INTANGIBLE ASSETS—NET

 

45,486

 

54,867

OTHER NON-CURRENT ASSETS

 

291,142

 

307,927

OPERATING LEASE RIGHT-OF-USE ASSETS

570,603

607,076

NON-CURRENT ASSETS HELD FOR SALE

 

6,777

 

TOTAL ASSETS

$

11,196,063

$

11,733,954

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:

Short-term debt

$

3,351

$

4,369

Accounts payable

 

1,915,617

 

2,090,479

Accrued expenses and other current liabilities

 

2,218,969

 

2,174,201

Income taxes payable

61,877

50,511

Contract liabilities

 

996,275

 

1,058,643

Current liabilities held for sale

47,940

94,043

Current portion of long-term debt

39,449

 

49,469

TOTAL CURRENT LIABILITIES

 

5,283,478

 

5,521,715

OTHER LONG-TERM LIABILITIES

 

104,355

 

145,444

OPERATING LEASE LIABILITIES, NON-CURRENT

636,236

679,059

LONG-TERM LIABILITIES HELD FOR SALE

345

11,095

DEFERRED TAX LIABILITY-NET

5,310

5,420

PENSION BENEFIT OBLIGATIONS

350,376

383,904

LONG-TERM DEBT

2,166,310

 

2,157,740

TOTAL LIABILITIES

 

8,546,410

 

8,904,377

COMMITMENTS AND CONTINGENCIES (Note 15)

AECOM STOCKHOLDERS’ EQUITY:

Common stock-authorized, 300,000,000 shares of $0.01 par value as of March 31, 2022 and September 30, 2021; issued and outstanding 140,742,683 and 143,168,815 shares as of March 31, 2022 and September 30, 2021, respectively

 

1,407

 

1,432

Additional paid-in capital

 

4,100,905

 

4,115,541

Accumulated other comprehensive loss

 

(864,087)

 

(900,377)

Accumulated deficits

 

(706,783)

 

(504,126)

TOTAL AECOM STOCKHOLDERS’ EQUITY

 

2,531,442

 

2,712,470

Noncontrolling interests

 

118,211

 

117,107

TOTAL STOCKHOLDERS’ EQUITY

 

2,649,653

 

2,829,577

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

$

11,196,063

$

11,733,954

See accompanying Notes to Consolidated Financial Statements.

1

AECOM

Consolidated Statements of Operations

(unaudited - in thousands, except per share data)

Three Months Ended

Six Months Ended

March 31, 

March 31, 

    

March 31, 

    

March 31, 

    

2022

    

2021

    

2022

    

2021

Revenue

$

3,213,658

$

3,265,573

$

6,480,374

$

6,578,728

Cost of revenue

 

3,003,706

3,070,314

6,070,218

6,199,099

Gross profit

 

209,952

195,259

410,156

379,629

Equity in earnings of joint ventures

 

11,919

7,157

19,869

15,358

General and administrative expenses

 

(37,098)

(36,007)

(73,599)

(74,367)

Restructuring costs

(73,292)

(8,746)

(76,663)

(21,784)

Income from operations

 

111,481

157,663

279,763

298,836

Other income

 

3,329

 

3,477

6,203

7,330

Interest expense

 

(24,173)

 

(32,800)

(49,556)

(63,451)

Income from continuing operations before taxes

 

90,637

 

128,340

236,410

242,715

Income tax expense for continuing operations

 

36,011

 

35,148

58,567

60,749

Net income from continuing operations

 

54,626

 

93,192

177,843

181,966

Net loss from discontinued operations

 

(6,113)

 

(47,914)

(68,053)

(103,666)

Net income

 

48,513

 

45,278

109,790

78,300

Net income attributable to noncontrolling interests from continuing operations

(5,592)

(4,845)

(11,048)

(10,259)

Net (income) loss attributable to noncontrolling interests from discontinued operations

(1,364)

(1,074)

4,363

(2,554)

Net income attributable to noncontrolling interests

(6,956)

(5,919)

(6,685)

(12,813)

Net income attributable to AECOM from continuing operations

49,034

88,347

166,795

171,707

Net loss attributable to AECOM from discontinued operations

(7,477)

(48,988)

(63,690)

(106,220)

Net income attributable to AECOM

$

41,557

$

39,359

$

103,105

$

65,487

Net income (loss) attributable to AECOM per share:

Basic continuing operations per share

$

0.35

$

0.60

$

1.18

$

1.15

Basic discontinued operations per share

$

(0.06)

$

(0.33)

$

(0.45)

$

(0.71)

Basic earnings per share

$

0.29

$

0.27

$

0.73

$

0.44

Diluted continuing operations per share

$

0.34

$

0.59

$

1.16

$

1.13

Diluted discontinued operations per share

$

(0.05)

$

(0.33)

$

(0.44)

$

(0.70)

Diluted earnings per share

$

0.29

$

0.26

$

0.72

$

0.43

Weighted average shares outstanding:

Basic

 

141,060

 

147,770

141,419

149,597

Diluted

 

142,626

 

149,519

143,631

151,632

See accompanying Notes to Consolidated Financial Statements.

2

AECOM

Consolidated Statements of Comprehensive Income

(unaudited—in thousands)

Three Months Ended

Six Months Ended

March 31, 

March 31, 

    

March 31, 

    

March 31, 

    

2022

    

2021

    

2022

    

2021

Net income

$

48,513

$

45,278

$

109,790

$

78,300

Other comprehensive income (loss), net of tax:

Net unrealized gain on derivatives, net of tax

 

17,087

1,064

20,636

1,953

Foreign currency translation adjustments

 

9,096

(20,065)

3,899

31,886

Pension adjustments, net of tax

 

9,030

42

11,763

(10,711)

Other comprehensive income (loss), net of tax

 

35,213

(18,959)

36,298

23,128

Comprehensive income, net of tax

 

83,726

26,319

146,088

101,428

Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax

 

(7,084)

(5,904)

(6,693)

(13,003)

Comprehensive income attributable to AECOM, net of tax

$

76,642

$

20,415

$

139,395

$

88,425

See accompanying Notes to Consolidated Financial Statements.

