AECOM [ACM] Filings

10-Q 1 acm-20220630x10q.htm FORM 10-Q

Table of Contents

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 June 30, 2022

☐ 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 ☒ No ☐

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 August 5, 2022, 139,649,705 shares of the registrant’s common stock were outstanding.

Table of Contents

AECOM

INDEX


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	1

	Consolidated Balance Sheets as of June 30, 2022 (unaudited) and September 30, 2021	1

	Consolidated Statements of Operations for the Three and Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)	2

	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)	3

	Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended June 30, 2022 (unaudited) and June 30, 2021 (unaudited)	4

	Consolidated Statements of Cash Flows for the Nine Months Ended June 30, 2022 (unaudited) and June 30, 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

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AECOM

Consolidated Balance Sheets

(unaudited - in thousands, except share data)


	June 30,		September 30,
	2022		2021
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	865,813	$	1,120,790
Cash in consolidated joint ventures		144,909		108,406
Total cash and cash equivalents		1,010,722		1,229,196
Accounts receivable—net		2,439,538		2,619,491
Contract assets		1,435,145		1,369,031
Prepaid expenses and other current assets		768,225		739,044
Current assets held for sale		94,542		139,426
Income taxes receivable		47,615		77,355
TOTAL CURRENT ASSETS		5,795,787		6,173,543
PROPERTY AND EQUIPMENT—NET		454,403		398,876
DEFERRED TAX ASSETS—NET		326,687		360,260
INVESTMENTS IN UNCONSOLIDATED JOINT VENTURES		347,240		328,906
GOODWILL		3,435,625		3,502,499
INTANGIBLE ASSETS—NET		40,442		54,867
OTHER NON-CURRENT ASSETS		288,555		307,927
OPERATING LEASE RIGHT-OF-USE ASSETS		551,669		607,076
NON-CURRENT ASSETS HELD FOR SALE		7,939		—
TOTAL ASSETS	$	11,248,347	$	11,733,954
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term debt	$	2,309	$	4,369
Accounts payable		1,998,922		2,090,479
Accrued expenses and other current liabilities		2,258,984		2,174,201
Income taxes payable		50,303		50,511
Contract liabilities		1,051,317		1,058,643
Current liabilities held for sale		60,786		94,043
Current portion of long-term debt		42,318		49,469
TOTAL CURRENT LIABILITIES		5,464,939		5,521,715
OTHER LONG-TERM LIABILITIES		106,315		145,444
OPERATING LEASE LIABILITIES, NON-CURRENT		610,169		679,059
LONG-TERM LIABILITIES HELD FOR SALE		345		11,095
DEFERRED TAX LIABILITY-NET		6,103		5,420
PENSION BENEFIT OBLIGATIONS		320,361		383,904
LONG-TERM DEBT		2,162,271		2,157,740
TOTAL LIABILITIES		8,670,503		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 June 30, 2022 and September 30, 2021; issued and outstanding 139,578,447 and 143,168,815 shares as of June 30, 2022 and September 30, 2021, respectively		1,396		1,432
Additional paid-in capital		4,139,019		4,115,541
Accumulated other comprehensive loss		(958,140)		(900,377)
Accumulated deficits		(731,265)		(504,126)
TOTAL AECOM STOCKHOLDERS’ EQUITY		2,451,010		2,712,470
Noncontrolling interests		126,834		117,107
TOTAL STOCKHOLDERS’ EQUITY		2,577,844		2,829,577
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	11,248,347	$	11,733,954

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Operations

(unaudited - in thousands, except per share data)


	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2022		2021		2022		2021
Revenue	$	3,241,695	$	3,408,357	$	9,722,069	$	9,987,085
Cost of revenue		3,021,145		3,206,823		9,091,363		9,405,922
Gross profit		220,550		201,534		630,706		581,163

Equity in earnings of joint ventures		7,489		8,270		27,358		23,628
General and administrative expenses		(32,766)		(36,340)		(106,365)		(110,707)
Restructuring costs		(12,264)		(12,971)		(88,927)		(34,755)
Income from operations		183,009		160,493		462,772		459,329

Other income		4,314		4,482		10,517		11,812
Interest expense		(27,416)		(149,038)		(76,972)		(212,489)
Income from continuing operations before taxes		159,907		15,937		396,317		258,652
Income tax expense (benefit) for continuing operations		44,517		(17,938)		103,084		42,811
Net income from continuing operations		115,390		33,875		293,233		215,841
Net loss from discontinued operations		(3,481)		(15,502)		(71,534)		(119,168)
Net income		111,909		18,373		221,699		96,673

Net income attributable to noncontrolling interests from continuing operations		(8,487)		(5,901)		(19,535)		(16,160)
Net (income) loss attributable to noncontrolling interests from discontinued operations		(1,534)		(941)		2,829		(3,495)
Net income attributable to noncontrolling interests		(10,021)		(6,842)		(16,706)		(19,655)

Net income attributable to AECOM from continuing operations		106,903		27,974		273,698		199,681
Net loss attributable to AECOM from discontinued operations		(5,015)		(16,443)		(68,705)		(122,663)
Net income attributable to AECOM	$	101,888	$	11,531	$	204,993	$	77,018

Net income (loss) attributable to AECOM per share:
Basic continuing operations per share	$	0.76	$	0.19	$	1.94	$	1.35
Basic discontinued operations per share	$	(0.04)	$	(0.11)	$	(0.49)	$	(0.83)
Basic earnings per share	$	0.72	$	0.08	$	1.45	$	0.52

Diluted continuing operations per share	$	0.75	$	0.19	$	1.91	$	1.32
Diluted discontinued operations per share	$	(0.03)	$	(0.11)	$	(0.48)	$	(0.81)
Diluted earnings per share	$	0.72	$	0.08	$	1.43	$	0.51

Weighted average shares outstanding:
Basic		140,608		146,109		141,149		148,434
Diluted		142,178		148,859		143,147		150,707

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Comprehensive Income

(unaudited—in thousands)


	Three Months Ended				Nine Months Ended
	June 30,		June 30,		June 30,		June 30,
	2022		2021		2022		2021
Net income	$	111,909	$	18,373	$	221,699	$	96,673

Other comprehensive income (loss), net of tax:
Net unrealized gain on derivatives, net of tax		(560)		830		20,076		2,783
Foreign currency translation adjustments		(112,217)		(18,775)		(108,318)		13,111
Pension adjustments, net of tax		18,279		3,220		30,042		(7,491)
Other comprehensive income (loss), net of tax		(94,498)		(14,725)		(58,200)		8,403
Comprehensive income, net of tax		17,411		3,648		163,499		105,076
Noncontrolling interests in comprehensive income of consolidated subsidiaries, net of tax		(9,576)		(6,913)		(16,269)		(19,916)
Comprehensive income (loss) attributable to AECOM, net of tax	$	7,835	$	(3,265)	$	147,230	$	85,160

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

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 MARCH 31, 2022	$	1,407	$	4,100,905	$	(864,087)	$	(706,783)	$	2,531,442	$	118,211	$	2,649,653
Net income		—		—		—		101,888		101,888		10,021		111,909
Dividends declared		—		—		—		(21,305)		(21,305)		—		(21,305)
Other comprehensive income		—		—		(94,053)		—		(94,053)		(445)		(94,498)
Issuance of stock		5		32,445		—		—		32,450		—		32,450
Repurchases of stock		(16)		(23)		—		(105,065)		(105,104)		—		(105,104)
Stock-based compensation		—		5,692		—		—		5,692		—		5,692
Other transactions with noncontrolling interests		—		—		—		—		—		(9)		(9)
Contributions from noncontrolling interests		—		—		—		—		—		7		7
Distributions to noncontrolling interests		—		—		—		—		—		(951)		(951)
BALANCE AT JUNE 30, 2022	$	1,396	$	4,139,019	$	(958,140)	$	(731,265)	$	2,451,010	$	126,834	$	2,577,844