3

AECOM

Consolidated Statements of Stockholders’ Equity

(unaudited—in thousands)

    

    

Accumulated 

    

    

Total 

    

    

Additional 

Other 

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits

    

Equity

    

Interests

    

Equity

BALANCE AT DECEMBER 31, 2021

$

1,413

$

4,085,333

$

(899,172)

$

(676,902)

$

2,510,672

$

115,567

$

2,626,239

Net income

41,557

41,557

6,956

48,513

Dividends declared

(21,445)

(21,445)

(21,445)

Other comprehensive income

35,085

35,085

128

35,213

Issuance of stock

4,154

4,154

4,154

Repurchases of stock

(6)

(487)

(49,993)

(50,486)

(50,486)

Stock-based compensation

11,905

11,905

11,905

Other transactions with noncontrolling interests

35

35

Distributions to noncontrolling interests

(4,475)

(4,475)

BALANCE AT MARCH 31, 2022

$

1,407

$

4,100,905

$

(864,087)

$

(706,783)

$

2,531,442

$

118,211

$

2,649,653

Accumulated 

Total 

Additional 

Other 

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits

    

Equity

    

Interests

    

Equity

BALANCE AT DECEMBER 31, 2020

$

1,486

$

4,038,149

$

(876,792)

$

(254,639)

$

2,908,204

$

111,973

$

3,020,177

Net income

39,359

39,359

5,919

45,278

Other comprehensive loss

(18,944)

(18,944)

(15)

(18,959)

Issuance of stock

4

7,901

7,905

7,905

Repurchases of stock

(22)

(1,220)

(121,572)

(122,814)

(122,814)

Stock-based compensation

9,259

9,259

9,259

Other transactions with noncontrolling interests

(1,727)

(1,727)

Disposal of noncontrolling interest of business sold

(10,969)

(10,969)

Contributions from noncontrolling interests

147

147

Distributions to noncontrolling interests

(1,597)

(1,597)

BALANCE AT MARCH 31, 2021

$

1,468

$

4,054,089

$

(895,736)

$

(336,852)

$

2,822,969

$

103,731

$

2,926,700

4

    

    

Accumulated 

    

    

Total 

    

    

Additional 

Other 

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits

    

Equity

    

Interests

    

Equity

BALANCE AT SEPTEMBER 30, 2021

$

1,432

$

4,115,541

$

(900,377)

$

(504,126)

$

2,712,470

$

117,107

$

2,829,577

Net income

103,105

103,105

6,685

109,790

Dividends declared

(42,951)

(42,951)

(42,951)

Other comprehensive income

36,290

36,290

8

36,298

Issuance of stock

19

13,584

13,603

13,603

Repurchases of stock

(44)

(49,939)

(262,811)

(312,794)

(312,794)

Stock-based compensation

21,719

21,719

21,719

Other transactions with noncontrolling interests

(118)

(118)

Contributions from noncontrolling interests

2

2

Distributions to noncontrolling interests

(5,473)

(5,473)

BALANCE AT MARCH 31, 2022

$

1,407

$

4,100,905

$

(864,087)

$

(706,783)

$

2,531,442

$

118,211

$

2,649,653

    

Accumulated 

Retained

Total 

Additional 

Other 

Earnings/

AECOM 

Non-

Total 

Common 

Paid-In 

Comprehensive

(Accumulated

Stockholders’ 

Controlling 

Stockholders’ 

    

Stock

    

Capital

    

 Loss

    

Deficits)

    

Equity

    

Interests

    

Equity

BALANCE AT SEPTEMBER 30, 2020

$

1,570

$

4,035,414

$

(918,674)

$

174,248

$

3,292,558

$

120,986

$

3,413,544

Net income

65,487

65,487

12,813

78,300

Cumulative effect of accounting standard adoption

(7,979)

(7,979)

(7,979)

Other comprehensive income

22,938

22,938

190

23,128

Issuance of stock

19

16,995

17,014

17,014

Repurchases of stock

(121)

(22,942)

(568,608)

(591,671)

(591,671)

Stock-based compensation

24,622

24,622

24,622

Other transactions with noncontrolling interests

580

580

Disposal of noncontrolling interest of business sold

(24,039)

(24,039)

Contributions from noncontrolling interests

226

226

Distributions to noncontrolling interests

(7,025)

(7,025)

BALANCE AT MARCH 31, 2021

$

1,468

$

4,054,089

$

(895,736)

$

(336,852)

$

2,822,969

$

103,731

$

2,926,700

See accompanying Notes to Consolidated Financial Statements.

5

AECOM

Consolidated Statements of Cash Flows

(unaudited - in thousands)

Six Months Ended March 31,

    

2022

    

2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income

$

109,790

$

78,300

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

 

85,176

 

80,828

Equity in earnings of unconsolidated joint ventures

 

(16,519)

 

(23,384)

Distribution of earnings from unconsolidated joint ventures

 

13,407

 

16,705

Non-cash stock compensation

21,719

24,622

Impairment of long-lived assets

 

95,814

Loss on sale of discontinued operations

45,586

50,117

Foreign currency translation

14,588

(8,304)

Other

8,059