					Accumulated				Total
			Additional		Other				AECOM		Non-		Total
	Common		Paid-In		Comprehensive		Accumulated		Stockholders’		Controlling		Stockholders’
	Stock		Capital		Loss		Deficits		Equity		Interests		Equity
BALANCE AT MARCH 31, 2021	$	1,468	$	4,054,089	$	(895,736)	$	(336,852)	$	2,822,969	$	103,731	$	2,926,700
Net income		—		—		—		11,531		11,531		6,842		18,373
Other comprehensive loss		—		—		(14,796)		—		(14,796)		71		(14,725)
Issuance of stock		5		34,913		—		—		34,918		—		34,918
Repurchases of stock		(24)		(111)		—		(158,041)		(158,176)		—		(158,176)
Stock-based compensation		—		11,591		—		—		11,591		—		11,591
Distributions to noncontrolling interests		—		—		—		—		—		(1,703)		(1,703)
BALANCE AT JUNE 30, 2021	$	1,449	$	4,100,482	$	(910,532)	$	(483,362)	$	2,708,037	$	108,941	$	2,816,978

Table of Contents


					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		—		—		—		204,993		204,993		16,706		221,699
Dividends declared		—		—		—		(64,256)		(64,256)		—		(64,256)
Other comprehensive income		—		—		(57,763)		—		(57,763)		(437)		(58,200)
Issuance of stock		24		46,029		—		—		46,053		—		46,053
Repurchases of stock		(60)		(49,962)		—		(367,876)		(417,898)		—		(417,898)
Stock-based compensation		—		27,411		—		—		27,411		—		27,411
Other transactions with noncontrolling interests		—		—		—		—		—		(127)		(127)
Contributions from noncontrolling interests		—		—		—		—		—		9		9
Distributions to noncontrolling interests		—		—		—		—		—		(6,424)		(6,424)
BALANCE AT JUNE 30, 2022	$	1,396		4,139,019		(958,140)		(731,265)		2,451,010		126,834		2,577,844


					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		—		—		—		77,018		77,018		19,655		96,673
Cumulative effect of accounting standard adoption		—		—		—		(7,979)		(7,979)		—		(7,979)
Other comprehensive income		—		—		8,142		—		8,142		261		8,403
Issuance of stock		24		51,908		—		—		51,932		—		51,932
Repurchases of stock		(145)		(23,053)		—		(726,649)		(749,847)		—		(749,847)
Stock-based compensation		—		36,213		—		—		36,213		—		36,213
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		—		—		—		—		—		(8,728)		(8,728)
BALANCE AT JUNE 30, 2021	$	1,449	$	4,100,482	$	(910,532)	$	(483,362)	$	2,708,037	$	108,941	$	2,816,978

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

AECOM

Consolidated Statements of Cash Flows

(unaudited - in thousands)


	Nine Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	221,699	$	96,673
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		126,605		129,288
Equity in earnings of unconsolidated joint ventures		(21,921)		(28,294)
Distribution of earnings from unconsolidated joint ventures		18,807		26,554
Non-cash stock compensation		27,411		36,213
Prepayment premium on redemption of unsecured notes		—		117,500
Impairment of long-lived assets		—		105,194
Loss on sale of discontinued operations		50,940		56,222
Foreign currency translation		(30,208)		(33,318)
Other		10,921		11,162
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable and contract assets		72,140		373,248
Prepaid expenses and other assets		132,695		(290,039)
Accounts payable		(181,718)		(271,947)
Accrued expenses and other current liabilities		123,336		58,901
Contract liabilities		(7,375)		134,815
Other long-term liabilities		(145,264)		(135,584)
Net cash provided by operating activities		398,068		386,588

CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for sale of discontinued operations including cash disposed		(42,261)		(265,876)
Investment in unconsolidated joint ventures		(20,205)		(51,852)
Return of investment in unconsolidated joint ventures		1,731		2,868
Proceeds from sale of investments		9,032		15,507
Proceeds from disposal of property and equipment		637		10,284
Payments for capital expenditures		(70,494)		(112,603)
Net cash used in investing activities		(121,560)

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